Why luxury brands fail in India?

Several international luxury brands, including Italian carmaker Maserati, lingerie house La Perla, British luxury menswear brand Alfred Dunhill and superbike maker Ducati are making a return to India with new partners, with more realistic expectations after previously having failed in the market. While La Perla and Maserati have tied up new partners here, Italian superbike maker Ducati has set up a subsidiary. British luxury menswear and accessories brand Alfred Dunhill which exited India in 2012 is also reportedly planning a comeback.

These ‘comeback’ brands are returning with improved product, pricing and distribution strategies to suit the local market as well as realistic goals in a challenging market such as India which lacks luxury infrastructure. All of these brands have been well aware of the importance of opting for the right local partner.

“The local partner failed to offer after sales services. We had to fly our technicians from Italy to handle individual customer issues,” said Umberto Cini, managing director for Middle East, India and Africa markets at Maserati, which entered India in 2008 and barely sold 20 cars in the first two years. The Italian carmaker has now made a comeback with three distributors. Cini said the earlier partnership caused a lot of damage to the brand’s credibility here and that the mistakes will not be repeated this time.

La Perla is re-entering the Indian market with a new partner – Vikas Jain, co-founder of mass-market phone maker Micromax, who believes that to succeed in India an international brand must craft a business model that takes into account uniqueness of the local market.

“Most brands currently work on a master franchise model in India. Rules of the game have to change if one has to make serious money here,” he said. “My plan is not to open a couple of stores, invest a few crores and make a few lakhs of profit. There is to be strategic level of investments and more serious commitment from both parties for a long term,” Jain said. The luxury lingerie brand first entered India in 2006 through an exclusive franchise partnership with the Murjani Group, one of the early entrants in the luxury trade in the country. But the partnership fell through.

adapted from  The Economic Times (India)

Maserati returns to India after previous failure