Apparel brands bet on high streets to keep expansion on track

High streets such as Connaught Place in New Delhi and Brigade Road in Bangalore are back in retailers’ priority lists as they prepare for a temporary lull in mall supply next year. Shoppers Stop, Reliance Retail, Madura Garments, Arvind Brands, United Colors of Benetton and others plan

greater presence in high streets and co-location with multiplexes to keep their expansion intact between October 2011 and March 2013 when real estate analysts foresee a void in mall expansions. Saloni Nangia, Vice President, Technopak Advisors explains, “High end retailers are looking at alternative models to keep their expansion plans intact because most malls have been plagued by delays, at times unreal and unviable rentals, low space efficiencies and high maintenance charges. Also, with many mall developers limiting their interest in the business to the real estate transactions, and not investing in planning, product and brand mix, mall marketing and management, success of the mall is uncertain.” High streets have been the mainstay of retailing in India and still have the highest number of footfalls. While they too have their own problems of poor maintenance and parking, they offer immediate business visibility and opportunity.

Reliance Trends for example, already runs stand alone stores in high streets. “Our current stores are in malls and we also run stand-alone stores in high streets. Our spread is pan-India including stores in Jalandhar, Nasik and Kochi as well as in the large metros such as Delhi, Mumbai, Chennai, Hyderabad and Bangalore. We find that we are connecting well with consumers across many such diverse markets,” states Arun Sirdeshmukh, CEO, Reliance Trends. They would continue to add more stores in the metros and Tier II and Tier III.

Retailers and real estate analysts foresee a temporary void in mall expansions beginning October 2011 up to March 2013 because developers shelved hundreds of projects when retailers withdrew lease contracts and rentals crashed due to the economic slowdown in the last two years. Out of 800 malls originally slated to open in 2010, only 100 will be operational, says a report jointly released by Shopping Centres Association of India and retail consultancies Jones Lang LaSalle Meghraj (JLLM) and Cushman & Wakefield.

“Depending on the format, retailers could look at alternate options to cope with the temporary lull in mall expansion plans. These could be a mixed lot including high streets, office complexes, local community centers, fuel stations among others,” explains Nangia. Retailers could also evaluate formats by taking into consideration their positioning, tenant mix, etc. Sirdeshmukh agrees, “The mall options we have either signed up or are evaluating are those that have a clear game plan in terms of positioning, location, size and tenant mix. The last 24 months have ensured that mainly serious players who understand underlying issues of how to make a mall a successful ‘destination’, are moving forward with their plans. This speaks well for retailers like us.”

Analysts also expect developers to boost retail space in high streets across cities by converting commercial properties into retail space.