MUMBAI: French luxury goods conglomerate Moet Hennessy Louis Vuitton SA (LVMH) is likely to clinch a multi-brand retail deal with New Delhi-based Genesis Luxury Fashion, in which the former's private equity arm L Capital holds a significant minority stake. Genesis Luxury is expected to open doors for LVMH's subsidiary Sephora, a multi-brand beauty and personal care retailer, with a licensing deal as talks failed with other contenders like Reliance Retail and Parcos, said two separate sources familiar with the matter.
LVMH is finalizing plans for Sephora a little over a month after India deferred foreign direct investment (FDI) in multi-brand retail. The 20-billion-euro luxury group's discussion with Genesis also signals its deepening ties with the Indian company after L Capital last year picked up 25.5% equity in the Sanjay Kapoorowned firm, which operates single-brand stores Just Cavalli, Canali, Paul Smith and Jimmy Choo. LVMH has independent operations of its flagship Louis Vuitton stores in the country. When contacted by TOI, a spokesperson for Genesis Luxury Fashion declined comment on its partnership with LVMH to bring Sephora to India, adding they would talk about their plans in time.
Industry observers said Sephora's deal-making with Genesis would be innovative following the L Capital investment in the latter. L Capital is sponsored by LVMH and Groupe Arnault-the private holding company of business tycoon and LVMH chairman Bernard Arnault-managing assets worth over 900 million euros. The Sephora stores are likely to open by end of this year offering cosmetic, skin care, fragrance, bath and body, hair care across multiple brands. The retail chain also has a hugely popular private label brand in its name which is moderately priced as well as a strong online presence across markets. Sephora has over 1,200 stores globally.
LVMH has been scouting for a partner to unfurl its multibrand retail operations in India, and had held discussions with multiple suitors, including Reliance Retail, a part of India's largest private sector company Reliance Industries. One of the sources mentioned earlier said LVMH always seeks control over retail operations, and would have preferred Genesis given its existing investment ties. This would also provide the group enough flexibility to expand Sephora's India business.
Sephora and DFS (a dutyfree store chain) are the two multi-brand retail businesses of LVMH. The Paris-based group is betting big on the potential of its multi-brand channels in emerging markets like India. DFS has been in talks with the country's swanky new airports to start operations. The Indian beauty retail market is largely unorganized with department store chain such as Shoppers Stop and Lifestyle offering shop-in-shop outlets for most of the high-end brands operating in the segment. "The key challenges facing the industry are low consumer awareness, limited supply side push and product, infrastructure/retail channel availability. This is where a multi-brand outlet which offers a plethora of choices has a huge potential to succeed," said Neelesh Hundekari, principal at consulting firm AT Kearney.
An AT Kearney-CII report on the luxury market said the personal care segment in India is estimated at $280 million as of 2010 and growing at 22%. Typically, a female consumer dominated market in other countries, with a significant share of cosmetics and skin care, the Indian market stands out for its fragrance domination.
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