After a lull of several months, fashion retailers are back to opening new stores. Fashion retailer Madame opened six stores in July, with plans to open six more in the next three months. Similarly, footwear retailer Metro Brands, which houses brands like Metro Shoes, Mochi Shoes and Walkaway, plans to open 15 more stores in addition to the six it has opened post-lockdown. Cantabil Retail plans to add four-five new stores every month.
This move comes against the backdrop of space being freed up in prime real estate locations across the country. Consider UNIQLO India, which introduced two stores in DLF Mall of India, Noida, and Vegas Mall, Dwarka, in September.
“A fair amount of real estate has been vacated in prominent locations like Connaught Place in New Delhi and Linking Road in Mumbai, and retailers are looking to tap this opportunity,” says Shubhranshu Pani, MD (retail services), JLL India.
Some retailers are also shutting down underperforming stores in the city and opening new stores at better locations, which are now available. Metro Shoes, for instance, is in discussion to move its standalone store in Lucknow to one of the malls.
Moreover, discounted rentals and flexible leasing agreements are also aiding retailers. Most landlords in Delhi and Mumbai are offering a discount of up to 25% to their retailers until their sales pick up, while others have entered a revenue-sharing agreement. Monthly rentals for prime locations in pre-Covid times stood in the range of Rs 800-Rs 1,000 per square feet (sqft). Malls, too, are adopting a flexible approach with retailers. DLF Mall of India has offered a 50% waiver on the minimum guarantee rent to its retailers for the second quarter of FY21.
“Though low rentals are not the prime reason for launching new stores, competitive properties are coming up in the market and we are in a position to negotiate,” says Shivendra Nigam, CFO, Cantabil.
Retailers are also opening stores in tier-II cities and beyond, which are projected to recover faster than the metro cities. “This is especially true for our brands like CROCS and Walkaway, which are underpenetrated,” says Alisha Malik, VP, marketing and e-commerce, Metro Brands. The company plans to invest Rs 75 lakh- Rs 1.5 crore in opening these stores.
Cantabil, too, has similar plans. “Our stores in tier II and beyond are already seeing 75% sales in comparison to previous years, and we expect this to accelerate with the festive season,” says Nigam. Furthermore, there are plans to add company-owned as well as franchisee stores in smaller towns to fuel growth.
Some companies, however, are reducing the size of their stores for these towns.
“We have decided to open smaller 800 sqft franchisee stores as opposed to our earlier average size of 1,400 sqft,” says Akhil Jain, executive director, Madame. It plans to invest Rs 50- Rs 60 lakh for stocking inventory in these stores.
Experts, however, caution that most retailers are opening these stores in anticipation of revival and would have to close them down if consumption does not return to the prem-pandemic level.
According to Anuj Puri, chairman, Anarock Property Consultants, retailers will also have to reconsider their floor designs as the “store of the future” needs to possess greater room for technology. “Adapting to all these factors will have cost implications as well as operational reconfigurations,” he says.