Factory outlets to get mall for themselves

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With its back to the wall under assault by ecommerce, a section of brick-and-mortar businesses is getting its act together by planning to launch factory outlet malls that would offer big brands in discounted prices round the year. The Economic Times has reported that about six such malls are being planned and one has already started functioning in Delhi.

More are coming up across the country in Guwahati, Coimbatore, Bengaluru and Punjab.

Such physical outlets are an established practice in the US and the UK though it is yet to be introduced in India.

“We have opened one such mall in Delhi’s Jasola. Some brands have opened their first such store in the country. It is still an early stage, but the concept is expected to gain popularity,” said Abhishek Bansal, managing director of Pacific Malls. Brands such as Birkenstock, The Tank, The Collective, Tommy Hilfiger, Lacoste, Skechers, Calvin Klein, Lacoste and Adidas have set up their stores in it.

Lacoste India CEO and MD, Rakesh Jain is delighted at the development. “Till now most factory outlets were located in high street locations which was a hassle for consumers for parking. Our store in the Jasola Mall has exceeded our expectations,” said Jain.

These malls are set to address a long-standing infrastructural deficiency for factory outlets since the premium brands did not get the appropriate environment so long in the country. With food, beverages, movies and entertainment, these malls will now provide these outlets with a comprehensive shopping-cum-entertainment package to lure customers.

Moreover, these malls might be coming up in different states and not remain confined to the biggest metros. A developer near Erode in Coimbatore a value mall spread over 3 lakh square feet. It will accommodate factory outlets of brands. “It is part of 1.8 million development and the idea is to create a destination for value shoppers. People want to upgrade and at the same time look for items at a discounted price,” said P Raajasekhar, managing director of Texvalley, that is developing the mall in erode.

G S Wahi of GSW Infra, a developer of a factory outlet mall in Ludhiana said, “Though the spending power in Punjab is better than any other tier II city, a concept of factory outlet destination will boost overall retail. We have combined it with the F&B and adventure zone so that it can cater to all age categories.”

“Retail will not be limited to mall and high streets, but move to highways with more infrastructure being built. On highways, factory outlets mall along with F&B and recreation makes sense. In coming years, this is going to be a popular concept,” said Susil S Dungarwal, founder of Beyond SquareFeet, a company that specialises in shopping malls.

Though factory malls are being planned throughout the country, one major headache could be deciding on the rent since the revenue that will flow into the stores will be at a discounted price compared to usual stores.

Real estate consultancy major Anarock data show that this year 11 million square feet of mall space will be added to seven major Indian cities as developers make a beeline to set up new malls after a gap during the pandemic. However, these are conventional malls that will not experiment with the nascent trend in factory outlets.

By 2026, Bengaluru, Hyderabad, Kolkata, Chennai, NCR, Pune and Mumbai Metropolitan Region will add 2.5 crore square feet of space to the existing quantum of 51 square feet.