Though the equation between demand for malls and supply of space is disproportionate, it has not weakened the will of Indian mall developers to open huge gigantic malls across the country. With little differentiation between the brand and other categories mix, malls are coining newer and innovative ways to increase footfalls, which calls for developing and providing support service amenities to deliver an everlasting shopping experience. The story delves into the reality of support services in some of the giant malls today.
One fine day, an opulent businessman decides to construct a mall and then gifts it to his son on the latter’s birthday, expecting he would be able to manoeuvre empty spaces as money generating units; little did the businessman realise the consequences. As expected, the project turned out to be a failure. Rightly said, constructing and managing a mall are two different things altogether. Across the country and major metros, there are many examples of malls either lying vacant or shut down due to improper planning. Analysts at agencies like Crisil, Jones Lang LaSalle (JLL) India and Ernst and Young say 80 per cent of India’s 255 malls are failing. Reports suggest that about US$ 4.2 billion has been spent to build these approximately 255 malls, of which about 65 per cent are in Delhi/NCR and Mumbai. The key reasons behind this are high real estate prices, poor planning, failed promotional activities, infrastructure incapability, high rentals, improper brand mix and sluggish demand as the economy slows. The attitude of the management and issues with the mindset and execution at the management and lower level was also a huge challenge to overcome. Susil Dungarwal, founder of mall management firm Beyond Squarefeet, says in an interview with Business Line: “Apart from the 250 malls in India right now, 400 or so are either under construction or at the drawing-board stage. This supply will be added in the next four years. A ‘Malls in India’ report released by Images Research said malls in number are expected to soar to 720 by 2016. The Americans are pulling down their shopping malls as they are reluctant to reinvent themselves whereas Indians are opening more and more malls, which are gigantic in size like the Lulu Mall in Kochi.”
What is the fate of all these malls? Are these malls developed and designed with business economics, viability and profitability in mind? Who is managing them to make them run efficiently? Do these malls have enough facilities to encourage customer traffic? These are questions that still remain to be answered, as Indian developers are still toiling between managing projects professionally and whimsically. Until very recently, mall management was synonymous with facility management in the minds of most Indian developers. “The realisation that professional mall management does not just manage facilities, but also advises owners in the design and efficiency of the malls and eliminates unnecessary expenses right at the construction phase, is yet to sink in. “At the same time, it is important to ensure that a right product is built and will be run efficiently, thus keeping operational costs under control,” says Anand Sundaram, CEO, Pioneer Property Zone (PPZ).
In countries like Australia, United States of America and various European countries, managing malls through a professional agency has been very well accepted by the retail sector. In India, however, this concept gained prominence only a few years ago. Getting the right tenant mix, inadequate promotional activities, facility management, and design of the malls are some of the key issues that still need to be addressed in the Indian retail sector. Most of these problems arise right from the initial stage of developing the mall for which mall developers need to have a vision at an early stage to avoid such challenges. Currently, there are very few designated mall management companies in India. However, big retail chains such as Future Group and some large developers have set up their own mall management divisions that operate as their subsidiary companies.
Some developers such as DLF have also recently entered into contractual arrangements with international property consultancy firms to manage their malls. Earlier in the decade, mall developers were more inclined towards exiting the project early by selling retail mall units to investors at the pre- and post-completion stages. But the liability does not end there. As the retail spaces are with different entities, there was no central authority managing the mall and this led to vacant malls with no retailers and customers. With no control over the various facets of mall management (adequate power supply, safety issues in case of emergency and miscellaneous issues related to signage, water supply, sanitation, etc.), the current Indian scenario is plagued by various issues, some of which are discussed below.
Bottlenecks and challenges
The crux of the problem lies in the basic plan of developing a mall. In Ahmedabad, nearly a third of the mall space is lying vacant. In Bengaluru, some projects that were expected to be operational by the end of 2013 have been deferred.
