When the IHT Luxury Conference, arguably the biggest luxury event of its kind, finally decided to come to India, it could not have chosen a worse time. Terror forced it to change its December date in Mumbai to Delhi in April. By this time, the concept of luxury had been cast aside, as the country struggled to cope with an economic downturn. The global luxury sector is estimated to be about $250 billion, of which India is estimated to have less than 1% share. The global luxury sector saw a 20% decline in average growth in November and December last fiscal and is expected to have a 2% drop in FY09-10, as per the International Council of Shopping Centres.

?There was a dip in sales for a while,? admits Sumeet Kaur of Hidesign, one of the fastest growing mass luxury brands in India. ?The biggest dip was in international orders, especially in established markets. They were cautious and ordered less. However, we are flooded with orders now. Domestically, small gifts, especially as shagun continued. Hidesign concentrates on office handbags for women and that continued to sell,? she adds.

The global situation had a mixed effect on the Indian luxury market. Expansion plans were abruptly put on hold by the notoriously secretive sector in the first half of the year, which saw some exits such as GAS, Dockers, Springfield and VNC. Then the better-than-expected performance by the Indian economy in the second quarter saw some brands suddenly revive plans. Canali, Estee Lauder, Versace and others announced expansion plans by the year end. In the second quarter, Brandhouse Retail (BHRL), which has brought global brands such as Escada, Dunhill and Reid & Taylor, among others, to India, saw its revenues rise by 12.5% on account of enhanced volumes through opening of new stores.

The luxury brands were caught between the need to follow the global seasonal cycle and deal with unsold stocks from the seasons before. Even as Indians learnt to roll their tongues around names such as Vacheron Constantin and de Grisogono, some franchisees changed hands, most notably Mohan Murjani, who exited the luxury space to concentrate on premium brands. Nowhere was the confusion more ironic than for Bottega Veneta, which shut shop in Mumbai and opened in Delhi within the same month. Besides Bottega Veneta, Jimmy Choo also changed hands from The Murjani Group to Genesis Colours. A significant change was the FDI level in the sector, which made it possible for brands such as Hermes to come in. Sales, which had been completely down in the first part of the year, saw partial recovery as some new brands entered the space, while others expanded hesitantly. Some sectors, such as top-end housing and hospitality, were worse off than others. Fortunately, the festive season came as a breather for the luxury market.

Pointing out the new design at her Select Citywalk Store, which has consistently met sales targets, Sumeet Kaur says the Indian market was not tally down, though there were differences among stores. ?Some outlets did much better than others. During the year, we also realised that shop-in-shops are doing very well for us. But we are opening elsewhere, even internationally, as our Asian business is doing very well. We are opening our third store in Vietnam, while Malaysia and Sri Lanka have grown as well,? she adds.

?With some leading luxury brands being allowed to directly retail in India, the luxury market continues to be a promising one in 2009,? says Sonika Malhotra, Executive Director, Radisson MBD. While most experts agree that India was not only an inspiration for many designers and brands globally, and the future potential for a luxury market in India exists, they were hesitant about the near-term prospects. Anna Zegna, Director Communications, Italian luxury menswear brand Ermenegildo Zegna, points out that the world had dramatically changed and ?we are never going back to the stage before the crisis?.

Repeated assertions that the sector was recession-proof did not ring true, as even unprecedented sales and special events, such as the Vogue Night Out, saw only tepid responses. Red sales got the fashionista excited, but whether markdowns alone can sustain sales remains to be seen. ?We were not badly hit by the recession, as the bridal requirements were the same irrespective of the financial crisis, but we did notice a slight dip in the budget for bridal wear,? says designer Neeta Lulla. She adds, ?We were prepared well for the recession as we had already introduced the diffusion range, priced between Rs15,000 and Rs 20,000, and saw a tremendous response for this segment.?

As Malhotra says, for the luxury shopper in India all that a luxury retailer needs to do is zero down on a niche segment, where there will be takers, no matter what.

Merry-go-round

* The Indian luxury market is estimated to be $3.5 billion, about 1% of the global market. However, with an expected growth rate of 25%, India may well be one of the fastest growing luxury markets globally

* Currently, only 51% FDI in retail is permitted, but only for single-brand retail. Multi-brand retailers are also asking for it and the government has been promising to raise the limit to 100%

* Top sellers in the sector: women?s accessories, gifts, men?s ready-to-wear

* Murjanis, who brought brands such as Bottega Veneta, Jimmy Choo and Gucci into India, has already exited from the first two and is in the process of exiting from Gucci as well

* Italian premium lifestyle brand GAS too closed all its stores. JV with partner Raymond still remains though. Also out are Springfield, a European casual wear brand and VNC, a women?s footwear and accessories brand