Re­tail Fo­cus Shrink­ing to Grow

For long, “growth” in re­tail, both na­tion­ally and glob­ally, sug­gested only one thing – grow­ing sales by ex­pand­ing net­work and in turn by in­creas­ing the num­ber of stores. Today, with the need for mar­ket pen­e­tra­tion with higher pro­duc­tiv­ity, re­tail­ers and b

VM&RD - - Front Page - Satarupa Chakraborty

Global re­tail­ers and ma­ture re­tail mar­kets have al­ready seen this. Big box for­mats like US based Tar­get has been seen to cu­rate store sizes, of­fer­ings and de­sign based on store mar­kets they op­er­ate in. French brand Sephora has also halved its store size to launch Sephora Stu­dios that use dig­i­tal in­ter­ven­tion to com­plete their full of­fer­ings.

Back in In­dia, re­tail is on the growth path with many top re­tail­ers and brand an­nounc­ing rapid ex­pan­sion of their foot­prints. How­ever, with higher rentals be­ing a nag, space planning strate­gies have be­come more se­ri­ous than ever be­fore. The im­pact can be seen in two man­i­fes­ta­tions: • Many large for­mat stores in high rental re­tail des­ti­na­tions have been down­sized to make way for new in­ter­na­tional brands.

• Ex­ist­ing small for­mat stores are be­ing made more com­pact to be vi­able to op­er­ate in key mar­kets with fran­chisee part­ners.

VM&RD takes a look at this sce­nario in In­dia from the an­gle of store de­sign and planning, and how it has im­pacted strate­gies and im­ple­men­ta­tions in this do­main.

Shrink­ing to grow Bri­tish fash­ion re­tailer Marks & Spencer (M&S) has con­sol­i­dated its store size in In­dia from about 20,000 sq ft to about 10,000 sqft to suit its busi­ness strat­egy of en­ter­ing prime lo­ca­tions and also pen­e­trat­ing past met­ros into Tier 2 ci­ties. The up­dated for­mat has a re-imag­ined store ex­pe­ri­ence to ad­dress new cus­tomer ex­pec­ta­tions. Un­lim­ited (for­merly Mega­mart),re-imag­ined it­self from a fac­tory out­let for­mat to a value fash­ion one in a re­duced size of 18000 sq ft, which was scaled down from 36000 sq ft. The new size has en­abled it to be present in high-streets, malls and in Tier 2 and 3 ci­ties. Re­liance Trends, poised to take its store count from 400 to 1000 na­tion­wide,

has fol­lowed the same strat­egy with a rapid ex­pan­sion ap­proach.

Al­most all large for­mat stores have ei­ther re­duced their size or ex­panded their brands port­fo­lio in the ex­ist­ing space. Re­tail­ers like Life­style, Shop­pers stop, Cen­tral and West­side have opened larger stores by adding their group for­mats, like food, elec­tron­ics and home, to cre­ate one-stop­shop shop­ping des­ti­na­tions. When en­ter­ing smaller mar­kets, they have sized their stores as per the ex­pected busi­ness.

Shrink­ing to spread

Apart from flag­ship stores, exclusive brand stores and fran­chisee stores brands are pre­fer­ring to set up con­densed shop-in­shops in the ex­pand­ing large for­mat stores to reach new mar­kets rapidly. Brands like Allen Solly, Peter Eng­land and Van Heusen claim to have as many as 24 dif­fer­ent SIS for­mats for dif­fer­ent multi-brand store for­mats. Even lead­ing re­tail com­pa­nies like Re­liance Brands and Marks & Spencer have set up SIS for­mats in multi-brand out­lets like Cen­tral and Project Eve re­spec­tively. Larger elec­tronic for­mats like Re­liance Dig­i­tal and Croma have opened Ex­press for­mats to pen­e­trate into smaller catch­ments of­fer­ing a cu­rated as­sort­ment of per­sonal elec­tron­ics and ac­ces­sories.

Shrink­ing, but does it show?

Does re-siz­ing a store also mean change in store de­sign and brand im­agery? We say, yes and no. Yes, when brands are shrink­ing to en­ter into lower tiers of sales or for vi­able fran­chis­ing. Typ­i­cally, brands like Louis Philippe and Aero­postale use dif­fer­ent store de­sign ma­te­ri­als and prop­ping for A-grade and B-grade ci­ties.

Ga­j­pal Rathore, from the VM and Projects team of Aero­postale ex­plained, “While in A-grade stores have ce­ramic tiles at the en­try point, B grade store will use only wood and no tile. Sim­i­lar other sub­tle changes will de­mar­cate the dif­fer­ence.” No, as the im­pact of re-siz­ing re­sults in the ef­fi­cient use of floor and wall space. The con­densed stores have a smaller pro­por­tion of mer­chan­dis­ing and dis­play space which is im­ple­mented us­ing denser fix­tur­ing and lay­outs. With walls and floors be­ing dense, other ar­chi­tec­tural de­sign ele­ments are used to add brand im­agery.

