From pants to mall, Pantaloon thinks big

Shalini Singh, TNN Feb 19, 2002, 01.41am IST chennai: is the retail industry in india coming of age? it is, if kishore biyani, the ceo of the rs 270-crore pantaloon group, one of india's largest retailers, manages to pull off his next grand attempt. biyani is currently in the process of creating india's largest retail offering in a single location and in so doing, is quietly metamorphosing from being a pure retailer to a mall developer. biyani is opening, for the first time, a pantaloon and big bazaar both in the same location - over 1,02,000 sq ft of retail space in phoenix mall, central mumbai. biyani is bringing a host of other brands into pantaloon, which has slowly transformed from being a retail outlet for biyani's apparel label 'pantaloon' to what is now a lifestyle store offering shoes, jewellery, apparel, sportswear, cosmetics, saris and gifts & stationery. biyani is also launching a new branch called 'home elegance' which will retail home textiles, crockery and tableware. "between big bazaar and pantaloon, we will cover the entire spectrum of a customer's needs, from utensils and apparel to even an optician and chemists store," explains biyani. big bazaar (india's first hypermarket) will occupy 52,000 sq ft while pantaloon will occupy the remaining 50,000 sq ft of which 60 per cent will be occupied by apparel brands like pepe, wrangler, reebok and mtv among others. these retailers are not paying a rental to mr biyani, but a percentage of sales for the space that they occupy. pantaloon has slowly been adopting this model across first, its camac street store in calcutta and then across other outlets, but never before on this scale. retail industry sources say this is a clear upscaling of the retail model. "mall developers have so far been merely selling real estate. the fact that a retailer is getting into mall management to create strategic clusters of brands to enhance footfall indicates a clear movement up the retail value chain," says a retail expert. says anuj puri, md, chesterton meghraj, the real estate firm that brokered the deal, "this is the first time that a mall is attempting to cater to 40 per cent of the total population in mumbai in sec a, b and c. it is a significant differentiator from other malls, which only target 20 per cent of the upper end of the population". "we expect a footfall of 15,000 people a day across both stores, with a 35 per cent conversion to sales. "the average bill size for pantaloon is rs 150 and for big bazaar is rs 450," says biyani. in fact, mr biyani points out that togther with other occupiers like mcdonalds, barista, dominos, the bowling company, fire and ice, sol kadi, silly point cafe and grease, mumbai's 3,00,000 sq ft phoenix mall promises to become india's largest and possibly most significant retail destination. at crossroads, where pantaloon currently occcupies 4,500 sq ft as the anchor tenant, biyani does rs 80 per sq ft turnover and draws a footfall of 3,000 customers a day. the large takeup of space at phoenix mall may have implications for crossroads if pantaloon decides it does not make strategic sense to continue with two locations. the rental at crossroads is rs 225 per sq ft, while phoenix mall is just about rs 80 per sq ft. the pantaloon group currently occupies a total of 4,50,000 sq ft across its 14 pantaloon, 3 big bazaar and 22 to 23 factory outlets across the country. Phoenix renegotiates lease rentals with anchor tenants Phoenix Mills Ltd (PML), a Mumbai-based retail centre developer, has achieved a significant success in renegotiating lease rental rates with its anchor tenants at High Street Phoenix (HSP) in Lower Parel.

Close to 150,000 square feet of retail space occupied by brands including Lifestyle, Big Bazaar and Pantaloons has come up for renewal this year. While the new rates for Lifestyle have been firmed up, negotiations for Pantaloons are expected to be completed by November. Shishir Shrivastava, group CEO and joint managing director, PML, said in an analyst call, This time the arrangement with Lifestyle for 50,000 sq ft is `91 per square foot (psf), or 7% of revenue share, whichever is higher. Big Bazaar has surrendered 16,000 sq ft from the 50,000 sq ft it was occupying at HSP. This surrendered area has now been converted into retail space branded as Grand Galeria Connect and is currently been leased out at an average price of `200- 250 psf. The balance area with Big Bazaar has also seen an increase in the leasable area owing to loading (re-zoning and re-planning of retail space) being done by the asset owner. With this, the Big Bazaar area has effectively become 39,000 sq ft. Also, the effective rate for the area occupied by Big Bazaar and GG Connect has now risen to average `134 psf from `68 psf earlier.About 90% of the GG Connect area has been leased out and stores would start operations by September. PML said it is identifying the best possible options for the third major anchor client, Pantaloons, whose contract would come up for renegotiations in November. On the residential side, PML has already launched first phase of residential development in Chennai and is actively working on aland parcel in Bangalore West.