As per market information, Luxury goods retailer Saks Fifth Avenue Inc. is in advanced talks with Aditya Birla Fashion Retail Ltd to open two stores in India.
The first store is likely to open in Aerocity, near the Indira Gandhi International Airport in Delhi, followed by a second in an upcoming retail project in Mumbai’s Bandra Kurla Complex business district. A team from Saks Fifth Avenue has visited India twice in the past three months and is likely to make another trip in March.
India’s luxury goods market is led by the National Capital Region, Mumbai and Bengaluru. It is dominated by single-brand retailers such as Gucci and Louis Vuitton, which have about half a dozen stores in India. If the partnership with Aditya Birla Fashion Retail works out, Saks Fifth Avenue will be the first multi-brand luxury retailer to enter India.
Saks Fifth Avenue would be retailing goods across segments such as cosmetics, apparel and accessories from luxury retailers, including Gucci and Burberry. It is also expected to introduce brands like Ralph Lauren that are not present in India.
The first time the New York-based luxury retailer evaluated the Indian market was as long ago as in 2005 and by the time its first store opens in the country, it could be late 2018. Globally, Saks Fifth Avenue has about 60 stores. Its parent Hudson’s Bay Co., which also owns the Lord & Taylor chain in the US, is looking at strengthening its US footprint and has made a takeover approach for struggling retailer Macy’s Inc., Reuters reported on 3 February. In 2015, Hudson’s Bay bought Galeria Kaufhof and its Belgian unit Inno from German retailer Metro AG for $2.7 billion to counter the impact of reduced consumer spending in the US and Canada.
Saks will be attempting to tap the rich with family wealth of over Rs 25 crore or annual income in the range of Rs 3-4 crore. According to the “Top of the Pyramid” survey by Kotak Wealth Management published in July, 59% of wealthy Indians now purchase luxury apparel and accessories locally as luxury brands are more widely available in India even as many still prefer to shop for clothes and luxury items abroad. Further, there were 146,600 Indians with a combined net worth of Rs 135 trillion in the year ended March 2016, according to Kotak. This is set to increase to Rs 319 trillion by March 2021, according to the wealth management firm. India allows 51% foreign direct investment (FDI) in multi-brand lifestyle retail - in states that permit FDI in organized retail. Foreign retailers also need to meet other conditions pertaining to the manufacturing and sourcing of material.
Aditya Birla Fashion Retail’s businesses in the luxury segment include multi-brand retail chain Collective. Last year it also announced a partnership with UK-based luxury brand Simon Carter and US-based fashion retailer Forever21.