Now, a lot of merchants are placing huge bets on bigger locations.
Brands across categories are reversing a decade-old trend of launching smaller outlets by opening big stores, not to keep more products but to give better experience to shoppers.
Fashion retailers including Levi’s, Tasva of Aditya Birla Fashion and Retail, Celio, Puma, and Apparel Group India that sells brands such as Aldo, Charles & Keith and Bath and Body Works, eyewear brand John Jacobs, and restaurant operator Chrome Hospitality, among others, have increased their average store size by 30-40% while a few have doubled their store sizes despite rising rentals as consumers increasingly look for experience, industry watchers said.
“We have seen at our malls that brands are asking for extra 30-40% space to expand the store,” said Rajneesh Mahajan, CEO of Mumbai-based Inorbit Malls. “While sales have gone up, the aim is not to store more products but give more space for shoppers to roam around and improve the quality of time they spend,” he said.
This reflects in the numbers, too. According to property consultant Anarock, the share of leasing of less than 2,000 square feet of retail space fell to 59% in 2022 from 64% in 2021. Share of transactions sized between 2,000 sqft and 5,000 sqft increased to 28% from 24% during the same period.
“Since we focus on experience, we try to look for standalone assets where we can convert it into an experience,” said Pawan Shahri, cofounder of Chrome Hospitality that co-owns and operates F&B outlets including Demy, Donna Deli, Shy, EVE, and Blah & Kyma in Mumbai. “Rather being conscious on spending post-Covid, people want to go out more but they don’t want every meal to become an expensive one. That’s where F&B brands can create an exclusive experience,” he added. Apparel, entertainment, and F&B together accounted for 70% of total retail space absorption in 2022 where the share of entertainment in absorption increased to 28% from just 2% in 2021.
Bigger store means high rental cost for retailers. Hence, they need to increase their revenues. Brands say more than the footfalls it is the conversion rate that matters.
“We have noticed conversion rate is better at large stores,” said Satyen Momaya, CEO of French apparel brand Celio. “From average size of 1,300 sqft, we have gone and opened about 3,000 sqft stores as the consumer is not only coming to buy…they want the experience.” The trend is not limited to India. In its home country France, Celio did not have any 700 square metre store earlier “but now all our stores are above that size”, Momaya said. After the Covid-induced lockdown, retailers had started shutting stores or reducing their size to save on rental.
