5 mall bosses on why location strategy decides a mall’s success

5 mall bosses on why location strategy decides a mall’s success

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India has finally left behind the nascent stages of retailing, crossing over into a veritable shopper’s paradise. Malls are no longer simply shopping destinations. They are retail stops, entertainment zones and food hubs all rolled into one. And they are sprouting everywhere.

But how do developers know to locate the perfect area to set up a mall?

In the past, mall developers used data analytics, demographic study and catchment analysis, but the scenario changed as technology advanced. Today, developers take many factors into account before setting up a mall in an area, including the demographics, the population’s spending propensity, an area’s economic development and the surrounding infrastructure to name just a few.

READ MORE: What the future of retail holds for malls of tomorrow

Indiaretailing Bureau spoke to a some of the biggest names in the mall business in the country to find out if location was indeed the deciding factor for the success of a mall. Here’s what they told us:

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11 Yogeshwar Sharma, Executive Director, Select Citywalk

5 mall bosses on why location strategy decides a mall's success

Why is the location of a shopping mall important?

Location of a shopping mall is of utmost importance as it is directly related to the catchment. The catchment defines the type of customers and their spending habits. It also helps the mall developers in selecting the brands that will perform well in that particular location.

What are the factors that mall developers keep in mind while selecting a location for a shopping mall?

The two main factors that developers keep in mind while narrowing down the location of a shopping mall are –  the spending habits of the customers and the catchment. Both the factors are equally important. If the catchment is there but they do not have the spending habit and vice versa then it becomes difficult for a shopping mall to survive.

How important is zeroing in on a demographic before settling in on a location?

The demographic area determine the success of a mall. The retail outlets inside the mall have to pay heavy rentals. The outlets will be able to pay rentals only if their sales are high and it is directly related to the buying habits of the demography.

Is study of traffic patterns while selecting a location for a mall essential?

The mall developers either select a location with a heavy traffic and provide adequate facilities that the nearby shopping hubs lack or open a mall in a remote area and attract the traffic by bringing on-board the right brand mix.

Is retail compatibility something you look for? Do you vet businesses around the location you have selected to see if they will generate traffic for you? If yes, why?

There are two types of shoppers – lifestyle shoppers and aspirational shoppers. The mall developers believe in providing what the lifestyle shopper is looking for and aspire him to buy more by bringing a few high-end luxury brands. The retail compatibility is created by satisfying the urge of the customers and aspiring them to spend more.

What impact does location have on mall revenues?

Location plays a very important role because if there are not enough customers at a particular location to support the mall, then the revenues of the mall will also automatically fall.

1. Yogeshwar Sharma, Exe...

22 Siddharth Yog, Chairman, Virtuous Retail

5 mall bosses on why location strategy decides a mall's success

Why is the location of a shopping mall important?

To create a high performance retail environment, the location is of utmost importance. The catchment accessibility is driven by the location, which in turn affects the footfalls and the revenue.

What are the factors that mall developers keep in mind while selecting a location for a shopping mall?

The demographics, the economic development of the area, the catchment and their propensity to spend, along with the infrastructure in and around the area plus the connectivity are the primary factors.

How important is zeroing in on a demographic before settling in on a location?

The identification of the correct demographic is a precursor to the success of the centre. Take for instance, Virtuous Retail’s latest development – VR Bengaluru, which hosts hospitality, retail, co-working and entertainment in the same premises; it is located in Whitefield – the new heart of Bengaluru. The centre is designed for global professionals and their families. Whitefield and the adjoining areas form a vibrant hub of IT and business, with established IT zones and the presence of prominent multinational companies. It’s also an aspirational residential hub that draws the right mix of people by offering a choice of premium residential projects, good quality schools, super specialty hospitals, and entertainment.

Similarly, the upcoming development in Chennai – VR Chennai is located at Anna Nagar, which is part of the prime growth corridor of the city. Access by close proximity to the highways and a metro station and the presence of an affluent catchment have been key inputs in choosing the location.

Is study of traffic patterns while selecting a location for a mall essential?

It is only rationale that the centre is easily accessible and well connected to the public transport system. Time has become a precious commodity, spending quality time with family and friends is a top priority for people. If an individual spends more time commuting, than at the shopping centre, it is not to anybody’s benefit.

This is essentially why we selected Anna Nagar as the home of VR Chennai, which is located in an upscale residential neighbourhood of 3,800 residential units and its a 5 minute drive for the super primary catchment of 50,000 people; a 15 minute drive for the primary catchment of 1.2 million people; and a 30 minute drive or the secondary catchment of 30 million people. It is also a 10 minute walk from the metro station.

Is retail compatibility something you look for? Do you vet businesses around the location you have selected to see if they will generate traffic for you? If yes, why?

Definitely, presence of other businesses along with the retail development is an added advantage to the local community and its economy, which makes it ideal for the shoppers, retailers and local authorities.

VR Bengaluru is situated next to one of the biggest shopping malls in the city, which has impacted both the centres positively, and the consumer is the biggest winner.

