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Arvind to launch online apparel business

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August 19, 2014

Mihir Dalal, Mint
Bangalore, 19 August 2014

“As physical (organized) retail was in the nineties, we see e-commerce as the next big thing. We are convinced that a large part of the consumption will move toward e-commerce. As a company which wants to be the largest player in brands and fashion, we feel e-commerce should be central to our vision,” Lalbhai said.

Arvind has formed a separate unit called Arvind Internet Ltd, headed by Tejinder Singh, a former executive at Times Internet. Arvind Internet has hired more than 40 executives, mostly from e-commerce firms such as Flipkart and Times Internet.

Arvind was planning to launch an online personalized apparel retail business within the next three months, Mint reported on 10 June.

Retailers such as Shoppers Stop, MobileStore, Croma and Spencer’s Retail have been talking up their strategy of integrating their stores with their websites and trying to make e-commerce a crucial medium of sales. Online retail is worth $3.1 billion, or 10% of the organized retail market, and is estimated to grow to $22 billion, or over 15% of the organized retail market, in five years, according to a November 2013 report by brokerage CLSA.

The growth of online retailers such as Flipkart and Snapdeal has hurt offline retailers, as customers have been lured by attractive discounts and the convenience of home delivery. Many retailers had asked brand manufacturers, who are also suppliers to online firms, to persuade e-commerce sites to reduce their discounts.

These steps are unlikely to work as analysts say e-commerce has become too large a medium for brands to ignore and the best approach for offline retailers would be to make a serious attempt at having some kind of an online business.

"The biggest difference between running a traditional retail business versus an e-commerce site is the pace at which you have to make decisions," said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. "In e-commerce, things such as inventory management, merchandising, pricing, promotions, etc., have a much shorter life span and a company has to be very fast on its feet to manage these things. Even customer acquisition costs are significantly higher in e-commerce, and logistics management is a complex problem. All this shows that it not easy for a traditional retail business to make a transition into e-commerce."

On its part, Arvind is launching Creyate in international markets, such as the US, as well as in India. The brand will also launch stores in 15 cities within the next year. These will be equipped with state-of-the-art technology to allow shoppers to customize all aspects of shirts, trousers and suits, such as material, sizes and features, Arvind’s Lalbhai said.

The website, which will be called Creyate.com, and the stores will take about 12 days to deliver products initially. Arvind has set up a separate factory for the Creyate business.

(Published in MINT.)

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How exclusive alliances with online retailers help brands like Xiaomi and Motorola

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August 10, 2014

G Seetharaman, The Economic Times

New Delhi, 10 August 2014

It turns my stomach. It’s a bad customer experience," says Michael Adnani, vice-president of retail at Flipkart, about its website crashing on August 5.

The third batch of 15,000 Xiaomi Mi3 phones, of which Flipkart is an exclusive seller, had been lapped up in all of two seconds. The site had also gone down on July 22, when the first bunch of Xiaomi Mi3 phones were sold in under 40 minutes, and on May 14 when Moto E went on sale on the site. Flipkart has sold over a million units of Moto G, Moto E and Moto X, all available only on its portal, since February, and 35,000 units of Xiaomi Mi3 which saw ten times as many people pre-registering for the first two flash sales (the figure for August 5 is not public yet).

Partnering with brands to be their exclusive sales partner seems to be the flavour of the season for e-commerce companies. Amazon, the world’s largest online retailer, earlier this week announced that it would be the sole seller of Microsoft’s interactive entertainment products in India, including the latest version of its gaming console, Xbox One, which will be available on September 23, and for which Amazon has started taking pre-orders.

Amazon had in July inked a similar agreement with Samsung for its Galaxy K Zoom phone, and with low-cost Indian mobile handset maker Karbonn a month earlier for its Titanium Hexa. But given the might of brick-and-mortar stores, most of these brands might find it difficult to completely ignore them in the long run. Organized retail, after all, is 20 times as big as online retail, and even with the rapid growth of the latter, will be nearly five times as large in 2020.

Turning Point

While brand exclusivity is not new to e-commerce firms — and certainly not to retailers — the trend has snowballed since the success of Motorola’s partnership with Flipkart to make a reentry into India. Motorola, which Google bought for $12.5 billion in 2011 and sold to Chinese computer-maker Lenovo for $2.91 billion in January this year, while retaining most of its patents, has since edged past Nokia to become the fourth largest smartphone maker in India. According to Counterpoint Technology Market Research, in the April-June period, Motorola’s market share was 4.3%, behind Samsung’s 25.3%, Micromax’s 19.1% and Karbonn’s 5.9%.

