Gucci committed to spend ‘significant’ money in India: Patrizio Di Marco

26 Nov,2012

By Vijaya Rathore

 

Patrizio Di Marco

Italian fashion house Gucci is committed to making “significant” investments in India to strengthen its distribution network, its president Patrizio Di Marco has said.

 

“We will spend a significant amount of money here and are working on a number of projects,” Mr Marco said, adding, “Gucci is serious about this market and will not miss any good opportunity to expand presence.”

 

The PPR Group-owned iconic brand, which recently opened a retail store in Delhi – its largest in the country – is hopeful of breaking even in its India operations within the next three years. The company is also keen on sourcing embroidery from Indian craftsmen for its global operations, Mr Marco said. “In a market like India, two to three years is reasonable time to break even. So, we are looking to do so within three years.”

 

The over 90-year-old brand entered India in 2007 through a franchise partnership with the Murjani Group, and later joined forces with Reena Wadhwa, wife of Ambit Group’s CEO Ashok Wadhwa, to form a joint venture with 51% stake in the entity.

 

“In 2009, we felt the need to invest more in this country. That’s the reason the decision was made to take over the business entirely,” Mr Marco said. Gucci, which has five stores in India, will not only open new boutiques in the country but also refurbish the existing ones. “We are in the works for a number of projects. But retail is one of the biggest obstacles,” he said.

 

India’s luxury market is expected to touch $14.73 billion by 2015, from an estimated $8.21 billion this year, according to a joint study by YES Bank and industry body Assocham, which add that global luxury giants are keen on investing in India. According to Mr Marco, India’s high import duties pose a challenge for luxury brands while its 30% mandatory sourcing clause for 100% FDI in single-brand retail is a deterrent.

 

“A brand can marry the best of the craftsmanship of this country with the best of the craftsmanship of the other, but if it is an obligation (to source 30% locally), then I am sorry…We have 45,000 people working for Gucci in Italy and that will remain,” he said.

 

Gucci, however, sources embroidery from India for its global operations. Without quantifying the same, Mr Marco said it was about identifying a country’s strengths.

 

“We do count on the Indian embroidery. But to what extent it will increase, that will depend on Frida Giannini (Gucci’s creative director). She loves this country and she is looking to come here and know more,” Mr Marco said, adding, “But again, that does not mean that we will do manufacturing here.”

 

When asked to draw a comparison with China, where the brand has over 50 stores, he said, “China is not comparable to India. The developers have to understand that India is not New York, you cannot charge so much here.”

 

According to Mr Marco, a store in China starts generating profits much before it does in India. In terms of sales, too, Gucci’s India turnover is not comparable to that of its China operations, or that of any of its other mature markets.

 

“In absolute terms, we are selling much less here. We are trying to do our best, but we have to be patient,” Marco said. Gucci’s president, however, said it is unfair to compare a store in India with a store anywhere else in the world that has been around for the last 50 years. “But in relative terms, India’s performance this year, in comparison to last year and the year before, is very interesting and growing in percentage terms.”

 

Source:The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

 

Related Stories

  • No Related Stories Found
Post a Comment 

Comments are closed.

Videos