Kolkata has begun to see movement in the retail market and may witness a welcome spurt in shop-stops in the next few months, provided franchisees get their brands and retail destination right.
According to Mayank Saksena, head – transactions, Kolkata, Jones Lang LaSalle Meghraj, in terms of supply, only two new malls – Lake City Mall and City Centre II – are scheduled to arrive in the near future. This will be followed by Riverside Mall later on. Retail rentals had reduced by approximately 25 per cent in the last two years and have reached stagnancy at present.
“The challenge so far was that retailers were demanding a pure revenue sharing model with no minimum guarantee component. Reason has now returned on this front,” Saksena said. “No new brands are setting up shop in Kolkata as of now. In fact, a few brands such as ‘Odyssey’ have left Kolkata. South Kolkata is the most preferred retail expansion destination at the moment. The major correction has already happened. While there may be minor corrections in certain locations going forward, the fact is that the retail rental scenario is now almost stabilized,” Saksena said.
Consumer sentiments have improved significantly, and footfalls at retail joints have increased by at least 20-30 per cent, Jones Lang LaSalle Meghraj claimed. Conversions have also increased over the last couple of months, owing to improved consumer confidence. This can be attributed to the share market’s revival and the fact that consumers realize that the employment stability quotient is also much higher now than it was a few months ago. “Kolkata has been very successful in franchising in the services sector but has been consistently gaining ground in apparel and food and beverages too. Franchising alone has seen a 30-35 per cent growth in the city last year,” sais Sachin Marya of Franchise India.
According to Rahul Saraf, MD of Forum mall, “Forum is one of the very few malls in Kolkata where sales have not dipped significantly because of its locational advantage and retail mix. So we have not felt the need to roll back our rentals although we are strongly negotiating revenue sharing model in order to help retailers tide over the recession.”
When Forum opened six years ago, rentals were around Rs 100 per sq ft which touched Rs 325 per sq ft as on January 2008. A few of the brands are looking at opening more stores in the city. For instance, Samsonite had about 10 franchises and four company-owned stores in Kolkata, and were looking at opening another four to five outlets in the city this year, informed N P Singh, director (retail projects), Samsonite. However, according to Kamal Jain, the franchise for Benetton and Adidas in Kolkata indicated that only mid-segment brands like a Levi’s or a Benetton were growing consistently over the past few years in Kolkata, while the city was yet to warm up to relatively high-end brands like a Guess or a Next.
There would be at least 50,000 franchises in Indian market by 2014, said executive director of Indian Franchise Association (IFA), Upendra Sachdev. “In the next five years, we expect there will be at least 50,000 franchises in the Indian market which will create an employment for at least 5 lakh people,” Sachdev said. ”The property rates are lowering due to the recession. Entrepreneurs are finding it cheaper to invest in franchise business. This will help the industry to grow to a large extent by 2014,” Sachdev said. In an industry report released recently, KPMG expects the slowdown to last 12-18 months, with recovery depending on the government’s efforts to stimulate the economy.