2. Siddharth Yog, Chairman, Virtuous Retail

33 Abhishek Bansal, Executive Director, Pacific Mall

5 mall bosses on why location strategy decides a mall's success

Why is the location of a shopping mall important?

Though physical location of any business is important. But it holds rather more importance in the retail sector as the success and sustainability of the retail business is largely dependent on it. You need to be where your target audience is and if the location is not favourable then the need to be well connected, accessible and reachable becomes a prerogative.

What are the factors that mall developers keep in mind while selecting a location for a shopping mall?

While selecting a location for a shopping mall the factors that are considered are accessibility and proximity to foot traffic, track of competition and knowledge of trends and changing dynamics.

Though, location of a mall is considered as one of the major factors for the success of a mall, there are a few other factors as well that decide how well the mall will perform. Some of these key influencers that help in the gauging the success of a mall are – the right tenant mix, knowledge of catchment and an intelligent approach to customer shopping preferences that is backed by quality knowledge and market research.

Whereas, planned execution, design and layout, efficient mall management,  optimum use of technology are important to evangelize the customer of today.

Is study of traffic patterns while selecting a location for a mall essential?

It is important to understand the demographic of the area where you are located and the neighbouring areas surrounding your location. When we first decided to build the mall in the Subhash Nagar area a lot of people were surprised but we took the decision on the basis of the research that we had done on the growth potential of the area.

It’s not just where the mall is located, but neighbouring localities and accessibility along with the positioning of the mall that draws traffic and make it popular. Pacific Mall at Tagore Garden is one of top premium shopping, entertainment and leisure destinations in Delhi and NCR Region.

Real-estate developers as well as retail businesses devote significant time and resources to analyze each prospective site to avoid the failure of business. Research study is valuable when it comes to create a shopping centre with the right size and right tenant mix.

Is retail compatibility something you look for? Do you vet businesses around the location you have selected to see if they will generate traffic for you? If yes, why?

It is one of the factors among the many others that influence the success of a mall. When a customer visits a mall, he/she is not just looking at making a purchase but an experience, a place to spend quality time with family and friends.

So, the marketing activities and events at Pacific are meticulously planned and well thought keeping above mentioned factors in mind. It is a healthy mix of both festive as well as non-festive events where we try to maintain a fine balance between being strictly non-disruptive to just enough events that will keep our customers engaged so that they come back for more.

We at Pacific Mall value our business partners, therefore, most of our marketing initiatives are a step towards allowing them to target the clientele, and tailoring events, promotions, festival celebrations and international days, to enable them to maximize on these opportunities.

What impact does location have on mall revenues?

Our location at Tagore Garden and the vicinity are definitely plus point and we have continuously progressed over the years thanks to the popularity of our services, ROI, value proposition and best customer experience and satisfaction. We regularly interact with our customers and conduct research and surveys to ensure that we get the right data on consumer touch points to help us prioritize on the brand mix and areas of investment.

By focusing on specific consumer segments we are able to create specific zones for customers with specific requirements like high density brands, value marts, celebration zones kid zones etc. Our periodic events and promotions are a mix of category specific requirements and catchment events.

3. Abhishek Bansal, Exec...

44 Amaan Fakih, CEO, Malls at Runwal Group

5 mall bosses on why location strategy decides a mall's success

Why is the location of a shopping mall important?

The location is the most crucial factor for success of a shopping mall. Depending on the location, a mall developer decides on the proposition, as well as the feasibility of developing the mall in that particular location.

Catchment areas, profile of customers, distance and travel areas, connectivity, bottlenecks in terms of infrastructure must be kept in mind while deciding the location of a shopping mall.

For expamle, if a particular location in the immediate vicinity has an intense competitor, this would deter the developer from starting a Greenfield project in such an area. If a particular catchment area is not very affluent, the developer will tweak the nature of the mall proposition to cater to that segment of audience, and could then put up a factory outlet, rather than shelving the project completely.

What are the factors that mall developers keep in mind while selecting a location for a shopping mall?

The modes of transport beyond private commuting such as buses, trains and the metros that connect other catchments around will help ease the commute for customers. Hence, this is a primary deciding factor for developers while selecting the location for a shopping mall.

How important is zeroing in on a demographic before settling in on a location?

Demographics plays a critical role is setting up a shopping mall. At its core, a shopping mall is just an infrastructure and without adequate support from the customers, it would count for naught. The demographic profile of the audience that resides in the immediate catchment area and supporting catchments is extremely critical. Factors such as demographic profile and density of the audience underline the proposition in the mall and these determine whether a developer should turn it into a luxury shopping mall, a regional centre, a value for shopping mall or a factory outlet, etc.

Is study of traffic patterns while selecting a location for a mall essential?

