For retailers, high street is flavour of the season as demand picks up

As demand picks up, retailers are opening 50% of their new stores on high streets

Now that demand is picking up, retailers are increasingly opting for high street stores, since mall expansion has been subdued owing to the lack of quality malls as well as the fact that many malls were forced to shut down because of the pandemic.

Shubranshu Pani, managing director, retail services, JLLIndia, said, “Retail expansion is skewed towards expanding at high street locations as malls were the first ones to down their shutters during the first and second wave of the pandemic. Also, they were given permission to open much later,” he added. 

According to Pani, big-box retailers are now opening 50 per cent of their new stores on the high street, whereas earlier, this figure was only 25 per cent. Smaller brands are following suit. They, too, are changing their store mix to going for as many as 50 per cent of their new stores at high street locations. Earlier, smaller brands used to have only 10 per cent of their stores outside malls.

Manish Kapoor, CEO at Pepe Jeans India, said that the company’s expansion plans are back at pre-pandemic levels and it expects to open 40-50 stores a year. “Currently, 65 per cent of our stores are in malls. We will continue to open stores in malls provided there are quality malls available. Else, we will open stores at high street locations,” Kapoor said. 

Abhishek Sharma, director at Knight Frank India, believes that local retailers, who suffered the most during the pandemic, will prioritise high street locations over malls. Moreover, many brands only want to be present at the big-ticket malls, he added.

 Mall developers have also started to hike rentals since demand is back to almost pre-Covid levels and retail chains like Shoppers Stop Ltd., Trent Ltd. and Aditya Birla Fashion and Retail Ltd. are now pursuing aggressive expansion plans.

“I do see an upward trend in rentals because sales and demand are back,” Pushpa Bector, executive director at DLF Retail, told Business Standard on the sidelines of the Phygital Retail Convention.

 Bector added that DLF Retail had already increased rentals by 15 per cent and that it could go up by as much as 20-25 per cent soon.

 Infiniti Malls is also hiking rentals by 15 per cent for brands renewing their rent agreements. “We had put on hold all hikes for the last 12-18 months due to the pandemic, but now we have started increasing rentals for those brands whose agreements have come up for renewal,” said Mukesh Kumar, CEO, Infiniti Malls.

Expansion Spree

The economic recovery has spurred the big retail chains to get into  expansion mode. “Pantaloons has reignited its expansion plan by adding seven new stores in the preceding quarter,” Jagdish Bajaj, CFO at  Aditya Birla Fashion and Retail, told investors post its earnings conference call.

“Let me assure you that we are back on track to add 60 plus stores during this fiscal. In the month of October itself we set an internal record by launching 12 Pantaloons stores in 12 consecutive days of the month,” he said. 

The company plans to open more than 100 stores every year for the next couple of years. It also plans to add more than 100 stores next year in its ethnic business portfolio in the October-December quarter.

Bajaj also told investors that its revenues in Q2 were close to 90 per cent of pre-Covid-19 levels, indicating a much faster rebound in sales compared to what was seen after the first wave of the pandemic.

In its earnings release, Noel N Tata, chairman of Trent Ltd., was quoted as saying, “We have been pleasantly encouraged by the rapid recovery in customer offtake starting from the middle of June when business reopened in many markets. Our fashion business, in particular, has recovered sharply and is now back to operating profitability.”

The company is focused on expansion and is building a strong supply pipeline, even as actually opening up to customers remains a challenge in the near term in the case of mall locations and select markets. 

Shoppers Stop is also following an aggressive expansion plan. It will add beauty stores to its stable as its makeup category saw a 133 per cent growth in the last quarter over the previous year. “We will be launching three new “Beauty by Shoppers Stop” stores in the next 12 weeks. These are standalone beauty stores and our plan is to open 10 to 15 of these stores in the next 12 months,” Venugopal Nair, managing director and CEO of Shoppers Stop, told investors on its earnings call. 

“For the next two years our target is to open 10 to 12 department stores and 20 beauty standalone stores every year,” he added.

 Nair also told investors that Shoppers Stop has seen a strong start to the festive season and its sales were nearly at pre-pandemic levels.  

Another prominent retail chain, Lifestyle, recently added two stores and will add seven more by March next year, Devarajan Iyer, CEO, Lifestyle, said on the sidelines of Phygital Retail Convention.