With new malls coming up in quick succession and the pipeline of such property expected to remain short, large format retailers have little scope to change their plans even if the market conditions are not favourable.
“This is a short-term pain for a long-term gain,” according to Govind Shrikhande, Shoppers Stop Customer Care Associate and Managing Director.
Fuelling this trend of retailers rushing in for booking at the time of the mall project being announced itself is the fear of losing an opportunity, he points out. In the backdrop of rising real estate cost, which is a reason for the malls charging high rentals, the retailers tend to move fast as “every opportunity that you lose, you may not get that ever [again].”
Mr. Shrikhande, who was addressing presspersons after the opening of a HomeStop, the premium home concept store from Shoppers Stop, here on Friday, said it was difficult to alter plans and tough for many brands to deliver at the current rentals. “When you see confidence coming back to customers, you can start reworking on certain plans. But, strictly speaking, the retail business is one [where] you can plan [only] for a three to four-year cycle… because properties come over three-five years,” he explained.
Citing the example of Chennai, he said, many malls, including the Phoenix Market City Mall where the new HomeStop outlet is located, were coming together.
“Ideally, I would have liked them to come six months later [from each other], as then the customer demand can grow along with the space. But we are not able to see that kind of pace,” he said.
Shoppers Stop, he added, was not affected by the slowdown though the growth was really slow in the first-half. It did well by clocking a 13 per cent growth in the third quarter. The company planned to add 2-3 such stores every year.
Asked if large retailers were ready for competition in the wake of the government permitting foreign direct investment in multi-brand retail, he said the regulations laid down were not easy to meet.