Design and space optimisation
“India has abundance of space which can be utilised; so the issue is not about lack of space for building malls and shopping centres, but about the design and the plans. Malls are ailing today and in true sense have become their own enemies,” says Paras Jain, an architect and builder of commercial spaces. Rajneesh Seth, a retired corporate professional, refuses to go for shopping to the nearby mall in Goregaon where he lives. He says: “Firstly, I am handicapped and need assistance in walking. In this mall, there is hardly any assistance on the wheel chair and even if someone helps me, the escalator is so thin that he is not able to manoeuvre my movement. Additionally, the signages in the mall passage are not clear and often confusing. Mall developers often work with inexperienced architects, who lack the expertise of what works and what does not for a mall. The 150,000-sq.ft., three-storied Center One was billed as the first world-class mall in Navi Mumbai. However, it lost its uniqueness to the better designed and infrastructural adept malls like Inorbit Vashi in the vicinity.
Retailers also get hampered due to poor and inflexible designs, and poorly constructed shop floor spaces in malls today. It is as much a compromise for retailers and consumers to run and walk through the congested walkways and shops. The classic example was City Centre in Mumbai, which had constructed shops of 500 sq.ft. so thinly barricaded that it affected the business of shop owners and retailers there. The high-end Atria Mall in Mumbai is another example of poor planning. The mall, which opened in 2006, is now up for sale. It has poor road access and is not close to any railway station – essential for footfalls in Mumbai.
What developers can do
In the last decade, the shopping centre industry has undergone a huge transformation. The success of a mall depends primarily on three factors – whether the developer has sold or leased the mall and to which brands, and the kind of revenue-sharing agreement it has with the retailers; whether it is designed to attract all retailers and garner visibility; and the type of catchment area it is focusing on. Majority of the developers are taking to creating arcade style malls not just to increase footfalls but also to develop entertainment spaces that can change the fate of the malls and, at the same time, infuse soul and life into the very fabric of the malls. “The design of the mall should also complement the target audience it is catering to. Bad design leads to dead spaces,” says Jain. According to Ashwin Sheth, MD, Sheth Developers, Viviana Mall: “The design element should incorporate optimum efficiency of equipment to reduce operating costs.” According to Mukesh Kumar, VP, Infiniti Malls: “The design of the mall should be modern yet contemporary.”
Some developers have eliminated alleys or narrow passages that a mall’s inherently poor design results in and have merged those with existing stores. “Badly designed malls have to be content with smaller retailers,” says Siddharth Agarwal, builder for residential and commercial spaces. But according to experts, the local phenomenon is set to catch up as a big retail trend this year. While Nalli, RmKV and Naidu Hall have already entered several malls in Chennai and Bengaluru, retailers from Chandni Chowk are set to be a part of Noida’s DLF Mall from July. Among other brands, Kala Niketan, Malabar and Kalyan have already moved into Hyderabad’s malls.
Also, there is greater emphasis on directing footfall traffic along the mall’s entire floor scape. Hence, developers are paying attention to issues of space utilisation and adding local flavours by giving a flea market feel to shopping centres. This not only generates revenue for the malls but also enables small entrepreneurs and retailers to showcase their merchandise. Infiniti Mall, Andheri West, Mumbai is pursuing the concept of flea market by giving traditional retailers a boost. Some mall developers are even introducing first-time brands or attractions (small retailers) in the extreme ends to encourage shoppers to walk through the entire spaceway.
“Planning and designing should keep in mind the need to be flexible or have dynamic parameters that may need to be tweaked from time to time. Essential ingredients of success would be to understand the needs of the local catchment, which will help in product positioning while also ensuring the right tenant mix to meet the expectations of the catchment. It is imperative for developers to position malls correctly so as to attract the right tenant mix and differentiate themselves from other similar developments,” says Dr. Prodipta Sen, Executive Director, Alpha G:Corp.
Right brand mix
While design and location can make or mar a mall, brand mix with interesting categories – food, entertainment, shopping, etc. – can affect footfalls positively. Landlords or developers tend to lease out retail space on a first-come-first-served basis or sell it off to investors or individuals who offer attractive rentals for the space. This creates a sub-optimal tenant mix like a food and beverage outlet next to a designer apparel shop instead of an accessories or a footwear shop. Developers have not been able to put in the effort to maintain and select the brands or eateries that should be a part of the mall.
