Mumbai: When a brand exits a high street, it typically indicates the retailer is in trouble, say experts.
In August, Tashi, a premium shoe brand from Tata International Ltd, shut its store on Linking Road, a high street in Bandra that gets customers not only from all over Mumbai city but also visitors from other parts of the country and abroad.
A high street is a generic name given to the primary business street of a town or city.
Linking Road is the second-most expensive high street retail destination in India with a rent per square feet of Rs.850 as on June 2012 after Khan Market in Delhi with a rent of Rs.1,250 per sq. ft, according to a Cushman and Wakefield (C&W) report released earlier this month.
Tashi was launched by Noel Tata after he took over as managing director of Tata International in 2010. Prior to that, Noel Tata headed Trent Ltd, which runs the Westside departmental stores and Star Bazaar, a hypermarket chain.
At the time of the launch, the company had planned a rollout of 15-20 stores in Mumbai and Delhi and hired a senior team of executives led by Deepak Deshpande who came from Bata India Ltd.
The plans for the rollout have been curtailed. Deshpande and his team, too, have been replaced by a new management.
This was first reported by Financial Chronicle on 19 August.
“The company envisaged a launch plan of 15-20 stores in two trial regions—namely Delhi and Mumbai, to test market the concept. Based on the results of these trial stores, it was felt that changes were necessary in store location and product pricing strategy. A new management team has been put in place to make these changes. The brand will continue to operate in these two markets with eight operational stores and through shop-in-shop stores, including Westside, while evaluating the relevance of the changes in strategy,” said a company spokesperson.
Footwear retail is a $8.5 billion market of which organized shoe retail is 30%. The overall market is growing at 18% per annum and has over the last five years seen more than half-a-dozen international brands and at least 20 domestic brands launch here, according to Harminder Sahni, managing director, Wazir Advisors.
He said that international brands are, on average, priced between Rs.1,800 and Rs.2,000 whereas domestic brands are half of that.
Tashi’s pricing of women’s shoewear between Rs.750 and Rs.4,700 and men’s shoes between Rs.600 and Rs.7,000 was comparable to prices of established brands from the US and UK like Nine West, Aldo, Puma and Steve Madden.
“I find the brand expensive and can buy other international brands for the same price,” said Amit Rathod, an engineer working with an IT company in Mumbai.
Tashi’s trouble on the Linking Road high street is just a case in point.
Following the global downturn in 2008, many brands like Gini and Jony, Converse, Wrangler, Lilliput, Spykar’s kidwear brand Oyo, Dockers downed their shutters on Linking Road.
While some of them are struggling to turn profitable, others have eventually exited from the retail business, pointed out experts.
“Retailers usually look at establishing a presence on a high street like Bandra to build their brand and brand experience rather than mere sales push. If a brand is committed to the retail business, they stay put there even if the store is not really profitable,” said Santosh Verma, director, IDFC Capital Ltd.
“There are two ways of showing that you are committed to retail for the long term,” said Sanjay Vakharia, director marketing, Spykar Lifestyles Pvt Ltd. Retailers, he added, need to have the gumption to be able to sustain operations on the high street and create a pull.
“It is most difficult to get consumers to walk into your high street stores. In a mall, people anyway come as it’s a congregation of brands,” said Wakharia, explaining that for a brand to survive on Linking Road it needs to do business of Rs.75 per square feet per day.
Spykar had planned brand extensions in 2008 for launching a hi-end denim brand Voto and kidswear Oyo. For these new brands, the retailer moved into a store of 2,500 sq. ft store on Linking Road. Following the collapse of the Lehman Brothers, however, the company did not launch Voto and eventually exited from the kidswear market. It now has a smaller store of 1000 sq. ft on the street.
Linking Road is a key benchmark for demand for retail space which rose 24% over the past year, higher than the overall average growth rate of rent at 12.5% across India, according to the same C&W report.
“There is limited good retail real estate in India whether it is high streets or quality malls. Hence brands have to have a presence on both the high street and malls in India,” said Jaideep Wahi, director, agency, retail services, C&W.