The third of SCAI Mondays– a weekly, custom webinar series aimed at redressing the unprecedented challenges arising out of COVID-19 pandemic for India’s shopping centre development ecosystem – took place on May 11, 2020. A group of India’s leading shopping centre developers, IPCs and retail leaders came together to devise effective solutions, including policy influence and government stimulus, out of the severe revenue crisis impacting developers pan-India.
This Virtual Roundtable, titled ‘Retail & Shopping Centres: 2020-21 and Beyond’ focused on the new normal and the potentials for reinvention in retail, including those in e-commerce, hybrid formats, design, tenant mix, pricing and more. The discussion highlighted the path for shopping centre developers and retailers to come together and innovate spaces and existing models to create new experiences for consumers, as India recovers from the current public health and economic crisis.
As the voice of India’s shopping centre industry, SCAI’s immediate task is to see a nation-wide roll-out of common guidelines and to work with partners towards re-opening all operational shopping centres backed by stringent SOPs. The non-profit body has been active on multiple fronts since the lockdown through daily virtual meetings with stakeholders, making presentations to government functionaries, regulatory and civic administration bodies, community media and PR.
The session was moderated by S Raghunandhan, President-Commercial, Bhartiya City Developers. The other panelists included:
- Pankaj Renjhen, COO, Virtuous Retail
- Pushpa Bector, Executive Director, DLF Shopping Malls
- Rajneesh Mahajan, CEO, Inorbit Malls
- Rashmi Sen, Group COO — Malls, The Phoenix Mills Ltd.
Post Lockdown Mall Scenario
S Raghunandhan talked about the current situation of shopping malls during the Coronavirus crisis and hoped that the industry would get a green light to reopen malls with the Government of India removing restrictions slowly for the retail sector. He opened the discussion asking the panelists to throw light on how shopping malls would welcome consumers post lockdown.
Pushpa Bector, Executive Director, DLF Shopping Malls kickstarted the webinar saying, “As per surveys and research conducted by our team, we have noticed that the customer approach towards going to the shopping mall will be a cautious one. We also found out that there will be two categories of consumers that the shopping mall industry will be witnessing post lockdown – first being those who desperately want to get back to their normal life and the second category will be of those who will be cautious in going to malls. We will have to tackle both sets of consumers with the same set of norms, and every mall will have to look into this. From the mall developers’ perspective, we think the first 30 days will witness a lot of picked up consumption. There will be a huge demand of the non-essential products. As long as the safety measures are concerned, we have working on various SOPs and will have to gain the confidence of the consumers by ensuring them safety. We are there to welcome the consumers and give them the ease/convenience of shopping. As far as the retailers are concerned, they are very eager to open their stores in malls. Some are little skeptical and worried while others are confident to come out stronger after the lockdown.”
“India too will be witnessing a new trend, and our belief is that there will be a rise in the nationalism and ‘Made in India’ brands will be preferred more in the first three months. We are expecting a recovery period post-October,” she added.
Rajneesh Mahajan, CEO, Inorbit Malls agreed, saying, “I think the experience of these 60 days will eventually turn out into lots of buying. Things that are required for exercises, cutlery and crockery products, furniture, athleisure will witness major purchases because the entire population has been way from buying these things for over two months now which is a long time. There will be cautious beginning. The buying could take 6-8 weeks’ time to reach its peak.”
Pankaj Renjhen, COO, Virtuous Retail explained this further saying, “We have been continuously engaged in dialogues with our co-partners, vendors and retailers and what we have noticed that there is a hope of optimism amongst all. We believe that there is a temporary hold on the consumerism and the road to revival will take few months of time. It is a question of the gradual uptake in some categories, some will witness a surge whereas others will face the decline. The challenge will be making a comeback in the respective markets.”
Rashmi Sen, Group COO — Malls, The Phoenix Mills Ltd. added, “Everybody worldwide is going through a similar challenge, and it is not only about India. Be it for upcoming malls or established one, this phase is going to be short-lived. For us, the safety and the confidence of the consumers is the priority as we will be initiating strong protocol measures for our retailers and consumers. I would not be worried about whether the consumers will be coming or not, but our concern in the initial period would be to restrict the footfall actually. The shopping behavior in the short-run will be very subjective and necessity led and not leisure led initially.”
Change in Marketing Initiatives
The marketing and other promotional campaigns will be facing a new challenge post-COVID-19 crisis. As people will restrain themselves to go out in large gathering, shopping malls have a challenge in front of them to tackle this situation.
“Communication is going to our first strategy. The first bit of marketing will be giving out a communication message with a comfort and confidence level to the customer to come to the shopping mall. We will also be highlighting on the step and measures which we are doing for the consumers and it is important to make them aware of it. Moving forward, we know we cannot go with the traditional marketing strategy which we used to do in the past. We have spoken to the retailers about sharing the database, to reach out to the consumers as per their taste and likes of shopping and then connecting with them. I think this is going to be a much more focused approach,” said Renjhen.
Sen explained, “The most important thing is inculcating confidence in consumers that malls are a safe place to go out for shopping. As far as Phoenix’s marketing budget is concerned, it used to huge as it included so many activities and events, however, this won’t be the case now. For the next three months, we won’t be doing any such outdoor activity. We will be doing more of brand-related communication with the consumer, about the new collections, timings, product offers, discounts etc. We will be focusing on the loyalty programs to stay connected with the consumers, so that they can get real-time information.”
