Global fashion brands trimming store sizes

With rising retail rentals and pressure from mall operators some global fashion brands, such as Gap, Mango and Forever 21, are trimming stores sizes by half. They say, high rentals and the steep minimum guarantee on revenue sharing in Indian malls makes larger spaces unviable. Gap, has now decided to reduce the size of some existing and future outlets to 4,500-5,500 sq ft. It had entered India two years ago with stores of around 11,000 sq ft. The mall has asked Gap to prune its store size to half due to lower than expected sales. Similarly, Spain’s Mango that had earlier talked about opening stores of no less than 9,000 sq ft is now opening nine of its 10 upcoming outlets in the next three months on 2,000-2,500 sq ft. The Mumbai-based conglomerate is currently busy rightsizing outlets and is even shuttering a couple of them.

Even Hennes & Mauritz (H&M), one of the most sought-after brands in India, is under pressure to reduce size of its store in Mall of India, Noida. A spokesperson for H&M as well as Pushpa Bector, head of Premium Malls division at DLF, denied the Swedish brand is reducing its store size in the Noida mall. But half a dozen mall executives, foreign real estate consultants and heads of rival brands ET confirmed H&M will have to vacate one of the four floors in the Noida mall. That is because most popular malls follow a revenue-sharing model. Higher the per-square feet sales of a shop, higher the rental income for the mall operator.