Reason: lower footfalls in the mall and high rentals charged by the developer.
In fiscal 2008, ETAM has so far closed four stores, all in malls, in cities such as Mumbai, Delhi, Surat and Ahmedabad, to save on exorbitant rentals.
ETAM is not an exception. Caught between lower sales and higher rentals, many more fashion, apparel and accessory retailers, among others, are either closing stores and moving to more economic locations.
According to international property consultancy Jones Lang LaSalle Meghraj (JLLM), the number of retailers quitting malls has gone up 50 per cent in the last two to three years.
A cross-section of retailers told Business Standard that footfalls have dropped 20 to 25 per cent in the last six months in most malls in the country.
More From This Section
Retail rentals in Linking Road in Mumbai, South Extension in Delhi and Brigade Road in Bangalore have risen 50 per cent in the past three or four years, taking the rental share of sales from 10-12 per cent to 40 per cent.
"Customer inflows in many malls and locations are making it unviable for us to do business, so we thought it is better to close the store there. Besides, property prices have also gone up drastically,'' said Jaydeep Shetty, chief executive officer of ETAM Future, which has decided not to pay more than 20 per cent of its sales as rent.
Shetty added that in the past two weeks he had seen an 8 to 10 per cent dip in customer inflows. "In the past seven to eight months we have not booked any new properties. We are waiting for property prices to come down. How can we pay all our sales as rentals?" Shetty asked.
In Mumbai, most big developers are favouring office complexes to retail malls, which earn higher rentals. Future Group, which bought landmark Crossroads from the Ashok Piramal Group, has converted a part of the mall into office space.
DLF, the country's biggest developer, is thinking of building an office block in its upcoming retail complex in Lower Parel, which was originally planned as a futuristic retail complex.
The National Capital Region (NCR) has also seen the exit of retailers in the recent months with outlets such as Tuscan Verve and Maya's Toy Store moving out of DLF City Centre owing to poor sales.
Retailers in Mumbai and Delhi are not the only ones to be impacted. Poor sales and high rentals are pushing retailers out of malls in Bangalore, Hyderabad, Kolkata and Lucknow too.
For instance, Spencer's, part of the RPG Group, has shifted 30 of its stores in the last one year in West Bengal, Kerala and Karnataka to other locations due to high rentals and lower footfalls in the places where store economics was not working out.
Big malls in Bangalore, the country's IT capital and home to wealthy techies, is seeing vacancy levels of 50 to 90 per cent. Eva Mall on Brigade Road, Bangalore's high street, has seen the closure of all its retailers and the mall owner is re-drafting sub-lease agreements with new tenants.
Purva Pavilion, in Church Street, has been half empty for the last four years and Sigma Mall, on Cunningham Road, has seen 50 per cent of small stores moving out.
Globus, the apparel retail chain of Mumbai-based Rajan Raheja group, closed two stores in Bangalore. The chain had plans to open 100 stores in the next four years, but now it expects to open those stores in the next five to six years, given the high property costs and unavailability of real estate on time.
"Costs have gone through the roof and sales are difficult to meet. Closing down is the last option available to us, so basically we avoid getting into high rental properties,'' said Vinay Nadkarni, chief executive of Globus.
Hyderabad, another IT hub, has also witnessed sporadic instances of retailers leaving malls . Arrow, a premium apparel brand, has moved out of Prasad Imax, the first mall in Hyderabad, due to poor sales, said informed sources.
Retail experts say the prevailing retail rentals are unduly high for a city like Hyderabad. At present, the malls in Hyderabad are quoting between Rs 80 and Rs 150 per sq ft, Rs 20 per sq ft towards common facilities, making a total payout of Rs 100 per sq ft. Anchor tenants require 50,000-60,000 sq ft space.
"How many retailers can afford a rental of Rs 50 lakh per month apart from overheads like power, manpower and infrastructure is a question only time can answer," said J Krishna Mohan, managing partner of NAI Hyderabad, which is involved in leasing malls.
Ahmedabad, which witnessed a mall boom of sorts in the last two years, has also seen exit of retailers as quickly as they have entered. Retailers such as Crosswords and Planet M have moved from the City Mall located in Raipur area of Ahmedabad.
In Gallops Mall on SG Highway, brands like SD Lounge, Nike and Sepia, owned by designer Pridarshini Rao, have downed their shutters due to poor sales. A few retailers in Atrium 2 of Iscon Mall have also written to the mall owner about poor sales, sources said.
"In Ahmedabad, malls are seeing an exit from retailers in the range of 15-20 per cent because they have not able to garner good sales. Retailers are also responsible for the lower footfalls because they have not properly repositioned themselves depending on location and demand,'' said a retail analyst.
(With reports from Anil Urs, B Krishna Mohan, Maulik Pathak, Namrata Acharya and Pallavi Bisaria)