D2C brands struggle for prime mall spaces as leasing norms evolve

Legacy brands and international retailers dominate high-footfall areas, while emerging D2C players struggle to break into the offline retail ecosystem.

New Delhi: The rise of direct-to-consumer (D2C) brands in India has disrupted traditional retail models, but when it comes to securing premium mall locations, these brands still face significant challenges, representatives of different brands told IndiaRetailing.

Legacy brands and international retailers dominate high-footfall areas, while emerging D2C players struggle to break into the offline retail ecosystem. However, a shift is underway, with malls beginning to recognise the potential of digital-first brands.

The Challenge

For many D2C brands, moving from online-only operations to brick-and-mortar retail is a crucial step in scaling their business. However, leasing retail spaces in premium malls remains an uphill battle.

Tanvi Somaiya, Founder of The Bear House, shared her brand’s leasing journey, noting that despite initially aiming to launch in a Phoenix mall, they couldn’t secure an entry at that time. Instead, they opened their first store at Bhartiya City Mall, which believed in their brand and gave them a prime first-floor location alongside established fashion retailers like Gap and Allen Solly. The store performed exceptionally well, ranking among the top two in the area.

“Securing retail space as a new brand was initially challenging,” Somaiya said. “But after opening our first store at Bhartiya City, we finally gained entry into Phoenix Kurla and Phoenix Palladium. While it’s still tough, the perception of D2C brands is changing—some are even outperforming legacy brands, which in turn is shifting mall operators’ perspectives.”

Sumit Jasoria, founder of fashion brand Newme, echoed the struggle to secure prime locations, describing going offline as a “challenge.” Within just eight months of launching online, Newme opened its first store—an achievement in itself, given that new brands are often assigned less desirable spaces.

“It took us 6-8 months to figure out the offline retail game. As an independent brand with no large corporate backing, we had to fight for every location,” Jasoria said. “Even when we offered higher rent, we lost spots to bigger brands. Some deals fell through because landlords preferred the safety of established tenants.”

Legacy bias

Many D2C founders pointed out that premium locations in malls are often reserved for well-known domestic and international brands, leaving new-age players with fewer options.

Jasoria acknowledged this challenge but remained optimistic: “There’s a bias—prime locations are reserved for legacy players. But habits are changing. Just like food delivery and quick commerce disrupted eating habits, fashion preferences are evolving too, which works in our favor.”

Snitch, another rising D2C brand, faced similar challenges when transitioning from a strong online presence to offline retail. According to Chetan Siyal, Chief Marketing Officer at Snitch, understanding the nuances of offline retail was a steep learning curve.

“Visual merchandising, customer flow, and ensuring our brand experience translated effectively in a physical space required significant adaptation,” Siyal said. “Securing a prime location was difficult, as key spaces were already occupied by established brands. We had to prove our traction, customer engagement, and ability to drive footfall before mall developers took us seriously.”

Despite these hurdles, Siyal noted that mall operators are beginning to recognise the value D2C brands bring. “The key is proving that your brand adds value to the retail ecosystem—whether through a unique in-store experience, a strong identity, or the ability to attract younger, digitally savvy consumers that traditional retailers struggle with.”

The mall perspective

While D2C brands highlight the challenges they face, mall operators have their considerations when selecting tenants.

Sunil Munshi, Senior Vice President – Retail at Brigade Group, which operates Orion Malls, said that their leasing strategy is not based on whether a brand is D2C or not. Instead, they prioritise alignment with their target demographic and mall positioning.

“We curate a diverse mix of tenants that reflect the preferences and lifestyles of our visitors,” Munshi explained. “This approach cultivates a dynamic atmosphere, increasing foot traffic and sales for all tenants.”

On the question of whether prime ground-floor locations are reserved for larger brands, Munshi emphasised that Orion Mall aims for balance.

“Prime locations are highly sought after, but we ensure that brands aligning with our mall’s positioning get access, regardless of size or category,” he said. “We carefully curate our tenant mix to include both established retailers and emerging D2C brands.”

However, Munshi acknowledged that D2C brands often go through a selection process before securing prime locations. Many start with pop-ups or kiosks to build local brand awareness and test physical retail before committing to long-term leases.

“Pop-ups and kiosks are essential stepping stones,” he added. “They provide brands with flexibility and an opportunity to gauge customer interest without the high risk of a permanent store.”

Food brands face a similar struggle

The challenges of securing prime locations aren’t limited to fashion brands. Quick-service restaurant (QSR) chains like Chalu Chinese also face stiff competition when entering malls.

CEO, Chalu Chinese, Vibhanshu Mishra, recalled the struggles of launching their first mall outlet. “The mall was already saturated with established food brands, making it difficult to attract customers. Foot traffic often gets diverted, so standing out was a challenge,” he said. “We had to train our staff extensively, manage a complex supply chain, and run aggressive marketing campaigns to gain traction.”

Securing a prime location was particularly tough. “High-demand spots were expensive and limited. Even when we were willing to pay premium rent, established brands had the upper hand due to existing relationships with mall management,” Mishra said.

To overcome these challenges, Chalu Chinese focused on building strong relationships with mall operators, showcasing their brand’s potential, and being flexible with leasing terms. “We had to prove our unique value proposition and financial viability before getting prime locations,” he added.

Despite the hurdles, the landscape is evolving. Malls are increasingly recognising the potential of D2C brands, particularly those with strong online communities and loyal customer bases. As digital-first brands continue to expand offline, their persistence and adaptability will be key to reshaping India’s retail ecosystem.

The post D2C brands struggle for prime mall spaces as leasing norms evolve appeared first on India Retailing.

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