Adnani says while Flipkart had exclusive tie-ups with companies before, the Motorola partnership was the first one where the exclusivity applied to the brand’s entire portfolio, including accessories like phone covers. "Discussions with Motorola started about 90 days before the launch of Moto G on February 6," he says. He adds that higher margins are not the reason for these exclusive partnerships."We are able to plan the products as we see fit for the Indian consumer."

Saloni Nangia, president of Technopak, a consultancy, says it would have been difficult for Motorola to create a conventional distribution network for Moto G. Exclusive partnerships may entail promotion by the e-tailer.

"From the brands’ point of view, the big win [of an exclusive partnership] is the huge amount of visibility they get because it is in the interest of the ecommerce partner to provide that extra push," observes Devangshu Dutta, chief executive of Third Eyesight, a retail consultancy.

Tony Navin, senior V-P of electronics at Snapdeal, says a brand could save 8-20% by taking the online-only route.

For e-tailers, Dutta adds, exclusive partnerships are a way to create differentiation. "In the past 2-3 years, their growth has come from discounting which is not sustainable." If a portal is the only seller of a product, consumers cannot compare prices on different websites and even at retail stores.

Having said that, Indian e-tailers would do well to learn from some unsavoury fallout of exclusive partnerships abroad.

The Flip Side

When American singer Beyonce launched her selftitled album only on iTunes late last year, Amazon and supermarket chain Target refused to stock CDs of the album.

Back home Nilesh Gupta, managing partner of Vijay Sales, an electronics store chain, says he has no option but to play hardball with companies sometimes. "If two out of a company’s 10 products are doing very well, and they are both exclusive to an online retailer, I will tell the company to take the other eight online too." When renowned literary agent Andrew Wylie, who represents Philip Roth and Salman Rushdie, in 2010 announced that e-books of classics like John Updike’s Rabbit series and Vladimir Nabokov’s Lolita would be available only on Amazon, publishers protested saying they owned the electronic rights to those books.

Talking of books and exclusive deals, Rupa Publications has signed an exclusive agreement with Flipkart to take pre-orders and sell bestselling author Chetan Bhagat’s upcoming book, Half Girlfriend, available from now to a month after its October release. Kapish Mehra, MD of Rupa, says Flipkart is only the exclusive online partner and that the book would be available at physical bookstores from the day of its release. "Everytime you do something innovative and different, it gets people talking. We saw it with the announcement itself, which generated a lot of buzz," says Bhagat.

Riding the Boom

The online retail market in India is expected to grow from just $2.3 billion, or 0.4% of the country’s overall retail market in 2014, to $32 billion, or 3% of the retail market in 2020. In the same period, the share of organized brick-and-mortar stores is set to rise from 8.4% to 14% (unorganized retail will still dominate).

While Motorola is used to selling at physical stores, four-year-old Xiaomi sells only online and did not want to alter its strategy in India. "We save a huge amount of margin by selling online which we then pass on to customers. Also, we don’t do promotions because the customer ends up paying for it," says Manu Jain, head of Xiaomi India. Xiaomi Mi3 is priced at Rs 13,999. "We chose Flipkart as an exclusive partner because of their technology and their track record in delivery and solving customer problems," says Jain. Flipkart was recently valued at $7 billion in a $1-billion fund-raising round.

Exclusive partnerships have now gone beyond mobile phones, with Myntra, which Flipkart bought in May, bagging the exclusive rights to SuperDry footwear and accessories collection, and Amazon being the sole launch partner for Whirlpool’s KitchenAid appliance range. Among the most prominent brands, Amazon now has Xbox One in its ‘exclusive’ portfolio.

Anshu Mor, director, interactive entertainment business of Microsoft India, said unlike mobile phones the market for gaming consoles in India is underdeveloped: "There is not enough awareness on what all you can do with a console. We have not been able to address that offline, and the youth audience we are targeting is natively digital." He adds that Microsoft chose Amazon as it was still in "market creation mode" and hence wanted to have just one partner to drive a concentrated effort in creating awareness about the product. Kumar says Microsoft and Amazon look to tap 6 million potential users of high-end console gaming.

Xbox One retails for Rs 39,990. While the Indian gaming industry is set to double in size to Rs 4,200 crore by 2017, the share of consoles will likely slip from 50% to 45%, thanks to the increasing popularity of mobile gaming. Globally, investors have been calling for Microsoft to junk Xbox, owing to its struggle against market leader Sony PlayStation.

