Malls resort to innovative ways to generate revenue

After tumultuous times, the real estate sector is slowly maturing on the retail front as mall developers and retailers are adopting newer practices.

Fixed rentals no longer attract retailers to the malls as the developers are looking forward to adopt innovative practices of revenue sharing and minimum guarantee, which would drive the retailers to the malls.

Retail sector experts maintained that after the slowdown ended, most of the retailers started looking at minimum-guarantee or revenue-sharing models (whichever was higher) instead of fixed rentals.

Manish Kalani, chairman and managing director, Entertainment World Developers, which is coming up with malls located in the Tier-I towns, maintained fixed rental are no longer sustainable and companies are looking forward to the revenue-sharing concept. Entertainment World Developers has three operational malls and nine are under construction. One such mall is coming up in the Mohali region, to be completed by the end of 2011. Termed as the ‘Treasure Island’, the shopping mall is spread over 800,000 square feet and would be a mix of both retail and hospitality. Entertainment World Developers is eyeing 80 per cent of the revenue through the two new models to be practiced by the mallsdevelopers in the coming years.

Kalani said, “the models of minimum-guarantee and revenue-sharing were more transparent and would enable a symbiotic relationship between the developers as well as the retailers.” The model was also advocated earlier but it is now that the model is actually being implemented and executed.

D K Jairath, COO Hindware Home Retail Private Limited, which recently opened their Evok store (the specialty home interior destination brand) in Paras Downtown Square mall maintained the model of revenue sharing worked well for both the mall developers as well as retailers.

Officials from Centra mall developed by the Uppal group maintained, without divulging further details, the new measures to be undertaken would encompass interest of retailers to attract them towards the mall.