Malls take the franchise route to revive fortunes
, ET Bureau|
Mar 09, 2018, 10.42 AM IST
New Delhi: Developers of malls across the country that are struggling to attract or retain tenants are embarking on a new path of revival by taking up brand franchises themselves.
TDI Infrastructure has invested in a collaboration with Beer Café and other restaurants to open their outlets in its malls in Chandigarh and Mohali. TDI will set up Beer Café outlets in the malls while the brand will manage sales and operations, giving the developer a share of the revenue, according to Rahul Singh, founder of the Beer Café chain. Investors Clinic, which is developing a mall in Greater Noida West, is in talks for franchise deals as is Omaxe for its malls in Greater Noida and Faridabad. Mall owners in cities, including Bhubaneswar, Lucknow and Kolkata, are adopting the franchise strategy, according to Munish Baldev, founder of retail consultancy JS Martin.
“A lot of malls are choosing this option as their revenue could go up substantially by investing an additional 15% to get a franchisee of a brand,” Baldev said.
The struggling malls are emulating New Delhi’s Select Citywalk Mall, one of the country’s most successful shopping centres, which has the licence to operate stores of Tommy Hilfiger and US Polo. Developers said the franchise route will help them to open or revive their shopping centres and will also encourage other mall investors to take up similar arrangements.
“The cost of managing the mall itself is very high, so it is a business you cannot leave as it is an asset management business and the asset starts biting you,” said Gaurav Marya, chairman of Franchise India Holdings, a retail solutions company that is helping some developers to get licences to operate stores.
Malls were impacted as e-commerce gained in popularity and economic growth slowed earlier, although developers are optimistic about the sector’s prospects. Marya estimates that of the 62 malls in the capital, almost 40 are non-performers.
“Rather than building new malls, it will be always good to change these 40 and make them performers,” he said. In December, realtor Omaxe lined up a dozen brands from Deez Biryani to furniture maker Nilkamal for potential tieups with investors.
Analysts said food and beverage is the focus area for developers and they are offering space to established chains in their malls through such arrangements.
TDI Infrastructure has invested in a collaboration with Beer Café and other restaurants to open their outlets in its malls in Chandigarh and Mohali. TDI will set up Beer Café outlets in the malls while the brand will manage sales and operations, giving the developer a share of the revenue, according to Rahul Singh, founder of the Beer Café chain. Investors Clinic, which is developing a mall in Greater Noida West, is in talks for franchise deals as is Omaxe for its malls in Greater Noida and Faridabad. Mall owners in cities, including Bhubaneswar, Lucknow and Kolkata, are adopting the franchise strategy, according to Munish Baldev, founder of retail consultancy JS Martin.
“A lot of malls are choosing this option as their revenue could go up substantially by investing an additional 15% to get a franchisee of a brand,” Baldev said.
The struggling malls are emulating New Delhi’s Select Citywalk Mall, one of the country’s most successful shopping centres, which has the licence to operate stores of Tommy Hilfiger and US Polo. Developers said the franchise route will help them to open or revive their shopping centres and will also encourage other mall investors to take up similar arrangements.
“The cost of managing the mall itself is very high, so it is a business you cannot leave as it is an asset management business and the asset starts biting you,” said Gaurav Marya, chairman of Franchise India Holdings, a retail solutions company that is helping some developers to get licences to operate stores.
Malls were impacted as e-commerce gained in popularity and economic growth slowed earlier, although developers are optimistic about the sector’s prospects. Marya estimates that of the 62 malls in the capital, almost 40 are non-performers.
“Rather than building new malls, it will be always good to change these 40 and make them performers,” he said. In December, realtor Omaxe lined up a dozen brands from Deez Biryani to furniture maker Nilkamal for potential tieups with investors.
Analysts said food and beverage is the focus area for developers and they are offering space to established chains in their malls through such arrangements.
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