The Online Advantage

Among the aces up the e-tailers’ sleeve is the data they have on purchase patterns by demography and geography. "If an exclusive launch is doing well in the north and not in the south, you can devise deals and promotions accordingly. In offline sales, that data will take a few days to come while here it is immediate," says Navin. What is common to brands like Motorola and Xbox is that they are trying to establish or restablish their presence in the market.

"Any e-tailer who is pragmatic would not expect long-term exclusivity. As a brand scales up and becomes more desirable, it has no option but to be available across multiple channels," says Dutta.

Exceptions to this could be brands like Xiaomi which are resolutely web-only. "If someone doesn’t have access to the internet today, they can just use their smartphone," says Amit Boni, general manager for India at Motorola Mobility.

However, Gupta of Vijay Sales feels Motorola’s smartphones should also be available at retail outlets soon, to which Boni says, "As of now this is an exclusive partnership. We would continue to sell our products through Flipkart in the foreseeable future." But, he also says that Motorola expects to have its products "widely available".

Even as more and more people, even in smaller cities, get comfortable with buying online, brick-and-mortar stores continue to grow and wield no small influence.

While several luxury brands have spurned online platforms in favour of the actual store experience, brands whose USP is their attractive pricing and who rely on volumes may have to reach customers through as many avenues as possible.

(Published in The Economic Times.)

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Meru, TaxiForSure plan overseas drive

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July 25, 2014

Nikita Garia, Mint

Bangalore, 25 July 2014

Meru Cabs, India’s largest taxi fleet operator, plans to start services outside India by the next financial year and is evaluating entering countries such as Malaysia, Vietnam, Myanmar, Nepal, Bangladesh and Sri Lanka.

“There are many countries around India which face similar problems related to taxi service—a huge consumer need and gaps in services,” chief executive officer Siddhartha Pahwa said on Thursday. “We have the capability to address these.”

Meru Cabs is not the only one planning an overseas foray. Rival TaxiForSure is also firming up plans to start operations abroad.

“We are looking at launching overseas early next year,” said Raghunandan G., founder and director at TaxiForSure. He declined to elaborate as the plans are in a preliminary stage.

However, Raghunandan said it makes more sense for TaxiForSure to go abroad as the company works on a so-called asset-light model and does not own cars, unlike Meru Cabs. “With our existing model, we would be better positioned to tackle the international market,” he said.

Companies such as Olacabs and TaxiForSure do not own vehicles but work as aggregators.

Meru Cabs, which started operations in 2006 by creating its own fleet of cars, has been trying to move to an aggregator model since 2012.

Currently, Meru Cabs is evaluating the kind of model it would follow abroad and the capital investment that would be required to operate internationally.

“It will be a significant investment,” said Pahwa, without disclosing the amount as the company is still working on details such as whether it would have to open call centres abroad or operate completely via a mobile app, acquire taxis in those countries or aggregate those already run by other operators.

The move to go international comes at a time when competition in the Indian taxi industry is intensifying, with local firms attracting investor interest on one hand, and international companies eyeing the Indian market on the other.

In recent months, Olacabs and TaxiForSure have raised funds.

In contrast, Meru’s growth has been almost entirely been funded by equity capital. Private equity firm India Value Fund owns 85% in Meru. San Francisco-based Uber had launched its India operations in August last year with its luxury car service UberBLACK and introduced the lower-priced service UberX last month.

Meru’s plans to launch elsewhere are afoot even as it looks to expand in more cities across India. It is present in eight cities including Hyderabad, Bangalore, Mumbai and Delhi and is planning to expand operations to 20 cities within the next 12-18 months. It had recorded a positive profit after tax for 2013-14 and expects to post Rs. 650 crore revenue this fiscal year compared to Rs. 395 crore a year ago.

TaxiForSure is also looking to expand its footprint in India as it looks to enter 22 cities by end of this year, said Raghunandan. It now operates in Ahmedabad, Bangalore, Chennai, Delhi and Hyderabad.

Olacabs is not looking to expand outside India as it deems India to be a large enough market at this point. “India is a sizeable market and there is a genuine taxi problem to be solved here before we can think of moving elsewhere,” said Anand Subramanian, director of corporate communications at Olacabs. Olacabs has so far covered nine cities with the launch of its operations in Chandigarh on Thursday.

Analysts say establishing a successful operation outside India won’t be easy as taxi is a very local business.

