04-07-2012, 04:36 PM
Retail as entertainment
INTRODUCTION
Concept of Malls
The concept of Retail as entertainment ‘came to India with the advent of malls. Mall fever has touched every facet of Indian society. Whatever is the income stratum of consumers, malls make no distinction in proffering most-revered national and global brands. Shopping Mall refers to a set of homogenous and heterogeneous shops adjoining a pedestrian, or an exclusive pedestrian street, that make it easygoing for shopper to walk from store to store without interference from vehicular traffic. Malls are incorporated with a whole bank of lifts and escalators for smooth transit of shoppers. Malls are located in proximity to urban outskirts, and ranges from 60,000 sq ft to 70,000sq ft and above. The future of organised retailing is largely in the hands of mall where the shoppers get quality, quantity, aspirational appeal, recreation facilities and ambience. Under one roof, the flashy malls promises just about everything under the sun, from foreign gizmos to the very desi, virtually an airbus full of national and international brands, to say the least. Malls offer a plethora of attractions- high profile shopping, impulse eating establishment, a glitzy and glamorous environment… to discerning shoppers of more refined tastes, who are more concerned with quality and fashion and less concerned with budgets. Mall reveals six factors namely comfort, diversity, luxury, mall essence, entertainment, and convenience which are a source of cynosure.
In India, malls have transformed shopping from a need driven activity to a leisure time Entertainment. The quality mall space which was just one million square feet in 2002 has accomplished new milestones of 40 million square feet and 60 million square feet in 2007 and 2008 respectively. There is a paradigm shift in the mall scenario, from just 3 malls in the year 2000; the country witnessed 220 malls in the year 2006. Exhibiting signs of further enlargement India is likely to have more than 600 in 2010 and 715 malls in 2015, with an estimated cumulative retail space of 100 million sq.ft. Shopping malls in India are reckoned to worth Rs.38,447 crore by the year ending 2010. Real estate corporations like DLF and Unitech are coming forth with the plans catering the ever-escalating demand of shopping malls. In the next four to five years Rs 65,000 is budgeted to be invested in retail real estate development. In most of traditional Indian malls, around 30 percent of space is allocated to apparel retailers while 12-20 percent space is dedicated to Food & Beverages.
Indian malls vary between 35,000 sq ft to 10,00,000 sq ft while U.S. version is between 4,00,000 sq ft to one million sq ft. [26]. The largest malls in Indian metropolitan cities enjoy 25,000 footfalls per day which hikes to an average of 40,000 on weekends [27]. Due to radical revival of shopping and consumerism shopping mall syndrome has hit India in all earnest. Even though the malls are mushrooming from metros and mini metros to tier III cities, the spread of malls is highly concentrated in India. North Zone is having the peak attractiveness with 39% while South, East, and West Zone respectively holds 18%, 10%, 33% of total malls pie . Creating artificial product scarcity, cheap imitation, and taking customer for granted are the talks of yesteryears, thanks to the mall culture . Further, shopping mall is the paradise where various shopping motives like peer group association, impulse shopping, hedonic, status consciousness, market mavens, economic motive, utilitarian motive etc. can be fulfilled in one shot.
Following are some of the key issues that emanated from the discussion between and amongst industry thought leaders present at the forum:
Connectivity/ Transparency:
It’s high time to build a connect between retailers and developers to understand the problems from both sides of the table and work out solutions that lead to a win-win situation for both. Dilip Kapur said that a huge variation has been seen in turnovers in store locations in different shopping centres and a need is felt like never before to have a greater connectivity and share sales figures with mall owners. A sense of confidence must come around by way of credibility and transparency from both sides. Pranay Sinha raised the issue of ensuring that fit-outs are complete so that the mall opens with a bang. It was expressed that the retailers must not keep the developer waiting to complete fit-outs . They should help work towards the mall opening with all shops open at the same time. Likewise, the developers must also honour the proposed date of mall opening and be accountable for undue project delays.
Zoning/Planning:
The need for a good retail-mix and the right zoning cannot be over-emphasised and must be considered very thoughtfully to create compelling differentiation. Sailesh Chaturvedi stressed on the qualitative aspect of mall management, which is higher on his wish list as compared to quantitative aspects such as footfalls.
Relevant footfalls:
It was observed that the typology of events/promotions has some retailers benefit from the footfalls while some other premium brands may even experience a drop in sales figures. While developers and retailers both agreed that it was important to drive footfalls to make the shopping centre a destination of choice for the customers, premium brands such as Tommy Hilfiger and Hidesign voiced the need for relevant walk-ins as clutter negatively impacts sales figures in their case.
Raghunandan supported the need to drive footfalls because if malls do not attract enough footfalls, it's eventually the tenants who suffer. The need is to reassess the general nature of mall events and promotions to connect better with the needs of the customer as well as the retailer. To be able to achieve that the correct mall positioning needs to be in place, said Yogesh Samat. In the same context, Arora cited the example of Wednesday Flea at Select Citywalk, which has proved to be a huge success for the mall. Shah of Ambience Group referred to their efforts to appeal to consumers across segments in trying to make the mall a preferred destination first; while promotions are secondary.
Sales v/s Lease model:
The lease model is a clear preference for both retailers as well as developers. BS Nagesh observed that the problems as experienced today are more with the sale model than where leasing has been done. But while the developers in general want the retailers to honour the mutually agreed lease deeds, the retailers are looking for more flexibility and freedom of action. Kapur made it clear saying that if developers can’t help reduce rentals to ease the pressure on retailers then the latter should have the freedom to exit.
Rent model:
Sinha raised yet another complex issue - How do developers arrive at rent figures? The discussion revealed gaps in the underlying philosophy. Raghuvanshi of Emaar MGF, who explicitly supported the need for retailers and developers to share each other’s ups and downs to tide over the difficult times, responded to the question of methodology of rent calculations saying that they do it the same way as it was done before the slowdown.
However, it appears that a combination of revenue share and relief during non-occupancy period should work well.
Importance of multiplex:
Puri posed a few key questions to the panel in a rapid fire round, which included a their take on the importance of Multiplexes. While multiplex was regarded as a significant anchor, but again relevance is the key. Nagesh voted for multiplex subject to incremental parking, while Narula added that the presence of other multiplexes in the area also needed to be considered. Kishore Bhatija said that frequency builders are needed to build habits, which eventually result in conversion. All in all, multiplex may not be the only answer always and more out-of-the-box thinking is the need of the hour. Bookstores and kids zone are suggestions that can make a positive difference to footfalls.
Outlook on tier II and III:
There’s good news for both retailers and developers looking to expand into tier II and III cities as the general outlook and experience as shared at the forum is positive. However, the perception of what the right size of a retail real estate development should be has restricted itself between 300,000 - 400,000 square feet as opposed to the million square feet plans that were the talk of the town until early last year.