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In a nutshell: Key Success Factors for Malls

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The India Shopping Centre Forum 2009 achieved its mission to deliver the essence of collaboration between retailers and developers.

The panel comprising of the who’s who of the industry discussed the burning issues faced by both retailers and developers in a collaborative and non-confrontational approach. This key session was ably anchored by industry veterans – Anuj Puri, chairman & country head, Jones Lang Lasalle Meghraj and Pranay Sinha, MD, Star Centres.

The retailer side was represented by BS Nagesh, customer care associate & MD, Shoppers Stop; Dilip Kapur, president, Hidesign; Sailesh Chaturvedi, CEO, Tommy Hilfiger (India); Yogesh Samat, CEO, Foresight Retail, Ashesh Amin, head, ColorPlus; and RA Shah, GM, Projects, Trent Ltd.

The developer community was represented by S Raghunandan, CEO-Retail, Prestige Group; Kishore Bhatija, CEO, Inorbit; IS Narula, president & CEO, Ishanya; Ananta Raghuvanshi, CE-Retail, Emaar MGF Land Ltd; Yograj Arora, director, Select Citywalk; Rohit Malhotra, CEO, Realtech; and Ramesh Shah, advisor, Ambience Group.

The concluding session set out to gather some key workable ideas to be delivered to the recently formed Shopping Centre Association of India (SCAI) towards facilitating implementation of the same to guide the way forward for the shopping centre industry in India, said Anuj Puri.

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.

— Soma Chaturvedi

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