“The companies will have to deal with the complexities of managing new markets and invest on marketing and technology,” said Devangshu Dutta, chief executive of retail consultant Third Eyesight.

(Published in Mint.)

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Package Deal

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July 18, 2014

Rashmi Pratap, The Hindu Businessline
Mumbai, 18 July 2014

In Mumbai, Beta Dave, marketing and e-business development manager at Sia Jewels, is elated by her company’s partnership with Amazon, which has tripled its online sales within a year. The jewellery is sent to Amazon, which takes care of warehousing, packaging, delivery and after-sales service, freeing up Sia to focus on new designs. Moreover, the big-town brand now finds additional customers in Tier II and III cities.

“The kind of brand recall Amazon has in rural India is amazing. People know it delivers the world over, and that helps,” says Sarda, who co-founded Soulflower with Natasha Tuli in 2001.

What has allowed Amazon to deliver anywhere from Dibiyapur in Uttar Pradesh to Mansa in Punjab is its tie-up with India Post. This masterstroke has given the e-commerce major access to nearly 20,000 pin codes across India. This is the core of Amazon’s India strategy — retrofitting to suit local conditions, rather than replicating its hugely successful global model in the $2.3 billion Indian e-commerce space, which is expected to grow to $32 billion by 2020 (Technopak Advisors). “Our global mission is to build the earth’s most customer-centric company. While Amazon’s vision and mission are global, we have localised our execution,” says Amazon’s country chief, Amit Agarwal

Globally, the giant is currently caught in catfights. For the past month, Amazon has been in a much-watched wrangle with publishing major Hachette. As the online retailer is the largest seller of books, Amazon asked Hachette to cough up more money on e-book sales. Hachette refused and, so far, the book industry has been split down the middle. Some big authors have sided with their publishers but a large number of authors who have found success through Amazon — it is now also a publisher — have aligned themselves to it. Amazon, by discounting books heavily, bled the brick-and-mortar bookstores, eventually leading to major chains like Barnes & Nobles shutting down outlets and Borders winding up business altogether. In order to protect its bookstores, in January this year, the French government passed a bill which banned online bookstores from offering free delivery. In the Gallic world, which does not believe in mincing words, this ban is called the Amazon tax. On the tails of these troubles — minor and major — India is a market that is now primed for the company. And Agarwal is here to make sure that as more Indians begin to shop online, their first site of call is Amazon.

Tailing Bezos

Agarwal learned from the best. For two years, 2007-09, he was the shadow to Amazon founder Jeff Bezos — a role that involved travelling with the top boss, attending all his meetings and taking the minutes, and conferring with him at the end of each day.

Fifteen months before Amazon India went live, Agarwal set up junglee.com, a website that allows buyers to compare offerings and choose before directing them to the seller’s website. This non-profit venture has given Amazon truckloads of analytics — handy ammunition for its India battle.

In e-commerce, analytics is as crucial as R&D is for a product company. It identifies what buyers are searching for, what they choose from, where they buy, at what price and why. That helps companies not only customise offerings for potential buyers but also ensures that their preferred products pop up every time they log on to the internet.

Junglee has also familiarised the company with sellers, facilitating a rapid expansion of product categories at Amazon. “Amazon had customers in India even before it launched here. It has built an analytical understanding of the Indian customer base through many years. Junglee, again, is a rich source of data and learning,” says Devangshu Dutta, chief executive at consulting firm Third Eyesight.

From the way Amazon sources products from sellers to how it reaches out to buyers, the company has retrofitted multiple processes. It has the mechanisms to offer over 17 million products across 28 categories in a country as diverse as India — all within a year of starting operations.

While tailing Bezos, Agarwal learned that customers care about three things — a large selection to choose from, value pricing and convenient delivery options. And over the past few years in India, he has focused on creating a differentiating factor in all three. And that, in turn, led to local innovation.

Ideas for India

In India, Amazon offered the cash-on-delivery option, something it doesn’t do elsewhere. (The company is now considering extending the concept to China and Japan.)

Its Easy Ship facility was created exclusively for India and benefits smaller sellers who don’t want to send products to the fulfilment centres. Amazon picks up the packages from the seller and delivers to customers. “We inject in the last-mile delivery,” says Agarwal. This concept, too, is likely to be exported to other countries.

In the second, and more successful, part of Amazon’s strategy, the ‘Fulfilment by Amazon’ offering allows sellers to stock their inventory at its warehouses in Mumbai and Bangalore. Amazon ships the products for them and charges on a per unit basis, irrespective of the numbers sold.

