Mall Culture in Gurgaon

Developers are ready to ``pay us for coming into the malls,'' Kishore Biyani, founder and managing director of Pantaloon, said in a telephone interview from Mumbai, where the company is based. ``They need anchor clients like us to bring in other clients.''

India's shopping centers are facing excess supply and slowing demand after mall rents almost doubled in two years. Malls in India's top eight cities have about 20 percent of their total 40 million square feet (3.7 million square meters) of space vacant, according to real estate broker Cushman & Wakefield Inc.

Malls are offering rent moratoriums for six months and free interior fixtures, Biyani said. The company, which soon plans to sign such agreements with mall developers, is also scrutinizing its own spending and costs more carefully.

``Every proposal and capital expenditure is being carefully examined and we are not getting into anything that may be marginal,'' Biyani said.

Retail rents rose sharply in the past two years as Reliance Industries Ltd., the nation's most valuable company, and Bharti Group, which runs India's biggest mobile-phone operator, started running stores.

India's $1.2 trillion economy, Asia's third-largest, expanded 7.9 percent in the three months ended June, the weakest pace since the last quarter of 2004.

It's ``premature'' to say whether and how much India will be affected by the credit crisis as ``there's no clarity'' on how that will affect consumer behavior in India, Biyani said.

Consumer spending and same-store sales will continue to grow and Pantaloon will stick to its target of adding as much as 16 million square feet of store space in the 12 months ending June next year, he said.

Pantaloon Retail said same-store sales in August rose 13 percent to 5.24 billion rupees from a year earlier. Total sales in August rose 53 percent to 7.17 billion rupees, according to the company.

Most of the big retailers have already signed on a few such deals where they would pay a fixed charge and then share 5-15 per cent of their revenues with the mall owner.

Jay Gupta, Managing Director of value-retailer The Loot, said he recently signed agreements based on revenue sharing for 25-30 stores.

"Within the next six months, this trend is going to catch up fast with one fourth of all the deals in the industry following this format," Gupta said.
Anchor retailers, especially value retailers, which have the capability of pulling in the footfalls for the mall are the first beneficiaries of this new format. In a typical deal, developers are charging Rs 25 to Rs 30 per square foot per month as the minimum guarantee money