Isabelle Guichot from SMCP explains the rationale for entering the Indian market

“Continuing a strategy aimed at rebalancing our international presence.” During its 2022 annual report, the SMCP group explicitly outlined its goals. With a turnover exceeding 1.2 billion euros and a target of 1.6 billion euros by 2026, the French accessible luxury specialist, owning Sandro, Maje, Claudie Pierlot, and Fursac, aims to further diversify its global footprint.

Although the majority of its sales already stem from outside France, spanning across 47 countries, the group has slightly adjusted its expansion goals. International market dynamics, coupled with challenges from its former Chinese ownership, prompted consideration for expansion beyond Greater China, which faced significant obstacles in 2022 (the group witnessed a 20% sales decline in the Asia-Pacific region due to complications within China).

Consequently, following a partnership agreement in early 2023 for Australia and New Zealand, the group has announced a new partnership with Reliance Brands to inaugurate initial stores in the Indian market. These developments were not part of the roadmap presented three years ago by the accessible luxury giant.

“Significant changes have occurred globally,” explained Isabelle Guichot, the group’s CEO. “We’ve slightly redefined our Capex (investment expenditure) and geographical focus. These are less weighted towards China, and we see potential in the Middle East, encompassing the United Arab Emirates and Saudi Arabia, as well as the Indian subcontinent. India, the world’s most populous country, has become a stronghold for luxury, with its burgeoning upper-middle class.”

Indeed, the United Nations Population Fund (UNFPA) estimates India’s population to reach 1.428 billion people, surpassing China’s population, which experienced a decline in 2022 and is projected to reach 1.425 billion inhabitants by the end of 2023. It’s an immense market, marked by distinct local characteristics, recently attracting the interest of Western brands.

“It was primarily a market centered on domestic consumption, but there’s a growing affinity among young Indian generations towards Europe and the West,” detailed Guichot. “While the traditional aspects, particularly concerning weddings and cultural events, remain highly structured, there’s an audience that appreciates the Parisian aesthetic. Previously predominantly male-oriented, the female market has become compelling. Our analysis, based on sales in the Middle East and London—frequently visited by Indians—indicates accelerating interest and appetite for our products. We explored various entry options into this market, and Reliance emerged as an attractive partner due to their expertise in brand distribution and operations in premium shopping centers.”

The development of high-end malls across the region has facilitated the entry of international brands, whereas previously, luxury brands found traction by establishing spaces within major Indian city palaces.

With Sandro and Maje, SMCP is set to open its inaugural stores in 2024, targeting cities such as Mumbai and New Delhi, alongside Bangalore and Kolkata. Over the next three years, around ten stores are anticipated to open, with a digital strategy accompanying these ventures to cater to a clientele inclined towards new technologies.

Regarding product offerings, the group’s brands will not tailor specific collections for the Indian market.

“Our approach is global thinking, acting locally. We tailor the assortment to align with market expectations, maintaining our accessible luxury pricing. Our analysis reveals a demand for evening dresses and a focus on tailoring,” said Guichot.

This expansion into India is intended to complement SMCP’s international deployments, with plans to reduce the share of its already mature French and European operations. Ongoing developments in Turkey and Mexico, along with advancing partnerships in Egypt, Vietnam, South Korea, and Thailand, are part of this strategy. In the United States, two major Maje and Sandro boutiques are set to open soon in New York’s trendy shopping district of Meatpacking District.

Several markets are thus part of Guichot’s strategy. However, China remains a significant factor.

“China remains an impressive market, distinguished by its ecosystem, quality malls, and ongoing initiatives,” asserted the leader. “A retail network is dynamic. There are new malls, expansions in existing stores, and initiatives we’ll be part of. Regions like Hainan Island, focused on duty-free shopping, are becoming intrinsically Chinese destinations. China’s resurgence isn’t linear, making it challenging to predict its pace and strength. The crucial aspect is having a global presence today, offsetting risks. We can counterbalance China’s moderate growth by expanding into other regions. It’s the market’s reality; the ability to adapt swiftly by compensating risk areas with potential ones is key.”

With AFP