“They have taken the stress of packaging and shipping off my head. I just focus on creating the best products,” says Tuli of Soulflower. Apart from stress, sellers are also spared the costs of warehousing, maintenance, packaging, delivery and even after-sales service. Such expenses vanish from the seller’s profit-and-loss account, to be replaced by a simple variable cost per unit, says Agarwal, terming it as ‘cloud computing’ for sellers.

“The warehousing cost for five items is different from that for five million, and the prediction for that capital investment is often wrong. Amazon essentially absolves sellers of all that risk,” he adds. This offering is a hit with small and medium enterprises that are hungry to go national but lack working capital. It’s also a service that no other e-commerce player has been able to replicate so far.

Analysts estimate that sellers save 30-40 per cent of their cost. And this, says Agarwal, allows Amazon to offer discounts to end-users. “We look at the cost structure of every seller, reduce the costs and allow them to keep a larger share for themselves. So they can pass it on to customers at low prices,” he says.

Home run

While it costs Amazon to offer such services, Agarwal says it is compensated by the growth in volume. “The cost per unit goes down… Good customer experience drives traffic, which attracts sellers and helps us bring in more selection. This, in turn, improves customer experience. This flywheel is spinning fast for Amazon,” he explains.

And the results are showing. Munendra Singh, working with a private bank in Mumbai, says he can pick up his parcels, ordered through Amazon, from a nearby store. “That’s a big convenience, as my wife and I both work and nobody is at home to take deliveries during the day,” he says. Amazon has tied up with Bharat Petroleum Corporation Limited to use its In & Out stores in Mumbai, Delhi, Bangalore, Ahmedabad and Manipal to make deliveries to customers.

Its same-day delivery is a huge hit too. Shreya Krishnan ordered three kurtas from Myntra on June 14 and was disappointed to learn about the cancellation of the order on June 25. “I got a mail from Myntra about the cancellation, without any reason for it. Since I had to leave for a holiday at the month-end, I ordered from Amazon. And got the delivery the same day,” she says.

Competition kill

“Amazon has certainly forced its competitors to re-think their strategy. Flipkart, the home-grown e-commerce company founded by former Amazon employees, is hard at work to outdo the US giant. Within days of Amazon launching same-day delivery, Flipkart replicated it; however, it’s unlikely to match Amazon’s reach in the hinterland anytime soon.

More importantly, Amazon India is backed by a strong parent, which reported revenues of nearly $75 billion in 2013 and is expected to touch $100 billion by the end of this year.

“Amazon has been an outlier in every country. It is the first pure-play e-tailer to emerge the world over. It is focused on execution and will be a competition to the existing players. More so because it doesn’t have capital issues,” says Ankur Bisen, senior vice-president of retail and consumer products at Technopak.

In contrast, Flipkart is backed by private equity funds, which invest only to look for an exit through an IPO or sale to another player. Flipkart is said to be in talks again for raising $500 million from a clutch of investors in a deal that could value the company at $5 billion, or ?30,000 crore. But valuation on its own doesn’t mean much.

A classic case is that of Indian telecom operators and tower companies, which commanded billion-dollar valuations around 2006-07. Foreign investors entered with cash. Today, however, only a handful of them are profitable. A majority are making losses and looking to sell. Similarly, continuing losses and limited finances will only make the going tough for Flipkart.

Until now, the bigger e-commerce firms have entered India through acquisition — ebay bought Baazee.com, while Monster.com acquired Jobsahead.com. Amazon was expected to do the same with Flipkart, but that did not happen. It wasn’t for lack of trying though. Flipkart was expensive and with the kind of capital and analytics at its disposal, it made better sense for Amazon to invest in own operations than pay big bucks for it.

This has unsurprisingly created a flutter in the Indian e-commerce space. In an industry where most businesses were built to sell, Indian companies have missed the biggest opportunity to exit. “Now they have to do something to stay in the business, and stay relevant,” says Dutta.

Repackaging business

Already, some large e-commerce businesses have shut down due to a cash crunch or were acquired by bigger players. Flipkart bought Myntra in May while Allschoolstuff.com and Indiaplaza.com closed after failing to raise another round of funding, as did Chhotu.in, Hushbabies.com, Miraistore.com and Koolkart.com, among others.

“Investors can’t run companies for long if they don’t have enough cash for operations. Amazon has stayed ahead of the cash-raising curve. Unless Indian businesses do that, they will run out of cash,” says Dutta.

