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Trends that will shape future of shopping malls


In this feature, we present a roundup of the year 2015 – the challenges and bottlenecks, which limited the growth of retail real estate and the remedial measures that need to be taken to consolidate the growth of this sector in the country. We have also spotted some early signs and trends that the year 2016 has in store and we tell  you how these trends will shape the mall industry over the next few years…

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An imperative transformation in mall space is the focus on planning and optimisation of retail spaces so as to extract their highest potential (Image Courtesy: Sorbis / Shutterstock.com)

A walk down the memory lane of malls and shopping centre journey in India and it seems we have seen it all. From boom to reaching a point when suddenly the developers seemed skeptical of the future; the shopping centre industry in India has witnessed quite a few up and downs. But what needs to be applauded is the constant efforts of industry stakeholders to go ahead and adapt themselves to the changing market and consumer dynamics. We speak with industry veterans and experts to gauge the current sentiments prevailing in the industry and their views on the road ahead.

The retail sector registered moderate growth in 2015; besides, there was rising competition between online players and brick-and-mortar retailers. Online retailing witnessed significant growth with large amounts of private equity funding in this segment. However, online retailers are reporting heavy losses owing to deep discounts that they are offering. Further, as the market is becoming more competitive, consolidation is also taking place in the retail sector. Some big retail chains have merged and acquired other companies in order to achieve larger scale and efficiency.

2015 also witnessed the entry of some popular international brands such as GAP, H&M and Aeropostale in India. This year can at best be characterised by ‘survival of the fittest’ and ‘synchronisation of all the retail channels’.

H&M Store
H&M Store

Putting things in perspective, CEO Viviana Mall, Sunil Shroff, says, “During the last few years, the retail market has witnessed a substantial growth. Indian retail industry has brought a vast range of various items from across categories under one roof. Due to liberalization of the FDI policy, major international and global players have entered the retail space and have ambitious plans to expand in the future years across verticals and cities.”

According to VP , Mukesh Kumar, “There has been a phenomenal growth of shopping malls and specialty retail stores. But not all shopping centres have survived, and only the ones that can create a community experience have thrived. Malls have increasingly becoming active on the social network scenario and have effectively utilized the social media to make it successful. Based on big regulatory or social and perceptual changes, malls across the country have been transmuting to prevent themselves from being obsolete and also match or exceed global standards.”

Staying ahead of the curve

Consumers are considering online shopping as a crucial part in their shopping journey today. While, online shopping is price-related, the brick-and-mortar model is all about social interactions. Malls should evolve beyond ‘shopping destinations’ and offer an entertainment element along with retail options to the consumers. It is non debatable that digitalization is the need of the hour today and the demand of customers. Hence to be relevant in this growing digital world, one of the solutions is collaborating with retailers to use technology as the means to create the next-gen shopping experience for customers.

According to Senior VP, Mall Management Place Saket, Benu Sehgal, says, “Malls are no longer just shopping destinations but are evolving as active hangout places. Customers look for a holistic experience and it is important to engage with them on an emotional level to create that connect. We offer a plethora of other elements which have now come in such as convenience services to our shoppers such as ticket booking, currency change, bill payments etc. Entertainment has also moved beyond just movies, with play zones or bowling alleys and much more. There are many associations relating to a particular cause or a particular festival besides Embassy associations, Art exhibits which further bring in value for the consumer.”

Today malls are emerging as crucial part of the community and a solution for every desire of a consumer right from shopping to entertainment to special celebrations etc. What is important to remember is that in the Indian context, shopping is often related to momentous events. Celebrations, festivals, weddings, birthdays or simply an occasion for friends and family to commemorate, results in the process of buying something new, getting a sense of ceremony. This can only be felt in person and not a click away.

Executive Director – , Yogeshwar Sharma, says, “It was a mixed year, we can’t deny the fact that 2015 was the year of ‘e-commerce boom’. E-commerce given a stiff competition to brick and mortar retail and malls. is an exception, we survived because our is a one of it’s kind mall in the country and it has the benefit of its ideal location and a very strong vicinity. We had to increase our mall spend on entertainment and leisure activities also some of the major international brands entered India through us like GAP, Aeropostle and H&M. Also these brands did lot of marketing at their end which eventually helped the mall. We also started services like delivery to the home, hands free shopping etc. So it was three pronged approach from our side – improving the tenant mix, adding new international/national brands to our mall portfolio, B. Marketing C. Providing services to our mall patrons.”

