FDI Not an Is­sue for Malls Sell­ing ‘Sin­gles’

Say pos­si­ble scrap­ping of FDI in multi-brand re­tail won’t harm them

The Economic Times - - Business Of Brands - RA­SUL BAILAY

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.

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