Tariff cut essential for luxury brand entry

Dynamic and lively Ms Christine Lagarde, Minister for Foreign Trade, France, attired in an Indian dress purchased from a store at Crescent in the Moon, in an exclusive interview with the Retailer. Her observation is that Indian market offers a fascinating array of luxury products and most of these are, in quality, at par with those available at Paris

Retailer: Is India ready for luxury retail?

Christine Lagarde: To establish a luxury industry in India or anywhere else in the world, it is a prerequisite that the brands go by a process. First, you identity the right market, and thereafter, find your target buyer and establish at the same time the culture which is most eminent to facilitate the trade for luxury from a consumer standpoint. Though Indian consumer is ready for luxury products, they still need to be made aware of true luxury.

Retailer: How did the luxury brands think of entering Indian market?

CL: The leader of luxury trade Louis Vuitton-Moet Hennessey (LVMH) has made considerable headway towards entering the Indian market. This endeavour would further pave the way for entry of other luxury brands like Hermes, Estee Lauder, Chanel in India. With initial spadework having been done by a superb brand like LVMH, it builds up confidence for other brands that can than follow suit.

Retailer: Is the government policy helpful in the entry of luxury brands in India?

CL: Lowering of tariffs would greatly facilitate the entry of luxury brands in India. Luxury goods, by their very characteristics, are expensive and the current tariffs further made these goods, for Indian consumers, highly priced. Indian consumer would be much inclined, in such situation, to buy these goods outside India during their overseas-travels. However, Indian minister says that he wants to offer Indian consumer the taste of French luxury. So, we feel that there may be tariff cuts.

Retailer: Would luxury brands also follow the franchising path in India?

CL: Franchisor laws are very strict in France, therefore, product distribution, rather than business format franchising, is the larger norm. We feel that franchisors are not fully qualified to create systems and processes for transferring complete business know-how, therefore, product distribution is the advised format. Moreover, there is a very strong and stringent legal system, which controls franchising.

Retailer: Is Carrefour planning to enter India?

CL: Carrefour is very keen on entering Indian market and is looking for a partner in India through franchise arrangements.