Managing all the stakeholders becomes a Herculean task: Cyrus Engineer

Cyrus Engineer, Head - Sales and Marketing, Tata Realty and Infrastructure Ltd, speaks to Arpita Mukherjee. Edited excerpts:
 
Current situation in the retail industry:
There is cautious optimism and enthusiasm. Clearly, sentiment is low  and spending is a little difficult. You see retailers struggling a lot more. But there is cautious optimism. We hope to see growth next year.
 
Organised retail in India is very strong and robust. Having said that, there is the huge dialogue that is happening on foreign direct investment, on whether it may, or may not happen in this sector. Indian retail will not be impacted too much because there is a large quantum of domestic retail that is going to happen in any case.
 
FDI in India would definitely be good for the overall industry. Of course it has to be well balanced to keep in mind the needs and the rights of the smaller retailers, etc but that can be worked out.

The way forward in India is organised retail. And currently we only have about seven to eight per cent of organised retail. There is great scope for progress.
 
Non-profitability of mall properties:
That is a challenge developers like us face today. When we purchase land in good locations we have to pay an arm and a leg, and a spleen and a kidney too, so it needs to be recovered. Retailers are bleeding in their own situations, but investors have their own needs. So developers cannot get all the money themselves, the investor wants his pound of flesh. Keeping in mind all these constraints, managing all the stakeholders becomes a Herculean task.
 
Also, given the element of competition, when one mall becomes successful, three more come up nearby and all sink together. There needs to be a regulatory framework to ensure that there is a level playing field for all.
 
The industry needs to mature appropriately, developers and retailers need to build partnership and trust that they're both working towards the same objective. So we are still a little distance away from reaching the level of comfortable maturity in the industry.
 
Retailers need to realise that developers are their allies and they need to foster a close partnership where retailers and developers both realise that customers need to come, spend and they both will benefit.
 
Maturity is still some distance away. But, having said that, India is one of the fastest evolving retail markets we see globally. What other geographies have done in 30 years, we have done in about 10 years. Clearly the pace of development is very fast. How long it will take to reach maturity is still a big question mark. We're all hoping it will happen sooner than later but it is still some distance away right now.
 
Pricing challenge:
That is very challenging and ultimately it will all hinge on what a retailer can pay a developer. It has to make business sense for a retailer to operate out of a certain space. Now the developer has to use his ingenuity and ensure he can afford what he is getting. Currently it is s bit skewed, but over time it will balance out for both of them to make sense.
 
And to that extent the new age commercial understanding of revenue share is going to be beneficial to both because it's like a partnership. A developer also ensures that the mall becomes a living space. There is excitement, interest for shoppers to come. Retailers benefit and they do not mind paying a certain percentage of their revenue to developers. So it's a win-win situation.