At the Nehru Place station on a Thursday afternoon, a stream of commuters rush in and out. A few stop by to window-shop at House of Technology (HOT), a new IT and electronics retail outlet which has opened recently. Spread over 40,000 square feet on two sides of the escalators, HOT is a huge store but there are more helpers inside than customers. HOT sells mobiles, tablets, laptops and cameras, among other things. Vipul Jain, CEO, Unique Infoways, is confident that this new form of retail at the metro station will hit it off big time. He expects about 12,000 footfalls daily at this outlet. That's an ambitious number considering how retail format at Metro stations has had more than its share of teething troubles.
In 2006, Delhi Metro Rail Corporation, or DMRC, started its retail operations and stations like Inderlok, Kashmere Gate, Rajiv Chowk were targeted as retail hubs. Inderlok station has a McDonald's, Big Bazaar, Comesum restaurant and wine and beer shop. At the Big Bazaar outlet, there are very few customers, while the McDonald's looks quite full. At the Akshardham station, which has a Parsvnath mall, hardly any mall space has been rented out. A "Coming Soon" poster of Haldiram's outlet has faded away. The outlet has been "coming soon" since 2010.
The idea behind retail at metro stations was to look at revenue streams beyond the passenger fares. While Delhi Metro continues to add a record number of commuters every year, the same can't be said about the retail business. According to its published annual report, the non-fare revenues for DMRC in the year 2011-12 were around Rs 200 crore. Of this, Rs 40 crore came from retail while the rest came from ATMs and advertising.
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SD Sharma, DMRC's director of business development, says that the culture of shopping at Metro stations is still new. "The demand for retail isn't much," he adds. Delhi Metro has built some big stations like the HUDA City Centre station in Gurgaon. Shops have been leased out only on the ground floor, the other floors are unoccupied.
DMRC has over 140 stations on its network and it has retail stores in about 40. In these, InterGlobe Enterprises, which runs Hudson News and Cafe, stores has presence in 38.
Siddhanth Sharma, director (retail), Interglobe, feels that location of the outlet plays a key role in success of stores on the metro network. He admits that in the last one year, the response to his stores has been a mixed bag. "The demographics of each station are different from the other," he says. Hudson News and Cafe sells magazines, newspapers, chocolates, coffee; Sharma says that at stations like Rajiv Chowk and Kashmere Gate, the number of customers is high, whereas Punjabi Bagh and Rithala stations see hardly any.
About 2 million people use the Delhi Metro daily and that's a huge target group. A retail consultant says that DMRC's idea was to build the network and then increase revenues. "Some stations just aren't conducive for retail space ," he says.
Relatively newer stations like Nehru Place are trying hard to cash in on the space available. There's a Starbucks outlet alongside a Dunkin' Donuts. Starbucks opened here on May 31 and one employee says that the response has been lukewarm. Future Group has a presence in Metro stations with 23 outlets. But most customers for this large format stores are residents of nearby localities and not commuters.
"The idea of shopping while commuting is still new to India," says Sharma of InterGlobe. One big reason why retailers are heading to Metro stations is low rentals. Depending on location, the monthly rental for a 300-sq ft space at a station is around Rs 50,000. Busy stations like Rajiv Chowk and Kashmere Gate command almost 60-70 per cent more rentals.
Ask Jain of HOT about the idea of opening an electronics mall close to the IT hub of New Delhi - Nehru Place - in a new retail format, and he says that he expects HOT to be a "game-changer" in IT retail. "All the brands are under one umbrella, and it's a format which we plan to take to other cities," he says. A store of this size in a mall would have cost him almost twice as much. Moreover, footfalls in a metro outlet are guaranteed to be more. Whether they translate into sales will be the challenge. It's a challenge which DMRC and other retailers haven't been able to meet, at least till now.