Indus Clothing, which has introduced Italian brands such as Miss Sixty and Energie, is in talks with mall developers to take its expansion plans ahead.
Harpratap Singh, director, Indus Clothing, said, "The company is considering various options such as diluting stake or a profit-sharing arrangement with good mall developers for retail expansion."
Singh added that the company might announce its plans in the near future, without revealing further details. The apparel company is looking at investing Rs 40-50 crore in the current financial year for expanding its brand portfolio.
Pepe Jeans, the denimwear brand, also follows a multi-pronged model of owned, leased and revenue–sharing strategy to optimise the market potential of the brand.
Anand Sundaram, vice-president, national operations, Inorbit Mall, said, "Currently, 15-20 per cent of the revenue of Inorbit Mall at Malad, a Mumbai suburb, comes through the revenue-sharing model, while more than 80 per cent of the revenues from the new mall at Vashi, in Navi Mumbai, would be garnered through the same avenue."
Over time, Inorbit has increased revenues through the revenue-sharing model from 5-7 per cent to about 15-20 per cent.
According to an executive from a property consulting firm, certain malls and brands opt for the revenue-sharing model to enter new markets where the sales cannot be immediately estimated.
"Some malls do opt for this strategy but they guarantee a minimum assurance from the brands. These arrangements are generally not formulated for bigger markets such as metros but for tapping new regions," said the property consultant.
Darshan Mehta, CEO, Arvind-VF Brands, mentioned that the company would love to have a revenue-sharing expansion model, but there is a scramble due to a dearth of good-quality malls.
Explaining the rationale behind the strategy, Anand Sundaram said, "As organised retail evolves, there are better products in the market and it is an indication of the mall's belief in the brand. It enables brands to meet their risks and benefit the topline. Similarly the retailers have also started adopting better revenue models and are focusing on the shopping experience."
However, he said that though the scheme works in the metros there is strict selection process for virgin markets.
