The Hindu Business Line : Now, factory outlets maketh the mall

CALL it the `retail-iatory' effect. Just when the big bazaars of the world were casting the spell of value retailing on metropolitan India, realty players are casting the die for a relatively new version of discount offerings: malls made up of only factory outlets.

According to a recent Knight Frank Advisory Services report, areas such as the Mehrauli-Gurgaon road and Mahipalpur in Delhi, Trimulgiri in Hyderabad, Marthahalli in Bangalore and Parel in Mumbai have already emerged as a hub of factory outlet stores in the country

But while the concept is yet to take off in India, one of the earliest factory outlet malls, KK Bazaar is already on an expansion spree.

Set up in August 2003 by Pune-based Kumar Builders, KK Bazaar is a factory outlet mall spanning 40,000 sq. feet on the Pune-Satara road. It houses apparel, footwear, saris and hosiery brands and, by virtue of factory sales, offers discounts ranging from 10 to 50 per cent.

"Value retailers do offer discounts, but factory outlet malls offer heavy discounts for just three-six-month-old stock, further satisfying customer's skew towards value for money," said Mr Lalit Jain, Chairman and Managing Director, Kumar Builders.

The realty player plans to increase the existing area to 2,00,000 sq. feet, and the expansion plan will take off in November, said Mr Jain. He added that the plan hopes to cash in on the fact that the discount mall draws regular customers from around a 40-km radius. Since factory outlets are set up at a reasonable distance from manufacturer's key specialty stores, malls with factory outlets avoid cannibalisation, besides drawing low rents and low operating costs, the Knight Frank report revealed.

Pioneering this effort in Mumbai is Royal Palms, a real estate developer. The realty player has identified 1.2-lakh sq. feet of land in its overall estate of 240 acres to build a discount mall. The project will take off by March 2006.

"The discount mall will enable brand owners, wholesalers and retailers an efficient premise to deal with inventory and transactions in huge volumes," said Mr Dilawar Nensey, Joint Managing Director, Royal Palms India Ltd.

The mall has already drawn leading brands such as Provogue and Nilkamal Plastics.

Royal Palms is also eyeing the area around the airport, considering that it has a permission to remain open till 3 in the morning as it is within the tourism development zone.

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