Select CITYWALK, Delhi
Select CITYWALK, Delhi

According to Managing Director – Retail Services JLL India, Pankaj Renjhen, “Shopping mall developers should focus on providing a wholesome experience to the prospective shoppers. With rising competition from online retailing, malls can be successful only if they provide a differentiating factor and emphasize more on categories such as F&B and entertainment. Malls have to step up and provide quality infrastructure and recreation activities which cannot be provided by online retailers. Increasingly, malls have to provide convenience and digital solutions so as to make a mall visit more comfortable and engaging.”

Key areas where malls should concentrate on to encash on the opportunity of growing consumerism in India

Today mall visitors are very well informed about fashion, prevailing trends and quality. The exposure to global fashion, taste and lifestyle has made people more conscious and informed when making a purchase decision. Malls today not only needs to be a place where they sell products and services but also need to be a place where they assist the mall visitor in taking a purchase decision. In addition to this, malls need to provide a high element of interactivity through a high focus on unique experiential content. Personalisation and customisation are also the key buzz words for today’s mall.

Valet services, shopping consultants, shopping bag valets, senior citizen zones, kids play and crèche areas, free wifi connectivity, loyalty programmes, navigation assistance etc. are all fast coming an integral feature of today’s malls. Herein the concept of fashion tips i.e. suggestions on what goes the best with a particular customer’s look and personality, makeover tips keeping a desired look in mind, healthcare tips etc. are also being offered. These services certainly establish a customer connect with retailers and their products.

According to Chief Mall Mechanic, Beyond Squarefeet Advisory, Susil S Dungarwal, “The young Indian consumer is spending 30 per cent more than the earlier generation & this has to be taken note of. If the Mall developers can create space for these consumers & satisfy their needs in the Malls, then we can look at the Malls reviving, otherwise the Malls in India will have a difficult time to survive.”

Stating his opinion, Kumar, says, urban India has embraced consumerism and a hunger for branded products emerged. A young working population, that lives by the “work hard and live well” mantra, has powered the Indian retail market The growing awareness of global fashion trends has been fueled by the Internet and the fashion and lifestyle media. As a result, the typical upper middle class consumer is conscious not only of the international styles but also about the lifestyle attributes connected to the brand. Though there is changing behaviour among Indian consumers quality and value continue to be at the heart of their purchasing decisions. A mall should have good mix of International & local brands. More and more experiential brands need to be promoted , Salons being one category.”

Head of Operations, Elante Mall, Chandigarh, Manoj Agarwal says, “I strongly believe that brick & mortar stores would continue to flourish as customized fits, the physical look, touch and feel of various merchandise and apparels and the need for fresh merchandise for each new season as well as the overall experience of shopping with friends & family are timeless. This is in fact supported by the brick and mortar store performance during the festive season just gone by in 2015 and by a great End Of Season Sale performance in January ’16.”

Elante Mall, Chandigarh
Elante Mall, Chandigarh


Vision for 2016

Owing to positive economic conditions and rising consumer confidence, it is expected that retailers will pace up their expansion plans in 2016. Retail chains are not only augmenting their physical stores presence but also launching their online retailing platforms. Also, with further relaxation of the FDI policy, it is expected that there would be foray of more international brands into India; also, more investments would be driven into the retail sector.

The top trends to watch for in 2016 for India’s retail real estate sector are:

Entry of more international brands owing to further relaxation in FDI policy: It is expected that more single-brand retailers will enter India owing to relaxation in FDI clauses and allowing selling directly online. This will propel more investments by international retailers, as there would be streamlining of operating in the Indian retail sector.

Network optimisation by retailers: As retailers adopt the omni-channel model, there will be increasing emphasis on productivity in terms of per square foot revenue generated by physical stores. Therefore, retailers are relooking at their store networks by conducting structured research in terms of location, rentals and sales generation.

