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Looking at the current developments, in 3 to 4 years,
not more than 150 million square feet will be available.
Retail space is costing Rs. 200 - 300 per square foot
per month, against Rs 150-225 a year ago, and that is
bleeding most of the retailers. The 25 per cent appreciation
per year threatens profit margins.
In textile and clothing, 6-8 per cent of revenues
are marked as profit margin. Likewise, 2 to 4 per cent
of revenues in food and 12-15 per cent of revenues in
luxury goods are considered as profit margin. “Most
of the retailers are bleeding,” says Arvind Singhal
of management consulting firm KSA Technopak. “The
Centre talks of mom-and-pop stores being affected by
big retail brands. That is not true. The realty costs
are so high that it is in fact the controlled rent that
will protect the mom-and-pop stores.”
Even the players who delayed their launch but had booked
the space have not escaped the high costs on account
of their prior commitments on rentals. “Availability
and affordability have become the core challenges for
the growth of the retail industry,” Rajan Mittal,
managing director of Bharti Enterprises, told a recent
business seminar.
http://www.hindustantimes.com
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