Tata Trent, the retail arm of Tata Group, has ended its six year old agreement with Xander Group, which funded its stores opening across malls. The arm now plans to open standalone Star Bazaar stores and not restrict itself to malls.
Unfortunately, Tata Trent which has a franchise and a wholesale supply arrangement with Tesco Plc, could not open any Star Bazaar in 2012-13 as they all were located in malls. These stores could not operational as the overall package din’t come across as attractive.
The financial report of Trent says: “Despite not adding any store, Trent Hypermarket recorded a 21 per cent increase in its total revenues last fiscal at Rs 785.19 crore. It reported a loss of Rs 64 crore in EBIT, or earnings before interest and taxes.”
It was in 2007, the two companies tied up for anchor tenancy rights and obligations in malls. The plan was to take the hypermarket count to 50 from four then. Though the collaboration till 2012 could only open 15 stores.
Star Bazaar has also recently launched its own private label.
Though a lot of brands eye malls as key location as they bring in footfalls, Trent feels that the consumer is not comfortable navigating a mall with a shopping trolley. The consumer, when visiting a hypermarket would prefer a standalone store that offers parking and quick access to public transport.
What does iGrow thinks:
Malls can be a good location for hypermarkets. A consumer who walks into a mall is intelligent enough to plan his movement in the mall and prefers hypermarkets as the last destination in a mall where in he can shop and directly move to parking. Being a part of the mall helps hypermarkets get some impulsive shoppers as well, these shoppers are the ones who actually contribute a lot to sales.
Malls let hypermarkets offer better deals to consumers and become a part of the services offered by a mall, than maintaining the huge area on its own.
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