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Occupancy rates at non-quality shopping malls fall further as retailers shift to premium malls: Report

Grade A malls have witnessed a CAGR of 6.2 percent over last 5 years as against a 5 percent benchmark in lease rentals, highlighting the success of creating a destination mall

September 24, 2019 / 09:02 PM IST

Shopping malls are getting differentiated in terms of lease rentals with the advent of alternative forms of retail including online in particular, according to a JLL report which was released on September 24.


Releasing its report on Day 1 of the two-day MAPIC India conference, formerly India Retail Forum, Shubhranshu Pani, Managing Director, Retail Services India, JLL said, “Low occupancy rates in non-quality malls and advent of alternative forms of retail has led to retailers preferring Grade A / prominent malls where occupancies are more than 90 percent. With such high demand from brands, these malls are calling the shots in terms of steep escalation in rents and shortened leases.”


Grade A malls have witnessed a CAGR of 6.2 percent over last 5 years as against a 5 percent benchmark in lease rentals, highlighting the success of creating a destination mall, he said. 


With a steep rise in rents and rising online sales, brick and mortar retailers are re-evaluating store sizes and efficiency.


He also said a slew of brands is down-sizing stores to achieve an equilibrium between reduced footfalls and escalated rents, he said.

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To add to their woes, the slowdown in consumption and unwillingness of intermediaries to take back leftover inventory from retailers has led to fresh trouble.


As consumer behaviour is getting reshaped, shopping on multiple platforms and using interactive touchpoints are adding excitement and convenience to the people’s shopping experience. There is a tendency of the customer to spend 9 percent more if a brand integrates more than four channels as compared to just one, Pani said.


As rent to revenue ratio has become a dominating metric to evaluate as against the revenue top-line, Pani said the disruption has led to brick-and-mortar retailers joining hands with e-sellers and experimenting with click-and-collect models; while online brands are venturing in the world of brick-and-mortar stores.

Moreover, omnichannel is helping brands improve their topline by providing multiple transacting methods and a chance to foray into new markets, Pani said.

Moneycontrol News
first published: Sep 24, 2019 08:54 pm

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