Faced with onslaught from ecommerce players, several retail chains are in the process of either exiting or downsizing standalone stores and relocating them to malls.
Retailers, Business Line spoke to, said the cost of operation in standalone stores are higher compared to having a store in a mall. Additionally, higher footfall in malls and resultant conversion rates are also the reason why companies are opting for shifting operations to malls.
Kulin Lalbhai, Executive Director, Arvind Ltd and the brain behind the company’s omni-retail channel said, “For most global brands, mall is a part of their strategy as young aspirational shoppers are heading there. Companies like us will continue to have stores in malls and high streets but in the long run, malls are where firms are headed.”
Recently, Spencer's Retail, promoted by RP-Goenka Group shut its flagship store at a Mumbai suburb. The hypermart format store spread across 40,000 square feet has ceased operations and the mall owners are currently awaiting the expiry of its lease agreement.
The company had earlier said that they were looking to resize the store as a part of its efforts to restructure the business.
During a recent investor call, Shoppers Stop also indicated that disruption caused by online players was also reason why retailers were doing a rethink on their brand strategy.
Answering an investor presentation, Govind Shrikhande, MD, Shoppers Stop, said for any retail format rent is a major component.
On why malls were getting an edge over standalone stores, Shrikhande said, “Shopping now has become an all purpose entertainment activity. People go to the mall because they want to go with entire family. So I would say malls definitely are a good answer in the current context.”
Shoppers Stop said that it had not received any offers for setting up standalone stores in the last 2-3 years.
The company said it has resized two of its stores. It has 69 retail stores. Shoppers Stop has 95 per cent of its stores in malls and only about 5-6 per cent are standalone.
According to a Crisil report, the top 10 retailers in India are estimated to have a total loss of Rs. 13,000 crore in the financial year 2013-14.
Ashutosh Beri, Managing Director (West), Project & Asset Management, JLL India, in report said, “There are basic parameters that mall developers must keep in mind at the conception stage of their malls. Location is, of course, a vital ingredient for the success of any mall.
“The baseline philosophy behind the creation of any mall is that it must be a place that continually attracts people into its premises, keeping them engaged and tempting them to stay for longer periods.”
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