Written by: Nithin Narayanan
I have written earlier about the high rentals of real estate that retailers have to pay. One option that retailers are doing to mitigate the effects of high rentals is to retail through the net. But again cyber insurance is unheard of here in the subcontinent. Hence there are quite a few grey areas where work is needed.
Coming back to real estate, the big players are tying up with real estate developers like DLF, which eases the search for new property for retail development. But looking at the big picture we tend to forget the plight of the so called 'Kinara Store' or the neighborhood store. In Indian cities one would find a couple of local store which cater to the residents of the particular area. These are generally family run stores. Hence companies like Reliance and Big Bazaar penetrate the local markets; it is these small or medium sized businesses that are affected. This was the same concern that the Left Parties of the government resented while opposing against FDI's.
These kinds of stores come under Unorganized segments and have total area could range from 1000 to 2500 sq.ft. The rentals range from Rs 100 to Rs 150 /sq.ft/per month. Going by the statistics 50 percent of the sales go in sustaining the business itself.
Even organized players are shutting stores which are based on bad location decisions. This is the reason that one would find Big Apple and other department stores in residential areas as it is a safe bet. A residential area would have a constant floe of consumers hence it is just a matter of time to succeed whereas in other locations, consumers have to commute to purchase.
This scramble for the same has resulted in fierce competition among the retailers. In this chaos the local retailer plight is falling on deaf ears. In India the concept of chain store has been growing for some time. In such a scenario to envision Kinara Stores in the future is hard and chances of their sustenance seem to be slim.