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Sep, 10 2010

ANY TAKERS FOR DAILY REVENUE SHARING MODEL?

Move over Minimum Guarantee or Revenue Sharing Model, now comes the 'Daily Revenue Sharing Model.'

Move over Minimum Guarantee or Revenue Sharing Model, now comes the 'Daily Revenue Sharing Model.' It is being seen as another step to pump life into the dying mall culture. Will it be able to do the needful?

MALLS were expected to dot the Indian retailing scene for a long long time. But, low retail spending and increase in rentals to keep up the inflation have taken a toll on their existence. Mall mania is fading both in the metros and the towns. Instead of cut-throat competition among brands, there are hardly any retailers in malls.

Witnessing the growing vacancy rates in malls, High Street Phoenix, (HSP) the first consumption centre developed in India, recently introduced the 'Daily Revenue Sharing Model.' Ensuring the ease of basic rent being payable by the retailer and revenue guarantee being received by the mall owner on a daily basis, the Daily Revenue Sharing Model is actually a joint bank account formed by the HSP and retailers.

Most of the developers in India are in favour of revenue sharing model, as it helps them to build long-term relation with the retailers. Following its success, emerged the novice model of revenue sharing on a daily basis, which seems to be gradually gaining acceptance.

As per Rajendra Kalkar, Centre Director, High Street Phoenix, “HSP and Palladium are the only centres that have adopted revenue sharing on a daily basis model. We have taken this risk and are one of the first centres to do so. But we have, in a sense, moved from just mere landlords to retail real estate developer in a true sense.”

Talking about the retailers' evaluation of the model, Kalkar states, “By introducing this model, we have achieved maximum retailers' participation for the model and the success has been tremendous.”

Sharing his views, Anil Sharma, CEO, French Perfume Co. Ltd, states, “Rental per day or paid on a monthly basis is almost the same for our brand. But rental shared on a daily basis is a better option.”

However, Arif Sheikh, President, Retail, Advance India Projects Limited, is not so enthusiastic. According to him, “Revenue sharing on a daily basis is not feasible as of now. It is very difficult to monitor and keep an account of daily transactions.”

Whether retailers and mall developers accept or deny its feasibility, one thing is sure, the rent per day model has made an entry in the retailing scenario. How much will it creep into the system only time will tell, but the ball has been set rolling.

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