Mall owners pull up brands for under-performance

Mall owners across the country are now cracking the whip on loss-making shops in their premises. They are now evicting loss-making brands, squeezing the store sizes so as to accommodate more shops and lowering lease tenures so as to increase footfalls and revenues. These steps are being taken in order to ward off the stiff competition posed by e-commerce sites.

Now many mall owners are offering 3+3 years lease terms in many cases for vanilla stores so that they can reinvent the mall as per the changing tastes and preferences. Earlier the lease would be on an average for nine years. But of late malls are not performing as well as they were five years ago.

Recently, DLF Place, Saket asked jeans brand Black Soul to leave as they were not able to generate enough footfalls. Similarly, Hypercity at Inorbit, Hyderabad was asked to squeeze its place from 1 lakh square feet to 84,000 square feet.

The mall owners enter into a minimum guarantee deal with the brands and also take a certain share in the sales revenues. But of late, many brands are opting for pure revenue share wherein mall owners collect a share in the store’s revenues rather than the rentals. So whenever there is a dip in the store’s revenues, it will affect the revenues of the mall. Puneet Varma, AVP (marketing and corporate communications), Inorbit Malls says that they continuously evaluate the performance of the brands at their malls. So In case a brand under-performs, ‘we offer them marketing support and help them revive their business’. It may be recalled that an Assocham report in 2015 had said, shopping malls in major cities will witness a decline in footfalls to the extent of 55.58 per cent during Diwali.