FDI Not an Issue for Malls Selling ‘Singles’
Say possible scrapping of FDI in multi-brand retail won’t harm them
Prominent mall operators say they are not worried about the possibility of a new government disallowing foreign super markets in the country, saying malls are more dependent on single-brand retailing where India allows 100% foreign investment.
Almost all exit polls conducted in the country have predicted that the BJP-led National Democratic Alliance will emerge winners when the Lok Sabha elections results are announced on Friday, and BJP in its manifesto has said that it will oppose FDI in multi-brand retail.
Most successful mall owners in the country ET talked to said FDI in multi-brand retail is not a relevant issue for them. “We are dealing more or less with (single) brands that are coming through franchisees, joint ventures or coming on their own. So from our perspective, multi-brand retail is not of too much consequences,” Arjun Sharma, director of Select Citywalk Mall in New Delhi, said.
There are about 200 malls operating in the country, and most of the two dozen odd highly successful shopping centres consider single-brand retailers their mainstay. Inorbit mall in Hyderabad, for example, is pruning the size of HyperCity hypermarket, currently spread over about 120,000 sq ft, by almost 40% to carve out more space for single brand retailers.
“Frankly what we are looking for is more single brands coming inside,” said Kishore Bhatija, chief executive of Inorbit Malls that operates shopping centres in Mumbai, Hyderabad and Bangalore among other cities. “As a mall operator I should have the choice of brands to match the requirements of my catchment. The choice of brands will help me to differentiate from other shopping centers and create and identity for myself — and that will come from single brand and not from the supermarkets,” Bhatija said.
Spanish fast fashion brand Zara has become a big success in India, and many other global brands are now lined up for India entry. Sweden’s Hennes & Mauritz (H&M), which received government approval for a wholly-owned sub- sidiary last year, plans to open 50 stores in the coming years. USbased Gap Inc and Japan's Uniqlo are also expected to formalise India plans or open stores in the coming months. Many mall owners are averse to lease out to large hypermarkets that sell everything including electronics and apparels, which are available in malls through specialty stores. “There is a need to bring in a supermarket but it has to be correct size to give productivity and bring the offerings what we feel is required and not bring in the plethora of products they generally sell,” Bhatija of Inorbit said. He said Inorbit is currently leasing out to supermarkets in the size of around 30,000 sq ft only, down from anywhere between 50,000 sq ft to 120,000 sq ft.
Similarly, Infiniti Mall in Mumbai, that had earlier reserved about 57,000 sq ft area for a hypermarket, now says the mall could do a supermarket of about 30,000 to 40,000 sq ft. “We are looking at somebody who is offering a lot of grocery and food and vegetable and gourmet food in the range of 30,000 to 40,000 sq ft and anything more than that may not work for the retailer as well as us,” said Mukesh Kumar, VP for Infiniti Mall. Mall operators also say they don’t miss global supermarket chains because there are several big homegrown players such as Future Group’s Big Bazaar, Reliance Retail’s Reliance Mart and Tatas’ Star Bazaar.