India Shopping Centre Forum ’10, a two-day event organised by the IMAGES group and supported by the Shopping Centres Association of India (SCAI), began with a full house audience this morning. The inaugural session, SCAI Conclave, focused majorly on the evolution of shopping centres in India.
Pranay Sinha, MD, Star Centres, initiated the discussion on a positive note by pointing out that shopping centres witnessed a phenomenal growth, from 2 to 20 across India within a span of five years in the last decade and the numbers might grow to 200 in the near future. He highlighted factors such as collaboration between developers and retailers as major reasons behind the growth. He also drove home the point that the “hot-spot” may soon lose relevance and stop being great crowd pullers with time. "In modern times, rent is a reward for success since the popularity of a shopping centre depends mostly on factors such as remaining differentiated by integrating the social fabric at the same time. So, the aim is to ‘Go Bharat’ as opposed to ‘Go India’. The input costs are not the basis of valuation any longer," Sinha said.
Echoing similar thoughts, Anuj Puri, chairman & country head, Jones Lang LaSalle Meghraj, said, "By 2012, we expect 40 million sq.ft of retail real estate to come up in India. With the growing demand, mall developers need to master mall management in terms of tenant relationships, product mix, promotions and common area management (CAM)." He also pointed out that it was a sector that needed to put the consumer first. Also, in terms of basic infrastructure, the design of the mall has to be productive. From his international exposure, Phil McArthur, SVP-India, Ivanhoe Cambridge Investment Advisory, agreed, "The mall manager is like the captain of the ship ."
Putting the retailer’s perspective forward, B S Nagesh, vice chairman, Shoppers Stop, and chairman, Retailers Association of India, observed, "Even in the last 18-24 months, considered as the slow down period, we have seen that consumers have stayed with the industry. Shoppers Stop generated 75 per cent business from its ‘First Citizen’ customers who preferred to rely on a trusted parter in difficult times." As key learnings, he suggested retailers should chase realistic numbers as far as their expansion plans are concerned since the consumer is willing to shop for products that offer great value for money.
Brining in an interesting perspective, Amitabh Taneja, chief convenor, ISCF & Head, IMAGES Group, observed: "Developing shopping centres is a science that needs to map the social, cultural and economic aspirations of various cities."
At this point of discussion, Thomas Verghese, chief executive, Aditya Birla Retail, & chairman, CII National Committee on Retail, emphasised that the partnership between the mall developer and the retailer was very important in order to create a unique shopping environment that will ensure repeated footfalls. He also claimed that out of the 170 locations that he operated, 120 were in tier-2 and 3 cities, but the consumer aspirations remained the same across India.
Sharing his views, S Raghunandan, CEO, Prestige Retail Group, said: "It is also very important to bring in good quality retailers into shopping centres who can perform consistently and efficiently, thus, leading to good revenue sharing." From the mall developer’s viewpoint, Nikhil Chaturvedi, MD, Prozone & Provogue, claimed: "Often, the mall owner has to pay for the retailer’s inefficiency in making money. Thus, the efficiency of design needs to be worked out by mall developers at the very beginning in order to bail out the excuse of inefficient spaces that are to be found in the best performing malls as well."
Sharing the success story of the Select City mall in Delhi, Neeraj Ghei, director, Select Infrastructure, suggested: "It is important to identify the consumer who will come back for more and keep evolving the model in order to meet his or her specific requirements."
The eminent panelists unanimously felt that with the Indian government approving foreign investments in the shopping centres space, the future of the business will get better. Nipun Sahni, MD & Head, real estate investments-India, DSP Merrill Lynch Capital, said, "Initially, investors looked to invest in residential property, but now shopping centres, too, are graduating to the retail asset class. I can quote the examples of Singapore and Australia in this context, though the same may be missing in India at this point of time."
Taking this notion forward, Ambar Maheshwari, head of investment advisory, DTZ, pointed out that almost 90 per cent of the capital was generic since retail real estate was at a nascent state in India and thus institutional capital was not easily available. He suggested the need for good research to plug in the competency and position a mall as a luxury or a lifestyle destination.
— Sayanti Banerjee
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