DLF Brands, the retail management subsidiary of DLF plans to open 500 stores selling luxury lifestyle labels in the next five years, entailing an investment of over Rs 1,000 crore (Rs 10 billion), a top group official said.
Already partnering seven international brands such as Giorgio Armani and Salvatore Ferragamo, it also plans to tie up with 12-15 global brands in the next five years.
The company plans to fund its expansion through a mix of equity and debt and go in for tie-ups through joint ventures and franchise routes. The focus of expansion would be in metros such as Delhi, Mumbai, Hyderabad and Chennai in the initial phase, the official said.
DLF Brands currently has joint ventures with international brands such as Giorgio Armani Holding BV, Salvatore Ferragamo and Boggi, and franchising agreements with brands such as Alcott, Sia Home Fashion and Sun Glass Hut. With its current portfolio, DLF has over a dozen stores in the country.
"The retailer plans to have at least four stores for each of the international brands by the end of 2009," said Kelvin Coyle, its managing director.
On Wednesday, it entered into a franchisee agreement with Donna Karan Studio LLC, part of the luxury goods maker LVMH Moet Hennessy Louis Vuitton SA. The company is expected to invest as much as Rs 65 crore (Rs 650 million) in opening 28 Donna Karan stores in the next five years.
"We know there is an economic slowdown. Today, our business plans are not the same as we were looking at a year ago. While chalking out our current plans, we have factored in the downturn and reduced the plans by 25 per cent,'' said Coyle.
On anticipated investment, he said it might go up or down, depending on overall conditions and the retail environment. The company plans to open at least 100 stores by the end of 2010, Coyle has said.
The company is also in talks with a couple of international brands and expected to tie-up with two-three brands in the next year, which Coyle refused to name, citing confidentiality agreements.
"Ultimately, we will have a tie-up with 12-15 brands in the luxury and premium market,'' he said.
According to retail experts, though the untapped market for luxury goods is attracting global players to India, most will tread cautiously during the current downturn.
"India is still attractive, given the saturation in western markets.
That is why international brands are looking at India, China and other South East Asian markets. But, if they planned to open 20 stores a couple of years ago, they will open only four-five stores in the current scenario,'' said Hemant Kalbag, partner and vice-president, AT Kearney India, a business consultancy.
"The luxury brands market will continue to be a niche market in Indian metros and they will not be able to penetrate in India as deeply as they have done in the US, Europe and other developed countries,'' he added.
Coyle agrees the current downturn is impacting all walks of life. "We have a strategy in mind which is in tune with the slowdown. It will move with a slower start and grow rapidly when things get back to normalcy.''
DLF Brands, says Coyle, is striving to provide price parity for its international brands in India in comparison with their home markets and absorb duties to keep pricing under check. Coyle said that Ray-Ban of the Luxottica group sold for 50 per cent less in the Indian market compared to western ones, and Sia Home sold for 20 per cent less than its home market, France.