The government has cleared the proposal to allow Gucci Group NV, Netherlands, for foreign equity participation of 51% stake in its Indian franchisee, Luxury Goods Retail Private Ltd, with an investment of Rs 1.04 crore. With the move, Gucci will now be able to enter the Indian retail market through single brand stores. The proposal was made by Luxury Goods Retail, which sells products under the Gucci brand in India under a franchise agreement.
It was in 2006 that Gucci India had entered into a franchise agreement with Murjani Retail for selling its products in the country. The pact was terminated in July this year and replaced with a new franchise.
In India, the company has two stores in Delhi and Mumbai. It had last year announced plans to expand to other metros, including Bangalore, and expand its product range in the country to house its men’s and women’s collections of ready-to-wear, handbags, shoes, watches and other accessories.
Meanwhile, Australia-based Retail Food Group (RFG), a leading retail chain, is planning to enter the Indian market next year with its four global brands — Michel’s Patisserie, Donut King, Brumby’s Bakery and ‘bb’s cafe’. The company ultimately aims to make its proposed venture in India bigger than its overseas operations in the next 15 to 20 years, say certain media reports quoting Gavin Nixon, sales and leasing manager, RFG.
As part of the strategy, the company is planning to open a total of 15 outlets of four of its brands within the first year and double the number every year for the next few years. RFG currently operates over 1,100 outlets in Australia. It had entered China last year.
Industry experts believe the Indian food market offers immense business potential. Nixon adds, “We want to capitalise on it as part of our global growth strategy. RFG is aiming to clock a revenue of Rs 4,022 crore ($87 million) from the country within five years from start of operations and expect Indian operations to be bigger than the Australian business in 20 years.” The overall Indian retail market is estimated to be around $12 billion, of which the organised segment accounts for less than 6%.
Shubhranshu Pani, managing director (retail), Jones Lang LaSalle Meghraj, comments, “Due to improvement in buyer sentiments, retailers are leveraging the current market dynamics by concentrating their presence in established metropolitan catchments, curtailing exuberant expansion plans and focusing on offering greater value to shoppers.”