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Growth and Development of Malls: The Indian Scenario

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The Indian retail market has gone through a long drawn process of metamorphosis and has emerged in its current modern manifestation. The traditional retail through itinerant salesman and formats of ‘haats’ and ‘mandis’ are long forgotten and were replaced by semi-established formats like mom and pop stores, kirana stores, convenience / department stores, and company/multi-brand showrooms. Even these semi-established formats are rapidly transitioning into established formats like hyper markets and multi-storied malls offering a range of products and services; from groceries, apparels and accessories to food and beverages, multiplexes, electronic goods and even salons and spas, all under a single roof.

There has been an organic growth of malls in the major eight cities, especially from 2006 onwards. Major regulatory changes of allowing single brand retail to 51% FDI and 100% FDI in wholesale through automatic route had an important role to play in the copious mall growth across the country. The mall stock quadrupled in 3 years from 2005 to 2008 and further kept the momentum by doubling over 5 years from 2008 to 2013.

It is important to take note of that the evolution of malls was caused due to the launch of malls of different sizes. Post 2006, gigantic malls with their gross leasable area (GLA) greater than 700,000 sf rose significantly from just 2 malls to 18 malls by 2013 and 10 more malls of such sizes are expected to come up 2015. Of the malls under construction, 20% of the malls will have GLA of above 700,000 sf and are expected to come up in Bengaluru, Mumbai and NCR. This clearly highlights that the need of bigger and more cosmopolitan cities is leading to amplification of mall areas. Till 2006, the malls were 3 to 4 storeys high; however, with the advent of colossal malls, the malls grew vertically also and are now many are 5 to 6 storeys high. So, the modern day malls are not only expanding horizontally but also vertically.

The focus has over the years has shifted to intricacies of mall design, which has an important role in making a mall successful. Mall developers have realized that just creating a glitzy building with central air conditioning, spaces for large anchor stores and food courts, covered parking, etc does not guarantee the success of a shopping mall. Apart from adequate planning and study of the catchment area, nitty-gritty like mall size, shape, design, mall management, ambience and positioning are largely instrumental in determining the fate of a mall.

Malls now strive to give frontage and visibility from streets to as many shops as possible and that circulation areas are wide and inviting with high ceilings. Landscaping is being done extensively inside the malls as well to make them seem inviting. The mall interiors like fixtures, lighting, flooring, etc are now being done up based on the shops in the vicinity or even based on festivals/ seasons, matching streamers and installations are being put up. From being places for ‘just shopping,’ malls are trying to become an entertainment package by organizing plethora of promotional events like concerts, performances, wine-tasting festivals, etc.

Considering the competitive landscape and presence of main streets as well as other malls, professional mall management is elemental in attracting suitable tenants and devising ways of effectively drawing in footfalls and thus further luring other retailers. Today, a lot of thought now goes into the positioning of the mall, whether to position it as premium/luxury, value for money or even niche, etc. Unlike at the beginning of mall culture, the occupier mix in present times is based on focused of the mall operators/managers. Food courts are increasingly being placed at strategic areas than being in being dead spaces. While segregation of particular malls as luxury or premium malls continues, many large malls are providing zoned spaces  or dedicated floors to luxury or premium brands.

Convenience being of prime importance in a mall, the access and exits to car parking are increasingly taken care of besides increasing the number of car parks per 1000 sf of covered mall area. Some malls are even providing for valet parking to attract more consumers by providing them with more ease of access.

The malls have started slowly evolving in terms of contracts offered to retailers. Earlier all space was either sold or offered on fixed contract basis entailing a fixed monthly rent plus the applicable common area maintenance charges. Thus only the occupiers were impacted by the extent of a mall’s success in attracting adequate footfalls and revenues. However, now innovative contracts based on revenue sharing or profit sharing with certain percentage as minimum guarantee are becoming increasingly the norm. Consequently, the tenant is assured of involvement and dedication of the mall management towards making it a success.

Malls will continue to reinvent themselves in order to keep abreast with the new era of entrants and to retain their existing patrons and consumers. The malls are increasingly becoming active on the social network scenario and are effectively utilizing the social media to make it successful. Based on big regulatory or social and perceptual changes, malls across the country will keep transmuting to prevent themselves from obsolete and also match or exceed global standards.