The discussion on the second day of the Indian Franchise Summit 2007 on March 11 dwelled on the issue of whether the organised retail sector, which works mostly through the model of malls, posed a threat to its unorganised counterpart.
‘Malls – Growth Drivers for Franchising in India’ was analysed at length by a panel comprising Pranay Sinha, President and CEO, Select Citywalk; Rajeev Karwal, Founder, Milagrow Business & Knowledge Solutions Pvt. Ltd; Monish Gujral, MD, Moti Mahal Delux; and Monish Bhalla, GM, Omaxe. Anuj Puri, MD, Trammell Crow Meghraj, was the moderator.
At the very onset of the discussion, Puri laid down the foundation of discussing the topic with the differentiation between organised and unorganised retail. Karwal, who has had a significant stint with Reliance Retail, explained how the country’s infrastructure had too many issues that needed to be tackled first.
“Even though the small-time retailer did not have the frills like that of any retailer at the mall, he still managed to get five to six per cent advantage. His margins are lower, and yet he manages to make a good profit,” Karwal said.
According to Select Citywalk’s Sinha, “The Indian retailer doesn’t mind giving credit for many months together. This idea of close binding through a great sense of trust gives the unorganised sector more room for growth. In the non-food retail sector, there is still hope for high street and malls to flourish.”
Moti Mahal Delux’s Gujral observed that food stalls still got good locations at the malls, and that it was commonly observed these days that most food courts were on the same floor, close to the cinema hall. Yet, each of them still managed to do good business.
Sinha pointed out, “Eating food is not something done out of impulse. It attracts people naturally, and that is why the F&B sector works in a different way from that of other retailers. However, many consultants do note that it is conducive for the energy of the mall if the F&B section is concentrated in certain zones.”
Karwal said that many retail brands of the unorganised sector would do well in about three years from now since by then they would occupy a good organised retail space and would have also learn the tricks of the trade. According to Gujral, this would surely happen because brand loyalty was a very important and driving factor.
The panelist then discussed in detail about the different ways in which a franchisee can be allowed space in a mall, and the implications of the same. By and large, it was agreed upon that the mall is an emerging market and the retailer too needs to see whether the mall developer understands the true nature of the area’s geography. It then all lies in the hands of the franchisee to cater to the changing needs of the geography and make it more relevant as the brand continues to grow.