New Age Malls: Transforming India’s retail landscape

Must Read

In the last couple of years, a rapid transformation of the Indian retail landscape has been witnessed in terms of both technological advancement and consumer preference. Online retail has made a big bang entry and witnessed exponential expansion.
According to a report by the Retailer Association of India, e-commerce sales are expected to reach US$ 55 billion by FY2018 from US$ 14 billion in FY2015. In contrast, the development of malls has slowed in India, with limited shopping centres being construction in a lot of cities.
If one takes key developments of 2014 and 2015 into consideration, the list is not very long. Besides the Mall of India launched by DLF recently, various Decathlon outlets and a few super marts, there has been no other major development in this segment.
About 25 to 30 million sq. ft. of mall spaces are under development in Tier I cities in India, but it seems that the developers are not in a hurry to complete these projects. Moreover, new plans are not looking too optimistic, especially in Tier I cities. The focus of developers as well as retailers is more on the changing business model and a new pricing strategy that can help them sustain in this challenging environment.
In fact, there is a dearth of quality retail space in 2015 in major cities. The trend of opening superstores is catching up in Tier II and Tier III cities, cities in which the mall culture has not successfully penetrated.  Having said that, a few successful malls in Tier I cities have continued to garner buyer interest and managed to retain low vacancies, while others are forced to convert themselves to banquet halls, offices or even hospitals.
What Makes Malls Successful
The factors that make these malls successful are better mall management, presence of international brands, and balanced floor plans, to name a few. Interestingly, most malls that have all these in a balanced manner are owned by developers. The ownership provides them the flexibility to do better mall management and control over tenant quality.
Besides this, they are more flexible in adopting technological advancements, which is one of the key factors in driving consumer foot print.
In India, there are a number of malls that are strata sold to the investors which are either managed and leased by multiple owners or leased back to developers for overall management. Generally, it is observed that it is difficult to change formats and tenants in strata sold model than in a developer owned mall. Multiple ownerships result in improper mall management and low occupancy. International brands generally stay away from such malls.
Changing Consumer Preferences
To be relevant in the digital age, these malls are trying to change themselves with the changing consumer preferences and stressing on experience and concept stores. They are trying to differentiate themselves by providing a unique brand experience to the buyers.
Multi-sensory customer experiences, better customer reception, and better relationship management with customers are areas that can be facilitated better through brick-and-mortar channels.
Multiple Delivery Models
Certain national retail chains have recognised the importance of multiple delivery models and have strategised accordingly. Now, almost all the malls have their own websites, which facilitate a platform to engage with customers by giving then information like discounts offered by their stores, events, food festivals, etc.
A few malls are even trying to provide augmented reality experience to the customers like virtual trial rooms in cities like Hyderabad.
Experience is the buzzword
The fact is that the malls are increasingly associating themselves with ‘experience’ such as F&B areas and entertainment zones like play areas, movie, theaters, etc. in a bid to increase footfalls.
Recently, the Mall of India developed by DLF in Noida claimed to dedicate about 40 per cent of the space to food and entertainment, which is a huge space considering the mall size of about 2 million sq. ft.
It is clear that what needs to be successful for retail mall owners is a broad based business plan that makes them stay ahead of competition. They need to ensure creative and sustainable operating models that balance the pace of business in the current changing environment.
What International Malls Are Doing
Internationally, mall operators are facing similar challenges. Mall operators in Hong Kong are utilising their designated home pages and internet platforms as an effective means to entice their customers especially the young generation to physical malls.
Online Growth
Collaboration can be observed between mall operators and retailers in achieving this. For example, by teaming up with retailers, mall operators can issue e-coupons which are only available online. However, it can only be redeemed in designated shops within shopping malls.
Even some developers like Wanda, COFCO and Yintai in China established websites for their properties, in the hope of undertaking more online promotions on behalf of tenants and owners themselves.
Another, trend that is catching fast to compete with online retail is facilitating click-and-collect and online order returns within shopping centers. New malls are taking care of new center designs and tenancy layouts to facilitate this service.
The Endgame
Organised retail sector is poised for a growth of US$1.3 trillion by 2020 from current US$600 billion in 2015. The same has been reiterated in recent Colliers report ‘Impact of e-tailing on brick-and-mortar retail’, where it is stated that online retail in India is expected to touch US$22 billion by 2018. Mobile internet users in India are expected to cross 300 million by 2017 from 159 million users at present, further aiding e-tail penetration.
With these new strategies in place, and adhering to an Omnichannel retail model, malls in India can certainly hope to get a greater share of the growth pie.

Latest News

Beverly Hills Polo Club enters Dehradun

Located at Centrio Mall this is Beverly Hills Polo Club’s 12th store in the country New Delhi: Beverly Hills Polo...

More Articles Like This