With over 500 malls in the country, India has witnessed the emergence of a never-seen-before ‘mall culture’ over the past few years. However, you would agree that building a mall is far easier than running it and keeping it that way. A recent report in a leading daily highlighted how several malls are biting the dust already. In this scenario, is it possible to resurrect or turn around a dead mall? And more so, what is it that mall owners can do to ensure their brand keeps breathing and inviting more walk-ins year on year? Anand Sundaram, Gautam Vaswani and Ian Watt from PPZ discuss this vital issue in detail.
Successful shopping centres infuse life into an otherwise mundane city life. These are the consumption centres where customers spend quality time with friends and families and buy goods and services. These are places where retail businesses thrive, the mall promoters see quality returns for their investments and start working on enhancement or renovation plans, and all these boost the GDP of the region.
On the other hand, under-performing malls have an equally negative impact. Customers hesitate walking into centres which affect the retailer’s business, which in turn adversely affects the developers RoI on that asset. Overall, such buildings start becoming the eyesore of a modern urban society.
Unfortunately, most reports suggest that there are more of the under-performing malls in the country today than the ones that perform. So, how do we get such malls back on track and be the drivers of the GDP? There is no simple answer or an easy fix to this concern. Such a turnaround requires financial will backed by the managerial will to convert this into a successful business. It needs the collective pooling of specialists across disciplines and a lot of effort to ensure that we get it right at the very first instance, as customers may not give this centre a second chance for revival.
Many approach a turnaround in a sequential manner. Some advocate that the design be altered first; others believe that improving the day-to-day operations should be the first area to receive attention while many others maintain that getting in the right retailers will do the trick. The question we ask is why is it that, in the first place, retailers do not wish to be present at this centre? It generally transpires that they do not believe there will be adequate consumption at that centre, given the combination of various parameters such as design, mix, management and marketing. In reality, a turnaround is a combination of all such efforts and more. Simply focusing on leasing to turnaround a centre would be akin to wanting to change the engine of a car with the hope that it can compete in a race. We really need to look at the entire structure and the business together as one entity along all dimensions and make changes along all these aspects of a value chain.
While researching the market in one city, for example, we found that our clients loved the large mall that had opened recently in their area. However, they did not like the time it took to park their cars, they found the size too intimidating to a point it started causing discomfort, and were confused by the maze of corridors and secondary circulation.
What emerged was a clear need for convenience shopping where the customer could dramatically cut down the time spent in the parking and the underbelly of the mall and instead spend more quality time with the family or group on the retail floors. Also, focusing on a few categories only at this small centre gave clear sense of differentiation where the small centre that was being turned around had a clear positioning and could be so marketed.
The design team had a clear mandate. They had to re-engineer and re-design the overall façade and the arrival area to appear more inviting and peppy while the access and egress to the parking needed to be now short and smooth. Keeping the need for convenience and quality, areas such as the toilets and signages were upgraded and the circulation modified and altered by shifting and adding a few escalators and stairs.
Modifications were made to the circulation within the larger mixed-use asset so that there are synergies between the various asset classes of commercial, retail and residential. Special attention was accorded to graphics and way-finding to ensure that the centre is both lively as also easy to navigate. Simultaneously, the shop sizes were changed to conform to the emerging needs of the retailers. They were re-designed, optimised and they actually increased the total trade area within the same constraints. The result was an evolved but simple design where the customers perceived the mall to be friendly, vibrant, easy to move around in and would have the experience of high-quality retail stores. The retailers, in addition to recognising these, also found efficient sizes for their store formats and had the key services that were required for effective functioning that could boast great frontages to attract customers.
The customer services were also designed to address the needs of convenience, speed and quality. A slew of customer services were implemented and a new organisation structure was advocated. To keep operating costs low, the HR and staffing aspects had to be looked at afresh to ensure that such costs per square foot was much lower than what it was earlier. A key enabler in this was the IT systems and processes. State-of-the-art cloud wares helped on all counts of enhancing mall up-keep, complaint handling, tracking performance and customer service while at the same time keeping the operating costs very low.
All these were encapsulated in the brand essence of the new brand key that became the basis of marketing of this centre. Animated events and low-cost communication programmes were the chosen vehicles in this instance to ensure that the buzz and life returned back to the centre.
Turning around centres does require concerted efforts of many specialists working in tandem towards re-positioning the centre to the market gaps and needs. While customers are willing and open to try new retail destinations, history suggests that most such centres have just one shot at such an effort of a turn-around. And we need to make that count.