The country’s first mall, Chennai’s Spencer Plaza, did well for a decade from 1991. However, walk-ins started falling in the absence of a good brand mix. During the early ’90s, the concept of an anchor store was non-existent, hence one did not have stores like Big Bazaar, Home Town etc. The right brand mix with anchor stores, which drives in huge footfalls, is a must. Oberoi Mall and Phoenix Mall in Mumbai have been successful models as they lease out the space to brands and end up having the right blend of products and food joints for the customer.
Kumar feels: “The catchment area of around 5 km radius of the mall must be studied before signing up any lease. There is no point in getting a luxury brand if there is no demand for it in the catchment. There should be a plan to upgrade as and when the market matures and aspiration level of the people rises. We are a 100 per cent leasing model.”
“There should also be a balanced mix and layout of retail outlets, footfalls and ample space for parking, rest areas, entertainment, gaming and the food court. At AlphaOne, Amritsar, we have an agreement with 5 franchisees and 165 outlets are directly company owned and operated. Whereas at AlphaOne, Ahmedabad, all outlets are company owned and operated,” says Dr. Sen.
“DLF Promenade is a 100 per cent leased mall and is a fashion forward mall positioned as ‘the next moment of fashion’. Hence, special attention is given to the premium fashion brands while chalking out the brand mix. It does a periodic churning of its brand mix to offer the newest and best of all to its patrons. The mall houses an eclectic mix of fashion brands that includes its fashion anchor Zara placed right in front of the main entry along with other fashion brands like Mango, Forever 21, Bebe, Promod, and Marks and Spencer – all situated on the ground floor. The mall also houses premium lifestyle food destination brands catering to the grocery needs of the individuals looking for the specialty foods, which they find when they travel abroad,” says Dinaz Madhukar, Senior Vice President and Mall Head. Sobo Central is unable to draw the crowds as it offers neither a food court nor a multiplex. Similarly, Atria Mall was bereft of customers as the category mix was not exciting, nor did the mall have a multiplex.
Majority of malls across the globe are owned by property barons that get tax breaks or immunity from local property taxes and hence they charge exorbitant rent and prefer big box chain stores. The bigger question facing retailers today is space rentals and how do they right size the stores in order to economise rentals. Especially the brands who are looking for expansion, are reconsidering rentals and looking at innovative revenue-based models. The mismatch between supply space and demand has pushed the demand with 30.053 million sq.ft. hitting the market as against supply of 56.399 million sq.ft. by 2014, according to Asipac experts. There is also pressure on rentals in malls that do not have footfalls. Mani Square Mall in Kolkata witnessed a sustained protest by tenants when rents were sought to be upwardly revised. Mall owners already have a profit-sharing system in the food courts.
“Broadly, it depends on the investment made to construct the mall and the current market rentals. The brand, location, floor and size play a vital role in deciding the rentals. In a few cases, low rentals are offered to the retailers who are all for offering services like florist, dry cleaners, local arts and crafts, etc.,” says Kumar. “The rentals in our mall largely depend on category affordability as per national norms,” says Seth. “At AlphaOne, we have the leasing model, which is a combination of minimum guarantee or revenue share, whichever is higher. This ensures a win-win situation for all the stakeholders. Therefore, we look for players and partners with the same thought process that enhances the shopping and entertainment experience for customers. The minimum guarantee varies for each floor whereas revenue share depends on the product category, as the profit margin for each category is different,” says Dr. Sen.
