Affluent Bangalore a happy hunting ground

Affluent Bangalore a happy hunting ground
Mint

Earlier this month, when Levi Strauss brand Dockers decided to spread its wings, it did so with its largest store nationwide—in India’s southern city of Bangalore. Dockers, spread out over 4,500 sq. ft, isn’t alone. Huddled in the same city is a 6,000-sq. ft Nike retail space and United Colours of Benetton’s 8,500-sq. ft store behemoth.
For retailers, Bangalore is holding out as a test bed for their swanky new stores and formats. These premium retail labels are following the rising tide of affluence among the city’s 6.5 million residents, of whom close to one million are regarded as the premium consuming class.
“By sales volume, Bangalore is the third largest market behind Delhi and Mumbai but the mix of affordable real estate and concentration of a brand-conscious, well-travelled clientele makes it a perfect place to check out concepts,” says Sanjay Gangopadhyay, marketing director, Nike.
By age 27, the average IT worker in Bangalore earns Rs6 lakh annually and can expect a six-fold increase by the time he is 40 when earnings top Rs35 lakh. Once the basic needs of home, car and expenses for children’s education are met, people begin to spend to improve quality of life.
This includes fine dining—average spending on eating out by India’s IT legions tops Rs4,500 crore, according to CLSA Asia-Pacific Markets, a research firm that tracked the lifestyle patterns of 3.25 lakh IT professionals across the top eight firms in the country. Also high on the list is spending on brands, movies and overseas holidays.
“Bangalore has a higher number of people with disposable income of Rs10,000 to Rs25,000 a month, relative to its overall population and this makes it an exciting retail destination,” says Shyam Sukhramani, head of Dockers in India.
Italian menswear brand Kappa and Paprika footwear for women from LMG Brands have also opened stores recently.
As the city’s realty pool expands, creating clusters for top-end retail, Bangalore will also see the entry of luxury brands such as Louis Vuitton, Versace, Christian Dior, Chanel and Gucci. All of them are expected to have a presence in the city by 2009-10.
“Luxury retail is possible only when there is the right mix of a location to showcase aspirational products and consumers willing to buy them. Bangalore will have both in the next three years,” says Mayank Saksena, head, retail service group, Trammell Crow Meghraj. This retail and property consultancy firm is helping set up three luxury retail projects that will be operational by 2010.
Most of these luxury brands will be housed in upscale locations such as the 1.3-million sq. ft UB City, the 120,000-sq. ft Embassy Mall and within luxury hotels such as the Ritz Carlton—all within the central business district.
The eight-acre MBD Zephyr Project in the eastern suburb of Whitefield is also targeting luxury brands as well as premium ones such as Debenhams, Zara, Mango and Body Shop. At present, Hugo Boss, the menswear brand that sells suits upwards of Rs75,000, is the only category A1 brand with a store in Bangalore apart from luxury pen maker Mont Blanc.
But India’s top retailer doesn’t agree that luxury brands will take off with the same flair that mid or upmarket brands have done.
“I see Bangalore moving up to become a destination for bridge brands such as Guess and Next that straddle the space between premium and A brands; it is not yet a luxury retail destination,” says Kishore Biyani, MD, Pantaloon group.
Still, Biyani has used Bangalore as a test bed for new retail concepts such as the Central Mall with seamless interiors and the Big Bazaar chain of discount stores—both of which were first launched here.
Despite its young and hip image, Bangalore is still a city of the salaried middle class with its wealthiest residents seemingly more focused, at least anecdotally, on philanthropy rather than conspicuous consumption.
“It is those born wealthy who spend naturally on luxury brands, not first-generation wealth creators. Until the children grow up, Bangalore will be a premium brand rather than a A1 luxury brand city,” says Fazle Naqvi, executive director, LMG Brands, a part of the West Asian retail conglomerate that owns the Lifestyle brand. Luxury is definitely on the way but for the moment it is “mastige” or a mix of mass and prestige brands that retailers are pushing in Bangalore.