As per estimates provided by industry insiders, the luxury brands business has gone down by a whopping 50% post demonetization of Rs 500 and Rs 1000 currency notes. It appears that people are busy sorting out their cash position, which is affecting sale of luxury goods. Fear of income tax authorities is another thing that may be preventing people from utilizing their cash for purchasing luxury items. Faced with diminishing sales, many luxury brands are now approaching top-end malls, asking them to reduce rentals.
According to the owner of a prominent mall that houses various luxury brands such as Britain’s Burburry and Armani Jeans, the luxury brands have asked for a reduction of 25% in rentals. Other such requests have also been received from luxury brands such as Jimmy Choo, Canali and Giorgio Armani. Rental cuts have also been requested by Reliance Brands that houses a wide variety of global luxury and bridge-to-luxury brands such as Ermenegildo Zegna, Paul & Shark, Thomas Pink, Kenneth Cole and Steve Madden.
Rentals for luxury brands is already high and coupled with decreasing sales, its making matters worse for them. Pratik Dalmia, chairman of ASSOCHAM’s National Council on Luxury and Lifestyle, acknowledged the fact that rentals for luxury brands are quite high in India.