This has forced Indian companies to relook their business model. Flipkart discontinued sale of consumer electronics like TVs, audio systems and white goods (air-conditioners, washing machines, refrigerators) within days of Amazon launching in India. It also cut down on the massive discounts it once offered on mobiles, tablets and their accessories. Its focus now is on high-margin and high-volume segments like apparel, as borne out by its Myntra acquisition.

Bisen points to two kinds of players in the e-commerce space — companies such as Flipkart, Jabong and Snapdeal, which have built brand equity, achieved some scale and demonstrated a viable future growth model; and the second-rung companies, which are pursuing differentiation but are struggling to progress beyond the initial round of funding. As long as the economy is growing, both of these will exist, along with the millions of brick-and-mortar retailers. Eventually, something will have to give. If its history in other countries is an indicator, Amazon is likely to be the one taking us into this post-apocalyptic world.

The fine print
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Hottest sellers: Books, consumer electronics, baby products, shoes and watches

Shop on the go: 35 per cent of traffic comes from mobile devices

Pincode search: It delivers to the pin code 790002, which is for a remote village called Balemu in the West Kameng District of Arunachal Pradesh

Instant gratification: 3,00,000-plus products are available for next-day delivery

(Published in The Hindu Businessline.)

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Good days yet to come for malls as vacancies rise

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July 18, 2014

Ashish K. Tiwari, DNA (Daily News & Analysis)

Mumbai, 18 July 2014

The retail real estate segment saw a significant rise in vacancies in April-June quarter of 2014 over the January-March levels as supply increased and tenants exited under performing centres.

According to a report by property research firm DTZ, the Delhi-NCR market witnessed highest increase in shopping mall vacancy at 3.5% followed by Pune at 2.6% and Mumbai at 2.3%, respectively.

"In the case of Delhi-NCR, the vacancy level stood at 19.5%, up from 16% during the previous quarter due to the addition of new space. Occupiers continue to prefer malls offering quality space, good mall design and a strong tenant mix. In contrast, lower grade malls continue to witness higher vacancy levels," Rohit Kumar, head of India Research, DTZ, said in the report.

While the Delhi-NCR market, witnessed new supply of 2.3 million sq ft during Q2, about 7% completed in Q4 2013 entered the market in second quarter due to regulatory issues. Additional 2 million sq ft of mall space is expected to be completed in second half 2014, but given the extent of project delays, some of this is likely shift to 2015.

Vacancy levels in Pune increased sharply quarter on quarter from 27.5% in Q1 2014 to 30.1% in Q2, and with over 2 million sq ft of retail space under construction, vacancy levels are expected to remain high over the next few years.

Contributing significantly to vacancy levels in Mumbai were malls located in micro-markets of Andheri, Bhandup-Mulund and Navi Mumbai. "However, with no new supply expected over the next year, the vacancy level is expected to decline in the coming months," said Kumar.

Though new supply certainly has led to the increase in vacancy levels across malls in these cities, retail industry experts said, additional factors like tight market conditions, experimenting with new malls and aggressive evaluation of sites by retailers also were equally responsible.

As per Devangshu Dutta, chief executive, Third Eyesight, retailers these days are very practical about their stores and have no hesitation in shutting down the non-performing outlets. "A lot of focus is on performance potential of newly opened or, for that matter, existing stores. Besides, given the current market conditions, it is pragmatic to discontinue sites that do not justify the cost of operations," he said.

International property consultant Cushman & Wakefield, however, differs on vacancy levels. While total vacancy in Q1 2014 was recorded at 14.5% there has been very little supply in Q2 2014 and limited churn in occupants, it said. As a result, there not been any significant movement in vacancy.

Sanjay Dutt, executive managing director, C&W in South Asia, said, "This scenario has also resulted in stable rentals across mall locations in key cities of India. At best, the Indian retail market can be described as stable; however, going forward, retailers may been looking at a more robust plan of expansion in line with increase in disposable income of the end-user / purchasers as granted in the union budget."

Meantime, mall operators feel vacancy rates differ from operators to markets. Also, the business model adopted by the mall owner/operator plays a big role in defining the success of the shopping destination.

Kishore Bhatija, MD & CEO, Inorbit Malls, said, "While vacancy levels could be seen as indicators of the overall business scenario to some extent, it’s certainly not something that one should be reading too much into. Besides, the market dynamics are such that well-managed malls with a good tenant mix will always have an edge over others."

(Published in DNA.)