Retailers Friendly Programs
When asked what would be the reaction of retailers in malls over this changed marketing strategy, Bector explained, “There are few things which we need to do from the marketing perspective. We need to look at ‘Collaborative Marketing, Responsible Marketing and Marketing which is oriented and creating the space into the best communication place for the coming 2-3 months’. Retailers currently are concerned about their inventory. Despite having so much inventory, their spring and the summer collections are still lying in stores, completely unseen, untouched and unsold. We need to sort this out together by helping them easing out their inventory. Marketing in the coming days will become one-to-one in nature, with lots of data exchange. A lot of digital marketing, along with hyperlocal marketing will come into action. That will be the need of the hour for the next few months. We will be collaborating with the retailers to ensure planned shopping.”
When asked if the lockdown phase will be a concern period for the Indian retail consumption growth rate, Sen said, “India is the most attractive retail market of the world today and its consumption story is very strong. I don’t think the two months of lockdown can put a dent in the consumption growth rate of India. We have seen the case of demonetization in the past and at that time also the sales rate picked up by the end of the year. Another factor to take into account here is cultural habit and it is the habit of Indian consumers to go to malls, as they are a very organised and convenient mode of shopping.”
Mahajan added to this saying, “If you look at the Indian economy, agriculture and Integrated Taxonomic Information System (ITIS) is a very large component of the GDP. If these two sectors continue to run strong, I think the recovery will be very fast. I believe we should see very strong growth during the time of Diwali. It may not surpass last year growth rate but will be very close to that.”
Bector agreed. “In India, there is a lot of latent demand that exists in consumers. We are not giving enough credence to the fact that aspiring Millennials want to lead a better life. That is the fundamental story of India consumption today. Delhi NCR being the capital is leading that story. The rate of consumption in this region is very high. We have seen in the past that due to demonetization and GST implication, there was decline for a period of 45 days and then the growth rate was even higher than before,” she stated.
Re-Inventing Shopping Malls
Will re-inventing shopping malls be a game-changing factor post-COVID-19? This was an extremely important question which panelists debated on the webinar.
Mahajan elaborated on this saying, “Shopping centres have been in a continuous re-inventing phase for the last 15 years on different aspects with trade mix being the most important one. We have seen certain categories have expanded and have been allocated more space on a regular basis while some have shrunk. Food and beverage, entertainment and multiplexes have increased significantly in the last 15 years. This is the incremental side, if you look at the physical side, the size of the malls have gone from 1000 sq. ft. to millions sq. ft. And in the future, we will be seeing more malls with even bigger space.”
“At VR malls, we have a co-working, hotel, separate F&B provisions alongside the retail center since 2017. We found that this model works very well. It is different from the typical model and it is changing frequently. The dependence on fashion is going to go down. The entertainment and activity related retail will go up. New segments will emerge, for example, the market where there is a demand for the co-working, it will have the co-working model. Similarly, for co-living and activity related demands, the model will be like that. Formats like shop cum office will be in the trend. F&B will continue to be the game-changer,” emphasised Renjen.
“In the past two-three years the format size has been changing. Earlier we wanted large flagship store, large departmental stores, but now we don’t. We actually want to take a look at format sizing. It is very important that the retailers also understand that and with e-commerce and Omnichannel becoming a reality, it is very important to get the right optimum size,” added Bector.
Change in Rental Model
Talking about his views on the change in rental and revenue models, Mahajan said, “Principally, I don’t see much change happening in the rental model in the short term. The models are well evolved, and they are working nicely. We have a very workable model and it will continue to be that way. In the long run, we will need to accommodate the Omnichannel and the hyper-local model which we are seeing in F&B now a well. These businesses are becoming sizeable and for an operator, it is necessary to include them in the rental model of the mall. If they choose to use that model, then some changes are required.”
“Coming to investment and differentiated rental models for F&B, we must understand something very crucial and that is that F&B is not a distribution model, but a manufacturing model. In comparison to other segments, F&B’s production and quality checks are done at the store itself. I see opportunities in this sector as well. If the mall takes care of the capital risks, the retailer should take care of the operational risks. It is the retailer, who is promising the quality, service and delivery of the product, precisely food. If respective parties are able to take the risk assessment, I see this model taking off in a very fruitful way,” he added further.
Future of Shopping Malls 12 Months From Now
Going by the theory that the situation will return to normalcy in coming months, it will be quite interesting to see where shopping malls would stand by the next financial year.
As per Rashmi Sen, shopping centres will be buzzing with happy customers. The whole approach of Phoenix Mills with the partners and retailers will be to bring back the business on track.
Pankaj Renjhen predicted that the role of shopping centres will become more formidable than ever post COVID-19.
Mahajan concluded the webinar saying, “From a consumer perspective, the next six months is all about surviving and reviving. I think we would be able to see the consumption level going higher from what we had in FY2019. On the shopping centre supply side, I see a slowdown and most of the malls which were ready to open now may have to delay a little. Their progress will be derailed due to this lockdown.”