Deepak Jad­hav, Head-Project, Globus Stores, ex­plains, “When the size is low, wall space is most im­por­tant hence we have let go off any fea­ture planned on wall like Nibs which we add to de­mar­cate/high­light a par­tic­u­lar area in a big store. We try to use ceil­ing fea­ture like cove ceil­ing in­stead plain ceil­ing with non-tra­di­tional light­ings like Chan­de­liers to fo­cus a par­tic­u­lar area. Also, there’s no need to plan a ded­i­cated back of­fice area if it is very small like less than 1000 sqft.”

Supporting the shrink

With var­ied for­mats, sizes and de­sign, it’s be­come manda­tory for re­tail ser­vice providers to add and al­ter their of­fer­ings to cater to space man­age­ment and speed of ex­e­cu­tion needs that the chal­lenge of space shrink­ing has opened.

RK Nair, Gen­eral Man­ager, Dove­tail, ex­plains, “At Un­lim­ited’s re­duced store size, in order to save space, we de­vel­oped some­thing called Tech­nowall, which is ba­si­cally a glass cladding par­ti­tion which also dou­bles

up as dis­play unit. We also de­vel­oped trans­par­ent floor fix­tures in glass in a way that it gives 360 de­gree view of the store.”

The in­crease in num­ber of for­mats and num­ber of stores has led to in­creased de­liv­er­ies and tighter time­lines. Top fix­ture man­u­fac­tur­ers have iden­ti­fied three key ac­tion points, viz., cost en­gi­neer­ing, bulk pur­chases of raw ma­te­ri­als and prod­uct en­gi­neer­ing that en­ables plug-and-play.

Rahul Khetan, Di­rec­tor, Elemental, said, “The de­sign dy­nam­ics is chang­ing al­most ev­ery day and we are now part of a brand’s re­tail roll­out plan.” Tak­ing cue on faster de­liv­ery, ven­dors like New Delhi-based Es­paces re­tail Fix­tures Pvt Ltd are work­ing on mod­u­lar fix­tures that are ab­so­lutely plug-and-play.

Fol­low­ing the foot­step of fix­ture man­u­fac­tur­ers, many es­tab­lished light­ing man­u­fac­tur­ers have cre­ated light­ing so­lu­tions that are highly func­tional, ef­fi­cient, cost ef­fec­tive and quick to de­ploy.

Delhi-based Ankur light­ing and Ban­ga­lore­based RLT, are de­vel­op­ing light­ing fix­tures that are tech-en­abled and have more func­tion­al­i­ties than just lu­men out­put. Hari Ra­machan­dran, CEO, Re­tail Light Tech­niques, ex­plained, “It will be al­ways dif­fi­cult to en­gi­neer a new prod­uct faster than con­cept change of a re­tail brand. It is more so in a de-reg­u­lated light­ing in­dus­try when cheap price of­ten be­comes a bench­mark. How­ever, we con­stantly work on 15%-20% more ef­fi­ciency and lesser op­er­at­ing ex­penses.”

In con­clu­sion, in the sce­nario of shrink­ing spa­ces, the in­dus­try recog­nises the need for col­lab­o­ra­tive work­ing of the busi­ness team, the store de­sign and planning team, the fran­chisee and the ven­dors to en­sure that brand ex­pe­ri­ence and prof­itabil­ity is de­liv­ered to all stake­hold­ers.

THINGS TO KNOW:

Com­pared to last year, leas­ing of re­tail space in metro malls has rose to 55% dur­ing Jan­uary-Septem­ber pe­riod this year while the sup­ply of space fell by 63% in the first three quar­ters of 2017 (Source : Cush­man & Wake­field).

Malls are look­ing for larger tenant mix of di­verse brands in the same space of­ten lead­ing to smaller store size.

An­chor stores in malls have re­duced in size by 30% to 40% (Source : Think Re­tail In­dia Re­port).

The busi­ness need for higher pen­e­tra­tion in non-met­ros, ef­fi­cient in­ven­tory man­age­ment and higher space pro­duc­tiv­ity are the com­mon rea­sons for down­siz­ing of re­tail spa­ces.

The in­crease in pop­u­lar­ity of fran­chisee mod­els of re­tail ex­pan­sion has re­duced the size of for­mats to achieve lower and vi­able in­vest­ments.

Ven­dors are up­grad­ing man­u­fac­tur­ing ef­fi­cien­cies and value en­gi­neer­ing pro­cesses to achieve chal­leng­ing capex tar­gets for large scale roll­outs. l Plug-and-play and tech-en­abled prod­ucts (in light­ing and fix­tures) are get­ting pop­u­lar.

Plug-and-play and tech-en­abled prod­ucts (in light­ing and fix­tures) are get­ting pop­u­lar.

Ga­j­pal Rathore, VM & Projects Aero­postale

Deepak Jad­hav, Head-Project Globus Stores

Hari Ra­machan­dran, CEO Re­tail Light Tech­niques Suc­ceed­ing to shrink

Rahul Khetan, Di­rec­tor Elemental Fix­tures Pvt Ltd

RK Nair, GM, Dove­tail Fur­ni­ture Pvt Ltd

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