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'India's realty price scares global retailers'

July 04, 2008 11:01 IST
UK's leading department store chain Debenhams has so far opened two stores in India alongwith its franchisee partner, Planet Retail. 

The company has drawn up a huge expansion plan in India, but Francis McAuley feels the prohibitive cost structures can scare away international retailers who want to invest in India. Excerpts from an interview with Raghavendra Kamath.

Will you scale back your international expansion plans in the light of a global meltdown and inflation?

No, instead we are carefully looking at how we invest our funds, energy and resources. At this point of time, if you walk away from India, it looks foolish. India is a key market for us alongwith Russia and West Asia.

Some people may scale back and close operations, but we see it as an opportunity to expand in terms of better locations, properties, people and so on. We said we want to double our revenues from international operations in the next four years. We stick to that.

What are your concerns as far as Indian retailing is concerned?

Shopping malls are very expensive and some sense should prevail in rentals. Service charges are double that of common maintenance area and rentals are 50 per cent more than what is charged on the carpet area. How India can be competitive with this kind of cost structures? It will definitely scare away international retailers who want to invest in India.

You have raised concerns about delay in getting real estate. How it has impacted your expansion plans?

Opening of malls are delayed by six months to 2 years in the country. We have to take that into account while chalking out our plans. The franchisee has to order six to nine months in advance from us. That is the standard supply chain in the UK.