Rising demand for mall spaces leads to resizing of existing stores

Malls in prime cities across India have been witnessing sky-high demand owing to which the existing stores are being rightsized and relocated within the mall-premises to give way for more retail-space supply.

The demand for retail space in malls such as Ambience in Gurgaon, Select Citywalk in Delhi or High Street Phoenix and Inorbit Mall in Mumbai, and many others are facing this shortage of space while some other malls mostly located in city outskirt areas, are lying partially unoccupied.

Many new brands are foraying Indian retail market at higher revenue share deals which would yield higher profit margins to malls. New brands usually look for swanky malls to market their products which add to the demand for retail spaces in shopping malls. On the flipside, the existing popular brands do not require huge showrooms to be prominently visible in the market.

Furthermore, many of the existing outlets in the malls are glad to cut down their space to make room for newer brands coming in. For instance, in Citywalk mall, Next London has cut down around 1,000 sq ft, helping the mall accommodate Apple store. Lewis too has cut down an area of 1,900 sq ft from 2,700 sq ft, so that two new brands – Superdry and Dune Shoes – can find space for setting up their outlets in the mall.

At the Ambience Mall in Vasant Kunj, Delhi, a large departmental store has shed 8,000 sq ft area (from 24,000 sq ft) to accommodate a new restaurant named Yauatcha. Even at Ambience Mall in Gurgaon, s.Oliver has cut down half of its space while Guess is planning to right size. It had blocked a larger space at the group’s mall in Gurgaon but has now decided to cut down 50 percent land and use it optimally.

Often, brands consume additional space which they may not actually require. With the new trend, this kind of non-optimal usage of retail space can be brought down. It is profitable to mall owners as well as the outlets. This can yield more revenues to mall owners while it can save money on rentals.

Market experts opine that, this is an efficient and creative way as the malls get more space to bring in new brands. At present, the malls record the performance of various brands, on the basis of data collected over the total sales of a brand, per sq ft sales in specific categories and many other parameters. This helps in performing a check on multiple brands and find out whether the brands are using optimal space within the mall. Besides numbers, the malls also consider factors that include design of the stores and the footfalls they garner on a regular basis, etc and they suggest the outlets on further improvement of design to attract the end-users.

Since more and more newer brands are entering the market, the pressure to accommodate them is huge on malls. The pipeline of brands includes Brooks Brothers, Decathlon, IKEA, Massimo Dutti, Pavers England, Furla, Fossil Inc, among others. As the vacancy levels in the popular malls are mostly minimal, the only way to give room to the new brands is to rationalise space, said market experts.

However, some of the store-owners in these malls allege that the resizing concept may not be helpful to all brands while it only helps mall owners in increasing their revenues. With the revenue shares in place, malls do get more revenue per sq ft of space leased. And when more new brands enter the malls, they usually pay higher rents or better revenue share terms, which improves profit margin making it a win-win situation for the malls.