It is imperative that developers study and understand the distances of various catchments to the proposed location and the time that it will take during peak hours and non-peak hours for customers to travel. In metros, such as Mumbai where traffic is a huge concern, it’s not just the distance to travel, but the time it takes to reach a location that will determine whether customers will take the pain to travel to the shopping mall or not. Additionally, the modes of transport connecting the shopping mall are of utmost importance for the employees of stores and mall management staff.

Is retail compatibility something you look for? Do you vet businesses around the location you have selected to see if they will generate traffic for you? If yes, why?

Before location for a shopping mall is finalised, it is important to understand if retail will thrive in that area or not. This would entail the study of whether the land parcels are suited for retail and or for residential purposes. As far as the retail segment is concerned, unless and until, it is a regional centre and the developer is confident that they will have customers coming from afar, one may want to underplay the importance of compatibility of the said location with a retail establishment. It is always imperative that the compatibility is checked and verified. Another factor to consider is whether certain businesses are already in the locality which then helps provide an indicative measure, though not comprehensive.

For example: Thane, before Korum Mall was established, had no other retail footprint in the immediate vicinity. Then Viviana Mall set its foot in Thane too. Therefore, a shopping mall developer such as Viviana Mall has to keep such aspects as benchmarks, the company would not have gone ahead with a mall located close to Korum Mall. However, the developer understood that the location was central enough with a strong catchment, sound infrastructure and thus assessed that retail would thrive in the area.

What impact does location have on mall revenues?

There is definitely a direct relationship between shopping mall revenues and its location. If the shopping mall is in an obscure location, the rental yield would be considerably less than if the shopping mall was at a central, accessible location. Finally, the ease with which customers can reach the shopping mall location, the kind of catchment in and around that location will both play a role to increase the quantum of footfall that comes into the shopping mall. This will eventually translate into the potential business that can be generated by the retail stores, which in turn will help to decide how much the rental pay out that they can afford for that specific location. If the trading density of specific locations is going to be relatively higher, and if the rent revenue ratio is healthier, it will help retailers generate more revenues and pay higher rental than others.

4. Amaan Fakih, CEO, Malls at Runwal Group

55 Mohammad Ali, COO – Retail, Prestige Group

5 mall bosses on why location strategy decides a mall's success

Why is the location of a shopping mall important?

Location of the shopping mall is really important as today most of the metro-cities have a series of micro-markets. Today no city can claim to have a destination which can cater to all parts of the city. Even if the mall is in the centre most part of the city you still can’t claim that I am the mall of Bangalore because it will still be the immediate catchment that will actually be reaping the benefits of the place.

The customers will visit the place maybe once in a blue moon whereas on a regular basis they will still go to the mall which is easily approachable in less than an hour’s time.

What are the factors that mall developers keep in mind while selecting a location for a shopping mall?

There are multiple factors that a mall developer evaluates before investing in a property. These factors have also been constantly evolving and prioritization primarily depends on the region they will be catering to and the catchment and demographics.

Some key factors a developer will definitely look at is the disposable income level in the catchment, the lifestyle and spending patterns The future development of the city will also be taken into consideration including the infrastructure and technology development.

The most important factors being the disposable income level, ability to spend, propensity to spend, the attitude towards spending v/s hours for spending. A few other factors are the ability of catchment to grow in terms of size over a period of time once the mall has come in and infrastructure – roads and metro stations.

How important is zeroing in on a demographic before settling in on a location?

Demographic and psychographic study of the catchment is very important. If driving distance is going to be more than an hour for some key areas to be connected so it will work against the success of a mall. Whether the catchment is high spending/ brand lovers/ shopping experience lovers or not is always worth considering.

Is study of traffic patterns while selecting a location for a mall essential?

It is important to analyse the future traffic patterns. It is always helpful that we discuss the town-planning and try to understand the growth patterns that they have planned for, from the city point of view- the roads, connectivity, infrastructure, bridges, fly-overs and metro. It is better to analyse the entire city masterplan beforehand.

We have a few big brands in India and we have existing relations with most of them, they also have a growth plan, they also have their target market where they will be reaching out to, which is a growth pattern, where next outlet will come. Thus, it is better to connect to brands and we need to think ahead and plan a mall where they would prefer to come.

Is retail compatibility something you look for? Do you vet businesses around the location you have selected to see if they will generate traffic for you? If yes, why?

Yes, retail compatibility is the must thing that we look for and we need to understand the actual compatibility. What we have observed and learnt is that people don’t like to shop where they work, people usually shop and consume where they live.

It is observed that after office people are in rush to beat the traffic, there is a hurry plus the consumption in India is mostly a family affair, they shop with family. We always take care of the cusomter’s shopping experience and want them to spend an enjoyable time while shopping.

What impact does location have on mall revenues?

Location always has a positive impact on mall revenues and plays a major role but beyond that there are several important factors as well like-
– Design – how comfortable it is for the people to spend more time
– Ambience
– Brand’s collection and brand placement
– Kind of brands that can convince people to come to malls
– Parking facilities
– Other amenities

5. Mohammad Ali, COO – Retail, Prestige Group
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