Great potential for factory outlet concept in luxury brands

Written by Mona Mehta | Updated: Sep 29 2009, 06:21am hrs
Dubai-based Big Brands, one of the retail arms of the Time Machine Group and a major distributor of luxury products in Gulf Cooperation Council, is set to launch Big Brands factory outlets across major metros in India. At these outlets, luxury products will be offered at discounts ranging between 40% and 80%. Vijay Samayani, chief executive officer, Cosmos Brands Distributors, the distributor for Big Brands in India, spoke to Mona Mehta about the growing demand for luxury products in India and his expectations from the five-day Big Brands Carnival being held in Mumbai. Excerpts:

What is the objective behind launching factory outlets for luxury products in India

Due to the slowdown in the global economy, including India, the demand for luxury products, especially, perfumes, watches and cosmetics, has dipped 60-70%. Despite the slowdown, Big Brands witnessed 15-20% sales growth when the Big Brands Carnival was held four months back in India by the Cosmos Group, where luxury brands were offered at discounts ranging from 40% to 80%. The brands included Givenchy, Calvin Klein, Christian Dior, Davidoff, Chopard, Trussardi, Iceberg, Chevrolet, Beverly Hills, Roberto Cavalli, among others. We feel there is great potential for the factory outlet concept for luxury products in India. This is also because the retail rentals have dropped 25%-40% in metros. The demand for premium apparel and footwear through factory outlets in India grew 25%-30% even when the organised retail sector witnessed a slowdown in the third and the fourth quarter of the financial year 2008-09.

Tell us about Big Brands new retailing plan for India.

We plan to set up franchisee-operated Big Brands factory outlets with an area size of 5,000 to 6,000 sq ft each in every metro beginning next financial year. At these outlets, branded luxury perfumes will occupy a maximum 75% space, with smaller space allocated for watches, handbags and accessories. We are talking to Armani among a host of other luxury brands in the US and the Middle-East to add to the Big Brands portfolio.

How do you assess the global demand for factory outlets for luxury brands

In Dubai, Big Brands has five factory outlets that are witnessing sales growth of 50%-60%. In the US, too, factory outlets for the likes of Martini & Rossi, Dolce & Gabbana are seeing good offtake. We expect similar demand growth in India.

What are the challenges before you in the Indian retail space

Creating awareness about the Big Brands Carnival and attracting footfalls is a major challenge. Going forward, we may have to face a similar challenge in attracting footfalls at Big Brands factory outlets. That's because we will stock products from the earlier season at the factory outlets, and not what is otherwise available at premium departmental stores. We do have a logistics partner in Dubai to handle factory outlet operations. We would like the same partner to create a logistics base in India for Big Brands factory outlets, which we feel will be a major challenge for us.