This has seen the commercial property environment shaped by many factors, and leasing strategies certainly determine the profit-making in the landscape. In retail environments, you will hear two terms raising discussion on leasing: Anchor Stores and Vanilla Stores. While each type of retail store is of high significant value to malls, and shopping centres, along with the prominent list of the best commercial investment property in Gurgaon, they hold different purposes. Wherein the anchor stores generate footfalls and brand that which Mall in, the vanilla stores are the smaller retail units that benefit off of that footfall. Leaseriding means it would offer an anchor versus a vanilla store through its medium. This may provide a break-even on profitability in commercial real estate. Each is different in its advantages and disadvantages, and what yields higher profitability is the extent of importance to investors and developers concerning Gurgaon and the fast-paced changes that go along with commercial real estate.
Definition of Anchor and Vanilla Stores
What do we mean when we talk about Anchor stores and vanilla stores? Let’s have a look at the exact definition of that:
Anchor Stores:
Anchor Stores. Also known as flagship stores or magnet stores, anchor stores are the standard large retail units that often devour large floor space in malls and shopping centres. Examples include international chains such as Walmart, Ikea, and Macy’s. Anchor stores typically stock a wide range of products, and it is said to attract a huge following of consumers.
Vanilla Stores
These are smaller, standard retail units and are often occupied by independent retailers or small chains. They are generally within walking distance of an anchor, so they rely heavily on the foot traffic generated by the anchor.
The Role of Anchor Stores
The major traffic inducers in any retail complex are anchor stores. A 2019 International Council of Shopping Centres report reveals that foot traffic increases between 30-50% within the same shopping centre for an anchor store due to their brand power and popularity. Their prime objective is to get massive volumes inside the centre, which then drift into these smaller, vanilla stores, thus creating a synergistic effect by helping the overall growth.
Profitability of Anchor Store Leasing
There are numerous benefits to leasing an anchor store, but profitability mostly depends on the following factors:
Stability through the Long Term:
Anchor stores provide stability and long-term leases, usually between 10 and 15 years. Such a long-term commitment ensures continuous income without the risk of frequent tenant turnovers in the future and can be expensive in terms of space left unoccupied and marketing to fill those slots.
Revenue Sharing Models:
Most big anchor stores take a percentage of revenue leasing model, whereby the owner benefits as a percentage of sales for the store. This can be quite lucrative if the anchor store performs well, but risks missing revenues if the store is underperforming.
Brand Association:
A lot of prestige and fame value is derived from an anchor store in a retail center. A globally recognized brand such as H&M or Zara would offer higher value to a shopping mall, and hence, it can offer higher value to the surrounding spaces like vanilla stores. With higher footfall and brand association, profitability in general can go up.
Profitability of Vanilla Store Leasing
Even though the stores are smaller, they have their own set of profitability advantages for developers:
Variety of Tenants:
Vanilla stores are a diverse tenant mix, which can make a shopping experience much more alive. Not only do these stores offer variety and attract an even higher range of customers, therefore, also increase overall sales in the retail centre. From little independent boutiques to mid-size chains, one sees all different mixes here.
Higher Demand for Retail Space
On one hand, while e-commerce keeps growing and strips away customers, many anchor stores have cut their wings or closed their doors, while vanilla stores—the ones offering unique experiences, niche products, and other features—still look rosy. In a 2020 study conducted by Cushman & Wakefield, a retail centre with more independent retailers and smaller chains achieved a foot traffic growth of 10-15% higher in comparison to a centre characterised by anchor stores.
Market Trends and Opportunities
Even as the retail landscape changes, anchor and vanilla stores are still integral to shopping centre success. For instance, in Gurgaon, which is turning out to be a growing real estate market, one is increasingly seeing concentration from developers toward finding the balance of both. SPJ Group is one of the outstanding commercial real estate development companies in Gurgaon; one of its flagship projects is Vedattam in Sector 14, which typifies this strategy and hence combines both anchors and vanilla stores, giving investors a balanced mix of high-traffic drivers and smaller, more profitable retail units. It will be on one of the most commercially busy belts, and Vedattam is already a major retail destination, both from anchor stores offering big crowds and from vanilla stores that ensure a lock-in of maximum profitability at a higher rent.
Conclusion
Property owners and developers need to decide whether it is an anchor store or a vanilla store that will best help support the long-term goals of a retail centre. Long-term stability and brand recognition, along with high traffic generation, are important benefits that anchor stores can provide, but these same anchors might require high rent for a vanilla store. Ultimately, what works best for many is to take a bit of both approaches: high foot traffic balanced by high profitability per square foot.
Anchor and vanilla store leasing is highly specific, and generalising about trends could be misleading. For investors looking out for retail developments in regions like Gurgaon, this nuance would lead to a smarter and more profitable investment decision. For instance, the upcoming project from SPJ Group, Vedattam promises a bright future for commercial retail space in Gurgaon, bound to offer alluring opportunities for both big and small retailers to flourish. For more details on leasing opportunities and to secure a prime spot in Vedattam’s retail spaces, contact SPJ Group today and take the first step towards a profitable investment.
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