Malls have to become brands in today’s dynamic retail environment. It is not only brands that draw people to the mall, but also the brand value and perception of the mall that plays a vital role in the minds of the consumer to choose a particular mall over another. The visitors expect a minimum level of comfort, safety and security, and hygiene from malls which are branded. To understand the customer’s needs, one needs to understand the ‘voice of the customer’, and take action accordingly. In Ahmedabad, for example, the women wanted large-sized restrooms that could double up as changing rooms. The adults wanted comfort of senior citizens to be taken up as a priority in malls. Hence, AlphaOne had to plan enough rest spots across the facility. Mangal Tirth Estate’s Balasubramaniam said in an interview with a national daily that the success of a mall also depends on its maintenance. This includes housekeeping, security and support services, parking and traffic management, water and power backups, etc.
The quality of support activities makes a huge impact at all customer touch-points and will go a long way in creating the customer connect and eventually customer loyalty. Support services in malls have become the backbone in initiating a consumer connect. It has become inevitably important to ensure that malls provide basic facilities such as well-managed parking, effective air-conditioning, well-kept housekeeping and a friendly environment to shop in. “With the advent of online shopping, the shopping centres globally are working towards creating a great experience to pull customers to the shopping destination. The centres are becoming a place for families or meeting places for leisure and business activities, and hence the elements required for these are being constantly upgraded and creative solutions adopted. A lot of shopping centres globally provide free Wi-Fi zones, introduce mobile apps for schemes at the centre, customer connect on Facebook, Twitter, interactive mall map kiosks, introduce machines for booking movie tickets, and for virtual trial of apparel in the atrium and lobby areas, virtual games for kids and teenagers in the common areas to name a few,” says Anand.
The Southgate Mall, CanadaMany international malls have also started to have travel agents, clinics, pet-care facilities, child care, dry-cleaning facilities, etc. These are day-to-day essential services, which could add value to the mall. This in turn increases the time spent by the visitors and also add to the footfalls. If we talk about Indian context then malls like, Inorbit Mall are excellent example of how professional mall management can transform, refurbish and reposition a retail centre into a popular and profitable venture. In many countries, malls are connected through the metros, which make it convenient for the visitors to visit the mall without worrying too much about the parking.
Parking and traffic management
Many malls in India do not have adequate parking. Since most malls are being built in the cities, developers typically provide basement parking facilities. However, these parking spaces are inefficient due to low ceiling heights, bad lighting and single entry and exit points. The first thought that comes to a mall developer’s mind while building the mall is to acquire as much as retail space as possible not realising that even though the mall might have the best of the brands, it might not be able to generate as many footfalls without an adequate and well-managed parking space. While visiting a mall, the customer’s key intention may be shopping, leisure or recreation that a particular mall offers to them but parking is one of the prime focus points, when it comes to support services in malls as it helps in creating the first impression on a customer’s mind during their visit. A lot of mall owners are still not accustomed to the idea of making parking spaces available in their malls but a lot is being done by developers and mall managers to deliver experiential shopping to its customers. “The flow of people is related to the design of the mall and the spatial distribution of its tenants. For example, a star-shaped mall tends to have a problem of crowding in the centre of the mall, as everyone has to pass through the centre while moving from one side to the other. Circular malls, on the other hand, would not have this problem. They tend to have better pedestrian flow and less congestion. Managing parking facilities includes provision of ample parking and manoeuvring of cars in the parking lot,” says Jain.
DLF Promenade has two floors dedicated for parking in Basement 1 and Basement 2. There are 786 car parking slots and 250 slots for two-wheelers. The exit and entry points are equipped with smart parking solutions handled automatically. The mall has reserved parking for the physically challenged and senior citizens in B1, and women. With valet parking and panic buttons installed to provide safe environment in the parking lot, the mall patrons can also enjoy the waterless car wash service in the parking while they are on their shopping spree. Viviana Mall offers for its customers planned rickshaws and cab stands at each entry, with highest parking capacity (2,400 cars), which is free of charge, separate elevators for the staff and others.
AlphaOne offers enhanced convenience for tenants and customers with parking facility for over 1,200 cars at Amritsar, where shoppers can park on the surface car-park and travel on the travellators to the lower ground HyperCity. Besides escalators and panoramic lifts, fully automated parking management systems and trolley management ensure free flow of customer traffic at all busy areas. The mall ensures that all its equipment and amenities are state-of-the-art and immaculately maintained. At AlphaOne, Ahmedabad, free-of-cost parking facility is available for over 1,300 cars, along with sufficient parking for scooters and motorcycles.
