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Burberry signs new Indian partner

Burberry is poised to enter a joint venture with Indian fashion retailer Genesis Colors, pending government approval in India.

The luxury British heritage label is set to sign the deal in a bid to expand its presence in India, which has a thriving luxury goods trade due to its strong stock market. If the joint venture goes ahead, it is understood that Burberry will invest £2.1m to take a 51% stake and will look at opening 21 stores across India.

Genesis Colors already has distribution rights in India for a number of other luxury brands including Jimmy Choo, Canali, Aigner, Paul Smith, Just Cavalli and Bottega Veneta.

Burberry already runs two stores in India through a franchise agreement with Media Star but the partnership would be terminated once the new joint venture is signed. Burberry then hopes to expand rapidly in India, repeating the recent success it has enjoyed in China, where it now operates 44 stores and is experiencing double-digit growth.

Expansion in India is part of a wider move by Burberry to grow the retail side of its business, which is outperforming its wholesale division.

In its interim results on Wednesday, Burberry posted a retail sales increase of 14% on last year to £311.6m, while wholesale sales fell 23% to £216.1m.

Readers' comments (1)

  • Luxury in India is 10 years behind Europe and USA . It was struggling before the Global Economy spiraled out of control. The Infrastructure in India cannot support the Luxury concept. Logistics, supply chain issues, Import taxes and Duties inflate the price of the product by 20% + . Consumers who can afford Gucci , Jimmy Choo , Burberry are World travellers and prefer purchasing from UK, USA or Internet due to currency exchange rates and tax rebates.
    There is a myth that India's middle classes are ever Increasing and have expendable incomes, however the culture and social strata are complex and Indians are 'savers not spenders'. There is only a very small percentage of the population that can afford Luxury itmes.
    India cannot be compared to China and many Luxury companies are posting success that are highly inflated as thier Franchise or Joint Venture partners are incurring all the debts.
    Luxury Brands that have already entered India are struggling with poor sales and ever increasing mountain of merchandise . Stocks gets discounted to 70%-90% off MRP. The Brands Image is destroyed and customers are educated in buying at a discount . There are no Luxury Outets so Franchisors have to discount the product or sell it off to 'Jobbers' who export the merchandise to the Far East or Africa.
    India is a complex and Brands need to be cautious and not be enticed by charamatic companies who promise 21 store openings. They also have to be prepared to support their partners margins, limited sales, huge marketing budgets and market appropriate merchandise eg: Cannot import Percious Skins into India eg python, lizard, ostrich, crocodile or anything trimmed in these skins. Limiting the selection of merchandise .
    Are brands willing to change thier offers for an already limited market and incur additional production costs ?
    India is unique and has great designers and artisans. Fashion jewellery and designer evening wear do not sell as they compete with Saris and 24 carat gold , precious jewels and diamonds crafted by artisans steeped in history.
    Luxury Brands are being collected like 'Prized Horses' with limited expertise in how to Retail these Brands. You only have to look at the last year and see the result of Brands being dropped, closed or sold off. Is it worth the Risk ? Or should the question be 'Who will be impacted by the finanacial burden?' Answer -NOT the Luxury Brand who receives FAT Royalty cheque .

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