Increased funding by Private Equity players: A lot of global investors are actively looking for investment opportunities in retail real estate spaces and retail brands as well.

Introduction of newer formats by retailers: In order to cater to the aspirational and discerning consumers, newer formats that integrate technology and improved experience may be conceptualised. Big Bazaar has already opened a new format of Big Bazaar Gen Next.

Observing the trends, Dungarwal, says, “2015, wasn’t a great year for the retail-realty sector in India, as not many Malls were launched during the year. The online onslaught has impacted the sector & the retail business overall has been under a grey cloud. Though the rental revenues have not yet impacted, there is a huge and a visible impact on the footfalls in the malls, because of the huge discounts offered by online retailers. Online business shall continue to draw more customers, till they offer discounts, which will impact the Mall sector.”

Talking about his expectation from 2016, he further adds, “Having seen the present scenario & also the low business environment in the Mall Business, I am very gung ho on the Mall sector in India, the potential for GOOD malls still is very high & Mall will continue to be a major attraction for people.”

2016 promises to be an exciting year with a robust and positive outlook. With overall market conditions, stocks, business sentiments and real estate starting to look up, it would be surely be a good year for retail as well. This is already supported by the fact that the 2015 festive season that has just gone by was excellent for the brick and mortar retail. There would be increasing amount of technology which would be deployed in retail world to engage customers. As per reports, pan-India there is not much of retail real estate supply expected and would help existing players in consolidating their market position and business.

With increasing population, shifting lifestyles, lengthy working hours and shrinking free time, it is definite that destination malls and neighbourhood malls will grow dynamically. This year, mall business will pick up in Tier II and III cities. Retailers will be revisiting their strategies and have a flexible approach, customised to different micro-markets.

Retailers will start experimenting with formats and sizes for the same brands, adapting to markets as they start moving up the value chain. Investments by both home-grown and international brands will strengthen in tier-II and tier-III markets as they expand beyond tier-I cities. This means, there would be equal opportunities to explore for international and local retailers

Executive Vice President and Mall Head, DLF Mall of India, Pushpa Bector says, “Food and entertainment is the space to experience this year as many international gaming concepts step in India with their new concept stores. Also, it is going to be an year, a technology-led retail will start entering in the single-brand retail store category.”

DLF, Mall of India, NOIDA
DLF, Mall of India, NOIDA

Kumar, concludes, “We expect platforms such as social media and mobile to play bigger roles in people’s shopping experiences in 2016. Companies won’t just use the small screen to “get in front” of customers (i.e. through geo-fencing and mobile-enabled sites). In 2016, retailers will step up their efforts by incorporating mobile into other parts of the customer journey, payments, and loyalty.”
Key factors helping shopping centre industry to flourish

Growing youth
The youth population is growing in India. They are becoming more brand conscious and desire a better standard of living. According to Census report, India has about 500 million Indians under age 25 with easier access to money giving them a significant purchasing power. This is driving growth and demand for products.

Increase in working population
According to the KPMG report*, the working age group of 15-54 years is the largest spender on retail and as per the census of 2011, more than 50 per cent of India’s total population falls under this group, indicating the significant influence by this segment.

Rise in income and purchasing power
India has a large and aspirational middle class and its disposable income has increased significantly, which is resulting in a substantial change in their spending habits and purchasing power. Other factors such as rising internet penetration of the retailers offering a high class shopping experience, rapid real estate infrastructure development, new product innovation, growing interest of investors have wedged the Mumbai retail industry to a large extent.

Ways that mall operators can further improve their business

  • They can raise retail categories like food & beverage, entertainment, services, lifestyle and luxury segments.
  • Malls could opt to implement O2O (Online-To-Offline) offerings in order to help retailers raise their offline sales. Most Asian mall operators are adjusting their tenant mix, but O2O offerings are still in an infant stage of development.
  • Mall operators, in the time to come, could focus on large malls developed in strategic locations keeping specific micro markets in mind. Where this could be a “one stop shop” type large/ regional centre development which has an excellent mix of all the various retail categories catering to customers across all age groups and segments with a focus on food & beverage, entertainment, services, and lifestyle segments.