Infiniti Malls have introduced sensor-based parking bays where the customer can easily figure out the vacant bays. The parking is automated for speedy movement at entry and exit points. This system also includes camera-based identification of license plates at entry and exit points for the safety of the vehicles.
Security and other concerns
Majority of malls in India are not in a position to buy high-end equipment like scanners, explosive detectors, fire extinguishers, trained security staff, etc. due to huge cost and other statutory taxes levied on it. Managing high footfalls at frisking points, unplanned and fewer exits during rush hours are still some of the biggest challenges for most of the malls today and can create issues in evacuation and emergency. “Apart from the regular checks and monitoring by the local police, ATS squad, BDDS and the QRT, prominent measures are taken to train the security staff and fire team to face and take independent decisions in case of an emergency,” says Sheth. To reverberate the safety and security values among all its staffs, shoppers and society, DLF Promenade celebrates Safety Carnival. The mall organised the first ever Safety Carnival for the shoppers in March, 2013, and now it has become an annual property. The carnival is done in association with the Delhi Police, Delhi Fire Services, hospitals, RWAs and educational institutions, to spread awareness about safety aspects.
“One must design security in many layers like, superimposed surveillance on physical guards and to take all steps to strengthen the weakest link in the chain of security. AlphaOne in Amritsar and Ahmedabad both incorporate highly efficient security measures to ensure that all visitors and staff have a safe and enjoyable experience, be it while shopping, dining or working there,” says Dr. Sen. At Infiniti Malls, other than separate entry and exits, all materials which come into the mall are scanned through X-ray machines, frame metal detectors, hand-held metal detectors, and advanced CCTV systems to detect every movement inside as well as outside the mall. There is also a separate vigilance and fire department to tackle any eventualities. Smoke detectors, sprinklers, hose reels and five sets of emergency evacuation staircases are in the mall for any fire.
Right from its inception, DLF Promenade has taken into consideration the issues of scarce water and power supply to its mall. They have built various facilities and have taken up aggressive horticulture initiatives besides entering into a tie-up with the Indian Pollution Control Association for garbage recycling. DLF Promenade uses 32 KW per hour through solar energy, which is expected to increase to 150 KW per hour. The mall also has many energy-saving techniques, such as light sensors inside and outside the mall, air-conditioning control through BMS, air curtains to avoid air-conditioning loss, Danpatherm insulation on transparent sheet terraces to avoid heat seepage into the mall while maintaining lux levels through day light and efficient STP for waste water treatment for recycling and utilising in horticulture, flushing and cooling tower. DLF Promenade is the only mall in the city offering support services to its visitors such as waterless car wash service, home Safe (dial-a-chauffer), party planners, child safe shopping, dedicated lounge for drivers, hydraulic elevator for 100 per cent accessibility, etc.
“We at DLF Emporio have solar panels for preserving energy and transforming it into electricity. We also have wastewater treatment to recycle and reuse water within the mall,” says Madhukar.
The malls are not just a place for shopping but a place for 360-degree entertainment. Every aspect of a mall including brand mix, F andB, design, positioning, size and location is aimed at creating a one-stop destination for the mall patrons and delivering a lasting customer experience.
Regular promotional activities at Ansal Plaza, including cultural events, have ensured steady foot traffic in the mall since its inception in 1999. The mall also has an amphitheatre dedicated to these promotional activities. This has been one of the driving factors behind the success of the mall, despite having a less optimal mall design and tenant mix compared with some recent malls in the NCR.
