FMCG majors move out of malls, eye high street stores

FMCG majors move out of malls, eye high street stores

Author | Source: Business Standard | Friday, Oct 13,2006 8:11 AM

FMCG majors move out of malls, eye high street stores

Malls are more expensive, complain major brands.

Many of the country's major FMCG brands are seeking to move out of the shadow of malls and create a presence of their own on the high street.

Even as the mall mania braces the country, and land prices shoot up and promoters struggle to find more of available retail space, many of the consumer durables and FMCG companies are investing in real estate in the form of standalone stores.

Besides higher visibility, high street stores cost less than space inside malls, if sources are to be believed.

For example, the retail division of Godrej & Boyce Mfg Co Ltd is planning to increase the number of 'Lifespace' standalone stores in India to 50 in the next 5 months, from the present 43, with an aim of generating a turnover of over Rs 100 crore by the end of this fiscal.

"We are now looking at setting up only 'Lifespace' stores with focus on standalone locations," said Shyam Motwani, vice-president & business head, retailing division, Godrej & Boyce Mfg Co Ltd.

Agreed Amitabh Tiwari, business head, consumer electronics, LG Electronics India Pvt Ltd, who plans to add 15 more major outlets by December this year, of which 10 would be standalone stores on major thoroughfares.

Said Pradeep Tognatta, director-sales & marketing, of Samsung, "Of the 20 stores that we would add, about 12 would be standalone stores. The mall concept has come up very recently so we are not extremely bullish on scaling up our mall presence right now. But if we don't find a good location for standalone stores we would look for space inside shopping malls although that would be expensive."

"Only 25 per cent of the new stores planned by the company would be located inside shopping malls and we would be looking at setting up more standalone outlets as that way there would be more room for Reid & Taylor loyalists," A Misra, senior vice-president, marketing, Reid & Taylor, said.

Godrej Lifespace stores would be one-stop-shop for all Godrej home appliances, home and office furniture, security systems, locks, home accessories and other lifestyle products.

Lifespace stores also had a younger feel to it, claimed Motwani.

"The Lifespace stores already account for about 1,50,000 sq ft of retail space in India, with 16,260 sq ft in Kolkata itself. We would add another 3 lakh sq ft retail space in India in another 2-3 years. The space would be either company-owned or company-managed," Motwani said.

"We are investing Rs 35 - Rs 45 crores in Tier 2 and Tier 3 cities in India. We are planning to take the number of stores to 90 by 2010 and achieve a turnover of Rs 300 crore in the next 3 years in India," said Motwani.

Of the 7 more stores that Godrej & Boyce would add by March next year, three would be inside shopping malls.

"Setting up stores inside malls is expensive. Instead, it makes sense to set up standalone stores on high streets because it is economical and ensures more visibility. For every store, on an average, we chose 6,000 sq ft, so that we can display our entire range," said Motwani.

Tiwari, speaking for LG, pointed out that at present, LG had 65 standalone outlets all over India, with three stores inside DLF and MGF in Gurgaon, and one in Shipra mall in Gaziabad.

"Our target is to have 2,500 sq ft per store to display our entire product range, but due to space crunch, many of our stores range between 1,500 sq ft and 2,100 sq ft," Tiwari said.

Commenting on scaling up the company's retail presence in malls, Tiwari said that it is imperative to have LG stores in malls as footfall there is very high and consumers can find a wide range of products under one roof.

"But then, setting up stores inside malls costs almost double of what it would take to set up a standalone store on a high street. So it makes sense to invest more in real estate for standalone stores," Tiwari added.

Samsung India Electronics Pvt Ltd too is looking at adding 20 more stores by March next year taking its total number of stores in India to 100.

Samsung products are available at Digital Homes, that are usually of 2,000 sq ft and above, and at Digital Plazas that take up about 1,200 sq ft.

Samsung offered its entire range of consumer durables products at Digital Homes.

Garments major like Reid & Taylor, confirmed it would be investing in real estate as high street locations were often cheaper.

"We plan to take the number of Reid & Taylor stores in India to 150 by end of this fiscal. Each store would be of approximately 1,500 sq ft. Of these, 120 stores would be located in non-metros and would be run on franchisee models. The rest would be located in the 6 major cities and would be company-owned," said Misra of Reid & Taylor.

Reid & Taylor, at present, has 29 stores all over India.

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