Retailers pay rents on monthly revenue basis

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New Delhi, Sep 3: The high rents became a great stress for the retail players like Shoppers Stop, Spencer's Retail, Madura Garments and they are shifting to revenue sharing model, Business Standard reported.

Till now the process was like, taking stores on rent, where a retailer pays a fixed amount every month, irrespective of the business the outlet is doing.

But now the new model would help the retailers, especially the new retailers to possess some profit from their new business.

According the daily, the well known retailers shifted to revenue sharing model, where a retailer pays a share of the revenue a store earns every month to its landlord.

However, this model helps retailers to offset rentals, at least in the initial months of opening an outlet, when the business is not profitable and footfalls are lower.

"Three years ago, most retailers just kept on opening stores, without thinking about the viability of the location, the footfalls it will get. Moreover, rents in metros were skyrocketing and retailers found it very difficult to earn profits," said Shoppers Stop CEO.

He also continued, "Now, most retailers are looking at a revenue sharing model with the property owner when they open a new outlet."

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