High Street Stores Top As Leasing Choice For Luxury Brands

BY Realty Plus

CBRE South Asia Pvt. Ltd., and PHD Chamber of Commerce and Industry, announced the findings of the joint report that highlights luxury retail leasing patterns across various retail formats from 2022 to 2023. In 2023, stores across high streets, typically open marketplaces in a prominent area with a strong retail presence, remained the top choice for luxury brands in India’s top eight cities.

Luxury brands leased 0.3 mn. sq. ft. of space in the high street store formats, registering over 100% Y-o-Y increase, while leasing in luxury stores in Malls stood at 0.24 mn. sq. ft., at over 300% Y-o-Y increase in 2023. Leasing in standalone stores by luxury brands stood at 0.1 mn. sq. ft. during the year, at over 200% Y-o-Y increase.

The overall leasing by luxury brands across the formats stood at 0.6 mn. sq. ft. in 2023, at almost 170% Y-o-Y growth. While High Streets constituted a 45% share in the overall luxury retail leasing in 2023, luxury brands’ stores in Malls followed at 40% and standalone stores accounted for the remaining 15%. This surge in leasing has been accompanied by the entry and expansion of various international luxury fashion, watch and jewellery brands across different locations. The eight cities tracked for leasing include Delhi-NCR, Mumbai, Bangalore, Kolkata, Pune, Ahmedabad, Chennai, and Hyderabad.  

While several luxury brands are present in the prominent malls and high streets in India, there are specific malls and high streets that cater exclusively to the discerning luxury clientele. These select destinations are carefully curated to offer a unique luxury retail experience, featuring a concentrated collection of high-end brands and providing an environment that aligns with the expectations and preferences of luxury shoppers.

The flagship experience continues to be a compelling factor for physical retail across all touchpoints, including luxury brands. It presents a distinct opportunity for brands to demonstrate their essence, values and unique attributes. Luxury brands, in particular, benefit from the flagship experience as it allows them to create an immersive environment that enables them to engage with customers on a deeper level.

Fuelled by a growing middle and upper class, India is witnessing a surge in demand for premium and luxury goods. This shift in consumer preferences is poised to reshape the retail landscape, transforming India into a crucial hub for global luxury brands. A confluence of factors such as rising disposable incomes, a growing desire for sophisticated lifestyles and the enduring influence of cultural heritage is expected to propel the luxury retail sector forward.

This is likely to position India as a focal point for both discerning consumers seeking exclusivity and luxury brands eager to capitalise on this booming market. Beyond sheer spending power, the internet and social media have become game-changers. Constant exposure to luxury brands has skyrocketed awareness among these shoppers.

Further, luxury brands already established in India are actively seeking expansion opportunities in metro cities where their presence is currently limited. According to the report, these brands are also pursuing larger space take-ups in existing locations to accommodate their growing offerings and cater to the increasing demand. Affluent consumers from tier II cities, seeking a wider selection of luxury goods, often travel to the nearest metro cities rather than international locations to fulfil their shopping needs. This growth trajectory has prompted luxury brands to look beyond the top-tier metro cities and adopt an aggressive expansion approach by opening stores in cities such as Chandigarh and Ahmedabad.

India's luxury retail landscape is rapidly evolving, underpinned by burgeoning consumer wealth and a strong inclination towards high-end brands. As this sector flourishes, it is reshaping the catchment areas of cities known for their luxury retail offerings.  The luxury retail sector is seeing significant developments, with the highest concentration in the Delhi-NCR region, which currently boasts nearly 80% of international luxury brands—a trend that appears to persist. Luxury malls in the Delhi-NCR region serve as a shopping haven for discerning customers across North India, while Mumbai attracts luxury shoppers from cities throughout Gujarat and Maharashtra.

Bangalore effectively caters to the luxury needs of most major cities in the surrounding region, whereas Hyderabad boasts a sizeable catchment area for potential luxury retail growth. As Hyderabad continues to witness a growing influx of affluent residents, the allure of luxury brands is undeniable. Recognising its luxury market potential, prestigious luxury brands are making a beeline to establish a presence and capitalise on the city's surging demand for high-end goods.

Kolkata, despite having a relatively smaller luxury market presence, serves as an important destination for luxury shoppers from East India and international visitors, particularly from Bangladesh. While the luxury sector in Kolkata may be limited in size, it plays a significant role in catering to the discerning tastes of these consumer segments, offering exclusive shopping experiences and access to luxe brands. The recent inauguration of the Jio World Plaza in Mumbai and the Mall of Asia in Bangalore exemplifies the increasing interest of Indian consumers in luxury retail.

Luxury brands are aggressively pursuing new avenues to attract both seasoned and aspiring luxury consumers. As the demographics of these high-end shoppers continue to shift, brands are likely to recalibrate their strategies and expand their physical presence to capture a larger market share.

While established players might navigate expansion cautiously and focus on key locations in metro cities, new brands planning to foray into the Indian market will continue to view it as a promising destination.

Luxury brands are revolutionizing the shopping experience by crafting unique in-store environments.

These experiential havens serve a dual purpose: fostering deeper customer engagement and amplifying the perceived quality of their products. Physical stores not only provide a powerful platform to showcase product lines but also help the brands cultivate a distinctive image.

 Luxury retailers will continue to utilize cutting-edge technologies such as augmented reality (AR) and artificial intelligence (AI) to weave digital elements into the physical store experience.

This is likely to create a unique omnichannel journey that not only highlights their brand heritage but also fosters deeper engagement with the consumers. Similar technologies could be harnessed online to create immersive experiences that would help solidify a distinct brand image.

Customers could directly interact and shop through these platforms, forging a seamless connection between online and in-store channels. This tech-powered approach is expected to grant luxury brands a significant edge over generic online marketplaces, ensuring a consistent and captivating customer experience across all touchpoints.

Tags : luxury retail leasing Luxury brands online marketplaces strategies