Apparel and footwear retailers, which until last year saw any announced mall project as "a hard to reject opportunity", are seeing themselves forced to change their strategy. For the first time after the retail boom, storeowners are cancelling pre-contracts sealed with mall developers.
Otter Distribution, the distributor of Otter, Fila or Geox brands domestically, has recently announced it gave up its plan regarding expansion outside Bucharest, amid the financial crisis and implicitly a shopping reluctance. Otter will open stores only in the shopping centres with which it has already signed contracts, namely Militari Shopping Center and Grand Arena, both in Bucharest.
Otter Distribution is not the only company abandoning discussions with shopping centres outside Bucharest. Benvenuti, a major footwear and leather goods retailer, has already relinquished several locations, either because of developers, which postponed their projects, or on the "uncertainty" characteristic of 2009.
Retailers' changed expansion strategy has already started harming the developers that planned to launch some projects and that are now having to resort to various methods to lure new tenants.
"Until mid-2008, most malls were opened with an 80-90% occupancy rate, even 100% in Bucharest. However, in the second half of the year some malls were opened with even a 30-40% occupancy rate, but these are exceptions. There will certainly be malls that will not be opened this year because they will not have a 60-70% occupancy rate, though the construction will have been finalised," considers Luiza Moraru, head of the retail department of CB Richard Ellis Eurisko consultancy.
The shopping centres retailers will renounce the fastest are the malls that will not open as scheduled. "These are 50% finalised projects where developers are unable to continue construction works. These malls may be postponed year after year and then remain unfinished, or be opened after five years and no longer be appealing to tenants. We're taking into account all information coming from them so that we may be able to shape up our future openings," announces Mihai Sindrilaru, New Yorker CEO.
There are, however, companies that have been cautious in their expansion and now are not being forced to concentrate their projects.
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