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French luxury brand Hermes is set to take luxury retail out of the confines of five-star hotels andluxury malls as it opens an independent store at a heritage building in south Mumbai next year.This marks a new trend in luxury retail as marketeers look at overcoming limited luxury retailinfrastructure for growth in the worlds third fastest growing economy, say industry experts.

We should develop places such as Connaught Place in New Delhi and Colaba in Mumbai,which are landmark heritage shopping districts, into luxury high streets just as Milan, Paris,London, New York, etc., have developed their prime shopping areas into luxury market spaces,Sanjay Kapoor, managing director, Genesis Luxury Fashion Pvt. Ltd, said by email.

Genesis Luxury is the marketing and distribution arm ofGenesis Colors Pvt. Ltd, the largestconglomerate of luxury brands in India, with names such as Jimmy Choo, Bottega Venetta andCanali.

This is a change in outlook for the luxury marketeer. Luxury retail in India has so far beenrestricted to five-star hotels and three luxury malls DLF Emporio in New Delhi, Palladium in

Mumbai and UB City in Bangalore.

Luxury products is a $1.5 billion (around Rs.6,700 crore) market in India, representing roughly31.5% of the $4.76 billion luxury industry, which includes services such as hospitality and assetssuch as luxury cars and residential apartments.

Indias overall luxury market will grow 21% to become almost three times its current size by2015, predicts theLuxury in India report, jointly released by the Confederation of IndianIndustry and AT Kearney on 7 October.

To tap into the high-growth, luxury marketeers such as Genesis, Reliance Brands Ltd (which

has Zegna), and Blues Clothing Co. (the exclusive franchisee for Versace, Cadini and Corneliain India), are all expanding. Genesis plans to open 7-10 stores over the next year-and-a-half inthe three metros as well as at new locations such as Chennai, Pune and Ludhiana.

The company currently has 20 stores. New Delhi-based Blues Clothing, which has 10 stores inthe Capital and four in Mumbai, plans to open 25 new stores by the year-end.

China is far ahead in terms of luxury outletsZegna has 200 stores in that country, Gucci has 35and Hugo Boss has 86. They have three stores each in India.

Zegna has close to 1,000 Indian customers who shop around the world in Dubai, Milan and New

York. On a recent visit to India, Ermenegildo Zegna, chief executive of Ermenegildo ZegnaHolditalia SpA noted that the country has the demand and the customers but lacks retailinfrastructure. Luxury cannot be restricted to the five-stars. It has to be more accessible, saidZegna, who wants to go outside the confines of the hotels to attract more customers and will alsolook at tier-II cities with million-plus populations.

Moreover, brands need to have multiple stores in one city to be able to cater to large populations.It is important to saturate a city with multiple stores, said Abhay Gupta, executive director at

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Blues Clothing, which recently opened three new stores in Mumbai. Gupta is also looking atstand-alone boutique hotels and airport retailing options to expand, besides new territories suchas Hyderabad.

Options are limited because there arent too many high-end malls being built.

It will be three to four years before a new luxury mall comes up in India, said Pankaj Renjhen,managing director, north India, at property consultant Jones Lang LaSalle.

The need to be more accessible and have a larger footprint is driving luxury retailers to look atnew business models. If you look outside the boundaries, we find opportunities, that is why weprefer to have an inside partner to help us speed up the development, said Zegna, who changedpartners for the third time in India in September.

The luxury retailers are following premium brand retailers such as Mango, Diesel and VeroModa who have over the past year experimented with stand-alone stores in unconventional retail

destinations and new business models. For instance, Diesel has set up a large independentflagship store in Mumbais Juhu suburb, by definition a non-conventional shopping destinationas there are no other similar brands present close by.

Last week, European high street brands Vero Moda and Jack and Jones launched a two-storeyflagship store in Santacruz, yet another Mumbai suburb about 4km away from Khar andBandras Linking Road, the citys retail high street destination, which has brands such as CalvinKlein, Benetton and Tommy Hilfiger.

Likewise, Mango, a premium womens apparel and accessories brand that till date had stand-alone stores in malls, is now retailing at Shoppers Stop Ltd, a big-box, multi-brand retail chain.

Our Juhu store is one of our best stores, said Darshan Mehta, chief executive officer, RelianceBrands, partner of Diesel and Zegna in India, while explaining that choosing the right location isimportant for a brands success and that Juhu proved to be a good fit for Diesel.

Opening on the Indian high street presents its own challenges. The street journey is hard, saidZegna. Luxury is not only about shopping, it is about having the right ingredients such as acluster of brands and ambience that make it happen.

While the infrastructure is lacking, the other elements all seem to be in place. India has around127,000 millionaires. There was a 50.9% rise in the number of high-networth individuals (HNIs),

or those with investable assets of $1 million or more, in 2009, according to the Asia PacificWealth Report by Merrill Lynch Global Wealth Management and Cap Gemini released inSeptember. Their total wealth grew 53.8% from the previous year, it said.

Moreover, nearly 70% of Indias wealth is concentrated in the five metros, said Atul Singh,managing director and head of global wealth and investment management, India, DSP MerrillLynch, explaining that a presence in the these cities was needed at a minimum to cover theIndian luxury customer.

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It may pay to spread the net even wider.

Wealth creation is no longer restricted to only Mumbai, Delhi and Bangalore. It is taking placein tier-I and tier-II cities such as Ahmedabad, Pune and Hyderabad, said the AT Kearney reporton luxury retail, which estimates Indias latent demand at $3-3.5 billion, up 120-150% from

current levels.