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Zegna Bows Big in India

Zegna unveiled its brand-new Mumbai flagship late last month, which, at 3,000 square feet, is now the largest luxury store in the country.

MUMBAI — Could bigger be better when it comes to capturing the attention of Indian consumers? The Ermenegildo Zegna Group certainly hopes so.

More than a year and a half after taking a temporary leave of absence from the Indian market, the luxury retailer unveiled its brand-new Mumbai flagship late last month, which, at 3,000 square feet, is now the largest luxury store in the country.

The unit takes over a prime space formerly occupied by a popular nightclub in the shopping promenade at The Taj Mahal Palace & Tower luxury hotel in the city’s south, where its neighbors include such high-end retailers as Louis Vuitton, Fendi and Burberry—an especially impressive location given the lack of premium retail space in India. A dearth of available locations and appropriate spaces have kept many brands eager to enter the market squeezed out in the past few years.

“It certainly has not been an easy task to open in [this location],” acknowledged Paolo Zegna, chairman of the Ermenegildo Zegna Group, in an e-mail interview. The brand, which originally entered India in 1999, had operated a store in a shopping mall that had seen a considerable decline in recent years, prompting the company to shutter its doors in late 2005 and concentrate on a new approach.

“Though we closed our first store [in anticipation of the new opening], we’ve maintained a presence in the market through advertising, editorial coverage and other promotions,” said Rahul Prasad, managing director of Zegna’s South Asia operations. “We wanted to follow that up with a large, impressive store that would have all the things customers have been seeing during this time.”

To achieve this, the store was designed by Milan-based architects Studio Architettura Beretta Associatti and completely crafted in Italy. The space carries the full range of Zegna products, including the Ermenegildo Zegna line, Upper Casual, Z Zegna, Zegna Sport, accessories, fragrances and eyewear. The company is planning to open a second major flagship in New Delhi in early 2008, and is also eyeing emerging markets such as Bangalore, Calcutta and Hyderabad.

While the brand’s former India store had been operated with a franchise partner, the new flagship is now 51 percent owned by Zegna, a result of a recent relaxation in the country’s rules on Foreign Direct Investment (FDI) in single-brand retail outlets.

Zegna said he hoped the recent positive changes toward foreign retailers would be just the start of India’s increasing openness to outside investment. “The most logical progression would be a further liberalization of the FDI norms allowing increased equity for foreign companies,” he said. “Additionally, we expect to see a progressive reduction of import duties, non-tariff barriers and other complicated local taxation.”

Still, he added: “The retail environment in India is going through a continual metamorphosis though not as fast as we would like it to. Suitable locations [for] luxury retailing are still very limited [and that] remains an impediment to the development of luxury retail. Unless there is dramatic infrastructural improvement in the retail environment, the development of high-end retail will be restricted to luxury hotels.”

Added Prasad, “India has a lot of potential, but it is not a sure thing. There is no doubt that the disposable income and the propensity to spend exist. It’s undeniable; the money is here. The question is how to set up a retail operation that works for this market.”