Given the recessionary woes at shopping malls, the chances of organised retail trade crossing the Rs 230,000 crore (Rs 2,300 billion) mark by 2010, as predicted by the Images India Retail Report -- with Kolkata accounting for seven to eight per cent -- look remote.

Retail expansion in Kolkata has slowed down by 25 per cent, while rentals have dropped by maximum 10 per cent in Kolkata, compared to national average of 30-40 per cent, according to Jones Lang LaSalle Meghraj.

Several malls in Kolkata are also being converted into office spaces. Many projects are on hold, primarily because the developers are now thinking of reducing their retail components and introducing more commercially viable residential and office components. Also, there is a serious lack of funding across the board.

According to Mayank Saksena, head -- transactions in Kokata, Jones Lang LaSalle Meghraj, the retail rentals in Kolkata are yet to be corrected according to the demand and supply. "The developers are still expecting higher rentals along with stringent commercial terms. In Kolkata, barring a few retailer-friendly developers, no one is interested in getting into revenue sharing models where the fixed operating cost is low for the retailer. In very few cases, deals are cracked on a win-win situation after extensive negotiations. Roughly, on an average, 8 to10 per cent correction is seen in the retail market in Kolkata."

Currently, developers in Kolkata are still waiting and watching the scenario. In some cases where the developer has purchased land at a higher price, is willing to keep the construction on hold and proceed after some time.

The expansion plans of retailers in Kolkata has drastically gone down compared to last two-three years.

Around three-four major projects in Kolkata are on hold since August-September 2008. These include Ozone mall (Oasis Group), Sapoorji Pallonji (Rajarhat, Action Area III), Avani Europa (Avani Group), DLF Grand Mall, Rajarhat. The projects are on hold because of acute catchment problem, rise in construction cost, lack of demand, lack of brands backing, lack of adequate funds, etc.

According to industry analysts, bleeding retailers in Kolkata currently include Westside (out of three operational stores, two are in wrong locations), Nik Nish (lack of funds) and Toy Story (lack of funds). These brands are willing to continue with their existing stores and cancel the rest.

According to Jones Lang LaSalle Meghraj, to be viable in business terms, rentals in Kolkata should be in the range of 25-30 per cent or 4 per cent of net sales for discount formats. For mid-segment formats in Kolkata, rentals should not exceed Rs 70 - 80 per sq ft, while for premium and luxury formats rentals should be in the range of Rs 90 - 120 per sq ft. Currently, rentals in Kolkata are 10-15 per cent higher compared to the viable proposition, depending on malls and their accessibility.

In Kolkata, high street retail rates are higher than in Bangalore by 10-15 per cent. However, mall rentals are lower than in Bangalore by around 30 per cent. High street rentals in Delhi and Mumbai are between 50-200 per cent higher than in Kolkata, and Kolkata has lowest mall rentals in India.

Retail rentals started in Kolkata at Rs 40-50 per sq ft and are now up to Rs 150-200 per cent sq.ft. In 2007, retail rentals went up to 300 per sq ft.

The upcoming malls in Kolkata include City Centre II by Ambuja, Axis Mall by Bengal Peerless, Terminus Mall by Bengal Greenfields, Lake Mall by Space Group and Avani Riverside Mall in Howrah by the Avani Group. On an average, each covers 3 lakh square feet and carries an average rental realization potential of Rs 60-80 per sq ft.

Select malls in Kolkata have also rolled back rentals while others are still positive.

South City mall in South City has already rolled back rentals by 10 to 25 per cent following a petition by a group of around 20 shop-owners. "We have reduced rents by 10-25 per cent for around 130 smaller, non-anchor stores for a temporary period to help them tide over these troubled times. Since last year, two retailers -- lingerie brand Straps and childrenswear brand Kanz -- shut their India operations and therefore have moved out of South City mall also," confirmed Manmohan Bagree, VP - marketing for South City Projects.

Rentals, in the Rs 80-90 (per sq ft per month) range when Forum opened six years ago in Kolkata, are touching Rs 350 for some outlets now.

"Forum at Elgin Road is still the most viable shopping mall in the city right now compared to all the others," claimed Rahul Saraf of Forum Projects.

According to Manish Agarwal, Pantaloon [Get Quote] retail CEO -- east, Big Bazaar has been immune to the meltdown but impulse purchase has dropped. "We are building on the USP of savings through shopping at Big Bazaar," said Agarwal.

Industry sources said that most of the bleeding retailers in Kolkata are ones with large retail area. So if even two stores shut down, around 48,000 sq ft of retail space will vanish from Kolkata.

For instance, Khadim's Egaro, opened two years ago, is currently running a 75 per cent 'clearance sale' on products. Sources said, the company is planning to close Egaro soon.

However, according to Suman Roy Barman, president of Khadim India, "We make regular offers to lure customers to our store." Barman refused to comment on sales figures.

Aditya Birla Group, which runs More in select locations in the city, is reportedly 're-engineering' its stores.

According to a local More representative, "A few stores are being relocated as rent at the current locations are too high compared to sales generated. Against the average store size of 2,500 sq ft, new More outlets will be around 2,000 sq ft. The offerings are also being reviewed to ensure that slow-moving goods do not occupy shelf-space."