Luxury retailers are investing in India’s new wealthy. Here's why 

A legitimate indicator of India’s increasing wealth is the new store by Indian fashion designer Sabyasachi Mukherjee in a refurbished building from the early 1900s, located just a few blocks from the Reserve Bank of India’s headquarters in Mumbai.

Sabyasachi is the newest luxury brand to relocate to south Mumbai with the launch of the four-story flagship store. Mumbai has been the centre of India’s financial services industry ever since the predecessor to the Bombay Stock Exchange started there in 1875 under a banyan tree. Hermes International, Christian Louboutin, and other brands have opened shops more recently, prepared to pay the area’s rising costs for space in historic properties and access to a growing upper-class population.

Anurag Mathur, a partner at Bain & Company in New Delhi, told Bloomberg that the emergence of the high-net-worth individual sector in India was attracting luxury firms at a significant pace. He mentioned that the pandemic increased Indians’ quest for personal luxury while restricting travel, forcing them to purchase these items domestically. For luxury brands, he said, “there’s clearly a desire to look for a new frontier, and India very much, with its change, offers that.”

By 2027, around 1.66 million Indians are anticipated to have a net worth of above $1 million. According to Knight Frank’s Wealth Report, the group of people with $30 million in their bank accounts is expected to increase by approximately 60 per cent in the five years starting in 2022.

When Dior decided to hold its first runway show in India against Mumbai’s iconic Gateway of India, it was clear that foreign companies were paying attention. To entice local consumers and their wallets, the collection featured sequined gowns, vivid pink pops, and traditional Indian stitching on jackets, skirts, and bags.

Rich, traditional business families have historically flocked the area around the Gateway, which includes the The Taj Mahal Palace hotel. However, while commercial real estate has become discouragingly expensive for some financial services companies, some global brands still perceive its importance.

According to Karl Nagarwalla of Nagarwalla Estates, a company that has assisted labels like Hermes and Louboutin in establishing showrooms in the city, “the increased demand for luxury brands, the limited supply of properties available, and the fierce market competition have forced rentals higher.” For a 1,000 square foot property, the monthly rent for retail premises in the neighbourhood can range from $6,044 to $7,250, he added.

Many banks, mutual fund managers, and dealers have consequently relocated to new financial districts, such as the Bandra Kurla Complex, which is anchored by Bank of America and Citibank, as well as northern suburban neighbourhoods.

The new Sabyasachi store is prime example of how, many of the city’s heritage buildings have performed many functions over the course of their existence. Early in 2021, Indian City Properties refurbished the building, a Grade IIA heritage-designated structure with neoclassical architecture, and purchased it from HSBC Bank. According to Indian City Properties, it was created in 1913 by the architectural company Chambers & Fritchley for the British Bank of the Middle East, one of the 37 banks that were located in the region that later came to be known as the bank district.

Aditya Birla Fashion and Retail Ltd., which acquired a 51 per cent ownership in the business with an all-cash acquisition in 2021, has helped Sabyasachi, noted for its lavish bridal dresses and jewellery, develop. According to records with the Bombay Stock Exchange, the investment aided Aditya Birla in its most recent quarter. Although the firm reported a loss for the three months ended in June, Sabysaschi’s income increased and sales have had “good traction” at the Mumbai store.

The addition of premium and luxury brands to Aditya Birla’s portfolio isn’t exclusive. Mukesh Ambani, the richest man in Asia, has his sights set on introducing luxury experiences to India. His Reliance Brands Ltd. has invested in MM Styles Ltd., the company that owns the name-brand clothing line that Manish Malhotra, a Bollywood stylist, runs. In addition, the conglomerate purchased a 52 per cent share in Ritu Kumar, another Indian fashion designer. The expansion of Reliance’s non-food sector is highlighted by its retail unit, which comprises fashion and lifestyle brands, which reported a 15 per cent increase in revenue year over year.

“The competitiveness is good — the market as a collective is growing. There’s enough and more opportunity for all the brands to have over the next decade or so,” Bloomberg quoted Bain's Mathur as saying. He further said that people began to question the purpose of their savings during and after the pandemic.

(With inputsfrom Bloomberg)

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