Wednesday 10 April 2013

Fall in consumer demand forces retailers to shutdown shops in Bangalore's high streets



BANGALORE: The old high streets of Bangalore, a favourite of international and domestic brands, are losing their charisma. Declining sales have meant that businesses-from luxury beauty chains to electronics goods stores-are shutting down shops to consolidate operations.

Brands, such as Pavers England, Reliance Trends, Poe, Levis, KFC, Ezone and Cafe Pascuci, among others, have closed stores across Brigade Road, MG Road, Lavelle Road, Richmond Road and Indiranagar in Bangalore-the streets where citizens of the garden city traditionally shop.

"Brands need to do balance between malls and high streets," said Ram T Chandnanim, deputy managing director (South India) of CBRE South Asia, a real estate consultancy firm. "All major brands prefer to open stores in malls due to better infrastructure and assured footfalls. However, malls take a lot of time to develop."

The Indian retail sector has seen a single-digit increase in like-to-like store sales-an indicator of customer demand- in 2012, compared with 15 per cent even two years ago.

Retailers do not expect things to improve considerably this fiscal as demand continues to be depressed. "The retail industry will settle down by mid of next year as we get used to moderate growth," said Ashish Dikshit, chief executive officer of Madura Fashion & Lifestyle. The company has shutdown its multi-brand outlet Planet Fashion on Richmond Road.

Slower growth has also pulled down rentals in Brigade Road and MG Road as brands move to newer locations. "Average annual growth rate of high-street rentals since 2009 has been in the range of 6-9 per cent. Rental values across high-street locations are likely to witness nominal growth in short term," said a Vestian Global report.

Retailers are now looking to step up presence in malls or move to cheaper locations due to lower rentals and better infrastructure in terms of air-conditioning and parking facilities. "Retailers are cautious as growth numbers are not good. Mall stores are showing better growth in sales as compared to high street, which is more of branding presence," said Amit Bagaria, chairman of retail planning consultancy Asipac Projects.

"There is an increasing challenge in terms of parking on high streets," said Bijou Kurien, president and chief executive (lifestyle) at Reliance Retail. The company has closed all four pilot retail stores of American office supply chain Office Depot in Bangalore as they failed to meet targets. UK-based Pavers England, which closed its outlet in Indiranagar, is looking to enhance the number of shop-in shops in outlets of multi-brand retailers as compared to standalone stores.

Others like French beauty chain Jean Claude Biguine are opting for smaller outlets. It had reduced store size to 1,100-1,500 square feet from 2,000, and is also negotiating the rent.

"Real estate is a key component of business and if not handled properly can sabotage brand. It is challenging to build business in India as the available space is very expensive and can make business unviable," said Dharmendra Manwani, founder and chief executive officer of Jean Claude Biguine India.

"Some brands are also surrendering tenancy in parts and relocating to nearest catchment area or evolving shopping locations in suburban residential catchments to drive footfall as sales continues to be slow," said Prashanth Sambargi, partner at Mars Realty, which deals in retail space. A detailed email sent to Future Group, Aditya Birla Retail, Levis and Pavers England remained unanswered.

1 comment:

  1. Yes it is correct story which is bound to happen in Bangalore.. if any one happen to visit orean mall ground floor shops all empty all time...

    www.knowinfonow.com

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