Each event and promotion at DLF Promenade is planned out keeping in mind the business of the brands, tenant feedback and mall target group so that the mall receives the right kind of footfall resulting in sale. While the décor inside the mall acts as a visual treat for the customers, the tenants witness an increase in the shopping due to the smartly planned out-of-the-box and innovative marketing initiatives – hosting the Fashion Bloggers Meet in March 2013, at DLF Promenade showcasing Spring/Summer 2013 collection, a month-long Summer Fiesta with the kids’ favourite cartoon characters Chhota Bheem and all his friends, food festival in 2014, bringing together some of the famous F andB brands in Delhi on one platform. In 2013, the mall organised the trend-setting Shoe Festival, spearheading category-led marketing in the mall industry. According to Sheth: “It is essential for the mall to brand itself in order to gel with the community around as ‘the mall’. Marketing initiatives during the festive season, public holidays, celebrities and international movie-tie ups have been perceived as a major crowd puller.” Quips says Dr. Sen: “The key to being ahead of the competition is the way the team at AlphaOne handles footfalls, which is always the primary concern of brand activation. As also specifically in AlphaOne, Amritsar and Ahmedabad, we are involved in several initiatives that qualitatively and quantitatively contribute to the betterment of communities especially in realms of health, positive public awareness, and community participation besides cultural and spiritual well-being. Activities in this regard have begun to be identified with the AlphaOne brand and the frequency of such activities is increasing all the time.”
“We promote the mall 360 degrees in terms of ATL and BTL activities. We engage visitors through social media, in-mall promotions, information on various offerings through website, and ads in print and electronic media in the catchment area,” says Kumar. DLF Emporio’s annual brand properties such as Luxury Shopping Festival, Rarest of Rare, DLF Emporio Design Awards, festive pop-up stores and installations assist our retailers according to the season. “This also gives a chance to our consumers to explore what luxury brands are offering for particular times of the year. We are looking forward to launching the Treasury of Trousseau, our one-of-a-kind wedding show starting on 27 August and going up to 31 August 2014,” says Madhukar.
Other than Mall management agencies, malls are using advertising agencies to promote their brands and figure out how they can economize empty spaces. Mall activations are emerging as one of the important modes for brand promotion. Today’s malls are busy up-scaling advertising environments to their full potential generating opportunities to make contact with the target audience. There are various ways in which brands are using mall activations –
“Brands see Mall activations as an opportunity to announce new product and service offerings to customers within a proximate distance. While classic advertising is useful in creating awareness; mall activations have the power to stimulate the buying process. As activation helps to create incremental sale opportunities by reaching out to the potential customers” says Ajay Mehta, CEO-Interactive Television Pvt. Ltd. When a brand advertises in the mall, the product is showcased in an environment where women, men, and teens spend lots of time. For advertising effectiveness, it is crucial to understand the brand in its competitive context.
Just to illustrate, May Mall Monitoring report showcased Samsung brand active throughout may. The report also highlighted maximum number of mall activations in Delhi closely followed by Bangalore in May. Automobile, Banking and Finance, Beauty and Consumer Durables are top 3 categories active in Mall Advertising since Jan 2014
Innovations in malls to enhance customer experience
Vipul Laing O’Rourke (VLOR), a joint venture between Vipul Group and constructions and engineering major in UK, Laing O’ Rourke Group, uses technology to communicate with both modern and old buildings and connects to a central control station. This allows multiple buildings to be managed by a core expert group of professionals, thereby reducing cost and operational risks. Some examples of kiosk solutions for facilities management include:
- Information and planning terminals: Allowing customers to find out about a centre, and plan and print their activities
- Booking terminals: Enabling customers to book tickets for shows, concerts, or simply parking, paying and printing tickets on the spo
- Fitness kiosks: Taking weight, height and other measurements of a user and asking questions about their fitness goals, then providing a printable fitness (and even dietary) regime to follow
What earlier may have just meant a function being essayed on an in-house basis or by petty contractors, has now evolved into various value-added services, using advanced levels of technology and cost-saving measures, which malls are employing to enhance customer shopping experience. In the new marketing parlance, when malls are tagged as brands and positioning is a big issue, each mall developer is looking for innovative ways to attract footfalls. What is important today is how a mall is following the principle of being a retailer- or shopper-friendly destination, providing superior ambience to its consumers and good facilities to its retailers.