Value malls new buzzword in retail

Mumbai, Jan 22 | Updated: Jan 23 2007, 05:30am hrs
The $300-billion retail segment in India is abuzz with a new concept in retailing value malls. This is about top property developers and local retail chains developing malls in regional pockets specifically to sell branded apparels, footwear and accessories at prices 25% to 30% cheaper than the maximum retail price (MRP). At least 45 to 50 value malls are expected to come up over the next two years.

Positioned at the middle-end of the market with target audiences in tier II, tier III cities, and metros, value malls will merchandise brands such as Peter England, Charley, Excalibur, Kouton and Easies, among others. Currently, branded products are being sold on the basis of actual MRP in hypermarkets in metros. The new concept is in sync with the emerging trend in the international market on the lines of discount malls and destination malls in the US.

TrammellCrow Megharaj, an international property consultant, is planning to foray into the value malls concept. It is talking to various property developers for development. Shubhranshu Pani, president - retail services, TrammellCrow Megharaj, said, Developers of value malls will be able to gain the value realisation from the footfalls depending on the location in which they are based. The new concept of value malls is emerging not only because space for developing premium malls on high street is scarce but also because retail property prices are expected to soar by 10-12% in metros by the end of the first quarter of 2007.

Akruti Nirman, which is planning to brand its upcoming malls in Kanjurmarg, Ghatkopar, Mumbai, Thane as CityWorld, has decided to develop its value malls in tier II and tier III cities after the next six months. According to Hemant Shah, chaiman, Akruti Nirman, We will develop value malls with an area of 1 to 3 lakh sq ft, compared with 6 lakh sq ft of malls we are developing in metros. The return on investment through a value mall will be the same or even more as the positioning and the land cost will be less expensive.

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Positioned at the middle-end of the market these malls will merchandise brands such as Peter England, Charley, Excalibur among others
The new concept is in sync with the emerging trend in the international market on the lines of discount malls

KSL Realty and Infrastructure Ltd is planning to rent out 8 value malls on fixed rental income basis in Vapi, Silvassa, Amritsar and Wardha in the next two years, Saurabh Tayal, its chairman added.

Apart from this, realty majors have also started identifying opportunities for developing 3 to 5 lakh sq ft of malls in Tier II and Tier III cities in 2007. Developers like Rahejas, Hiranandanis, Pantaloon Retail, Prestige Group, Akruti Nirman and DLF are spearheading new mall development plans in cities such as Pune, Ludhiana, Jalandhar, Nasik, Nagpur and Coimbatore. According to them, since the cost of land in Tier II and Tier III cities is 40% cheaper as compared to that of the metros, cost of construction in Tier II and Tier III cities will be less. Hence, it becomes imperative to focus on Tier II and III cities for development.