Given the recessionary woes at malls, chances of organised retail trade crossing the Rs 230,000-crore mark by 2010, as predicted by the Images India Retail Report — with Calcutta accounting for seven to eight per cent — looks remote.
First came rent negotiation between mall owners and retailers, then revenue-sharing arrangement to help retailers tide over the recession. Now, many retailers are either shutting shop because the rent is still higher than the revenue generated per month, or relocating ‘unviable’ stores.
Market speculation, fuelled by 75 per cent stock clearance sale and several freebies, has been growing.
Industry sources said that most of the bleeding retailers are ones with large retail area. So if even two stores shut down, around 48,000 sq ft of retail space will vanish from Kolkata.
For instance, Khadim’s ‘Egaro’, opened two years ago, is currently running a 75 per cent discount on products, to attract customers.
According to Suman Roy Barman, president of Khadim India, “We make regular offers to lure customers to our store.” Barman refused to comment on sales figures.
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Aditya Birla Group, which runs ‘More’ in select locations in the city, is reportedly ‘re-engineering’ its stores.
According to a local representative, “A few stores are being relocated as rent at the current locations are too high compared to sales generated. Against the average store size of 2,500 sq ft, new More outlets will be around 2,000 sq ft. The offerings are also being reviewed to ensure that slow-moving goods do not occupy shelf-space.”
RPG Group's retail chain Spencer's is also rejigging operations. It recently closed down and relocated 56 of its unviable stores. Currently Spencer's has 700 stores, commanding a retail space of 2.5 million, which will see an addition of another 1.3 million sq ft by 2010.
According to Manish Agarwal, Pantaloon Retail CEO – east, Big Bazaar has been immune to the meltdown but impulse purchase has dropped. “We are building on the USP of savings through shopping at Big Bazaar,” said Agarwal.
Select malls have also rolled back rentals while others are still positive.
South City mall has already rolled back rentals by 10 to 25 per cent following a petition by a group of around 20 shop-owners. "We have reduced rents by 10-25 per cent for around 130 smaller, non-anchor stores for a temporary period to help them tide over these troubled times. Since last year, two retailers - lingerie brand Straps and childrenswear brand Kanz - shut their India operations and therefore have moved out of South City mall also,” informed Manmohan Bagree, VP - marketing for South City Projects.
Rentals, in the Rs 80-90 (per sq ft per month) range when Forum opened six years ago, are touching Rs 350 for some outlets now.
“Forum at Elgin Road is still the most viable shopping mall in the city right now compared to all the others,” claimed Rahul Saraf of Forum Projects.
The situation is same with the eateries.
“February has been one of the worst months in recent memory and business across the city has slumped by almost 25 per cent,” said S K Khullar, the president of the Hotel & Restaurant Association of Eastern India, which has over 150 member hotels and restaurants in the city.
According to Pankaj Poddar, Director, Poddar's Thandai Pvt Ltd, which owns restaurant brands like Chaat.in and Malgudi Junction on Camac Street, "Sales have decreased by 15-20 per cent, on account of low unit prices. For 2009, outlook is conservative, where the value-for-money restaurants would survive the recessionary and inflationary trends. Fine dining and high-value outlets may have to go that extra mile for attracting patronage.”