The worldwide lockdown for almost 70 days amid the COVID-19 pandemic left the Shopping Centre Industry in India and the world in the throes of a crisis. The need for hyper sanitization and social distancing had led to shuttering of malls for over two months in India without any business. While the Central Government has eased restrictions in some states, others are still waiting for a green signal to open their doors to consumers. Despite Unlock 3.0 being announced, mall developers are still reeling under the impact of the lockdown, the subsequent fall in footfalls due to cautious consumer sentiment, retailers not being able to pay rent and added operational costs. Today, despite most malls across the country being open to customers, the industry is yet to reach a point where it can confidently announce it has made a comeback.
Between April – August 2020, IMAGES Group’s Shopping Centre News magazine has been consistently bringing to its discerning audience, thorough analysis, reports and webinars discussing the impact of and the challenges posed by COVID-19. The monthly magazine has also been providing intelligence, and touching base with industry experts for their recommendations and opinions on how a business must behave to stay afloat in these extraordinary times.
Towards the same, Shopping Centre News has conducted a survey featuring some of the most influential shopping centres pan India, to find out the ground reality of the situation. The data collected shows that approximately 80 percent occupancy and around 425 malls have re-opened their doors to consumers and also reveals a completely new set of norms, trends, and consumer behavior as far as shopping centres are concerned and the same is applicable for all tiers of society – in Tier I, II, III and IV.
It further goes on to show that in the lockdown period, while sales and rent went down to nil, the expenditure for shopping centres has stayed the same. These included salaries, licenses fee, electricity bills, CAM charges and sanitization costs during a time when there was no relief from the banks and many retailers were unable to pay rent in the face of the complete shutdown and zero revenues.
The survey further highlights post re-opening footfalls, revenue percentage, consumer demographics, out-of-the-box retail innovations, emerging as well as older but accelerated trends. Aside from this, there is an analyses of consumer behaviour – cautious or revenge buying, average dwell time and conversion rates.
The survey concludes that if mall developers are to bounce back from the pandemic effect, it will only be through establishing their premises not solely as experiential playgrounds, but also as trusted and transparent safe havens. Both developers and retailers need 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.
Current Consumer Spending Behaviour
While consumers want to get out of the house and go to the
mall, they don’t want to spend a lot of time inside, the fear of the contracting the virus is so high that all they are doing is quickly popping in to buy essentials with minimum human contact and interaction, and then heading home. This has affected their buying behaviour, which is obvious in the fact that groceries, household supplies, personal care products, health and wellness products and other essentials are witnessing increased demand.
As Pushpa Bector, Executive Director, DLF Shopping Malls explains, “We have noticed that the customer approach towards going to the shopping mall is a cautious one. We also found out that there are 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 for non-essential products.”
Rajneesh Mahajan, CEO, Inorbit Malls feels the same. “I think the experience of the lockdown 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 a cautious beginning. The buying could take 6-8 weeks’ time to reach its peak.”
Meanwhile, Gopal Machani,Jt. MD, MGB Felicity Mall, Nellore points out, “We have witnessed that the consumer who is coming out to shop is very focused on serious buying. The conversion rate in every mall has increased by 50-60 percent. The average bill value has also increased by 20 percent. Every
person entering the store is buying 3.6 pieces of garments. The overall business is down by 30 percent in comparison to last year’s data, but we are witnessing week-onweek growth increasing by 10-15 percent.”
The survey also indicates a huge bend towards the ‘value for money’ purchase followed by ‘discounted merchandise’ and luxury buying.
Categories in Demand
The survey indicates that slowly consumers are moving ahead
from the purchase of only essential products and are buying stuff from other categories as well. Apparels, electronics, sports, gym wear have witnessed the maximum footfalls in recent days.
According to Nimish Arora, Director & Interim CEO, Select CITYWALK brands like Home Shop, Apple, H&M are reporting good footfalls and sales along with very well behaved customers. “Cosmetics and personal care brands are also witnessing a good turnout. Apart from this electronics and home stuff also saw a good footfall. Customers are adapting to this change in a very positive way, even if the trial rooms facility is yet to become functional. Select CITYWALK is helping brands by reaching out to loyal customers. We are helping brands go Omnichannel and also helping them off er free delivery services to customers.”
Sanjeev Sarin, Centre Director – Mall, Phoenix United, Lucknow adds, “Customers are happy, and the response has been good so far. Retailers too welcomed the customers with open arms and were quite happy with the turnout. As far as F&B is concerned, the food court is operational with 50 percent occupancy. Outlets like KFC and Dominos is doing very well. In coming days, there will more turnout in the food court and fine dine-in restaurants. Even salons in the malls were operational with additional security and sanitization measures, with employees using measures PPE kits and disposable towels.”
Adding to this, Mohit Pruthi, VP-Head Retail, Marketing & Brand Communication, Bharti Realty, Delhi says, “We have seen the emergence of new consumer behaviour in the post COVID era. People are finally gaining confidence to come out and shop. The number of shoppers has gone up by 3X from Day 1 of opening. The segments that have seen maximum surge are grocery, electronics, children equipment, health and beauty. The footfalls are increasing slowly, and the rate of conversion has gone up by 15-20 percent.”
Arijit Chatterjee, COO, Junction Mall says, “We too started from a positive note. Maximum stores in the mall have opened up and are quite happy with the response of the customers. Even the shoppers are quite satisfied with the arrangements and measures initiated by the mall. We had customers coming to our mall from nearby places as well. Not only the anchor stores but the vanilla stores are also witnessing a good response. We witnessed serious shoppers in the mall, and everyone was with shopping bags or so. There were no window shoppers roaming inside the mall.
Thrinath K, Centre Director, Elante Mall, Chandigarh points out, “The response is beyond expectation. The first reaction which we got from the consumers was satisfaction on the safety parameters. The customers entering the mall are feeling safe and it is a huge achievement for us. We have tied up with the ‘Safety First Campaign’ from Bureau Veritas and as a result, we have huge panels of the display installed in the mall with various creatives.”
Different shopping malls have a different set of SOPs lined up for their recovery period. While malls in North and West India are hoping for a comeback by Diwali, malls in East are hopeful to for a turnaround by Durga Puja. However, most malls feels the recovery period will be in phases.
Dalip Sehgal, CEO, Nexus Malls feels that there are three phases of recovery under any crisis situation. These are:
– First Signs of Recovery: After 70 plus, when the malls finally opened their doors, one thing that matters most is to get the footfalls back. The first stage is to bring back the confidence and trust of the shoppers.
– Re-Imagining the Business Model: This phase will be of 60-120 days where retailers will have to start re-thinking their business model and cost structure. It is time to be more value specific too.
– Footfalls: This stage will start from Diwali onwards as all the segments of shopping will start returning to normalcy.
Going out with new safety measures has become a routine. Malls are barring entry of people not wearing masks and who don’t have the Aarogya Setu app set up on their phones. Besides this, emphasis is laid on contactless purchase, minimum interaction, safety measures like thermal scanning etc. Besides this, there are certain guidelines mentioned by the Shopping Centres Association of India (SCAI) and the Government of India for social distancing as well.
Arjun Gehlot, Director, Ambience Mall, minces no words when he says, “Shopping malls are more safe in comparison to any retail outlet on the high street and commercial complexes. The kind of effort we make in sanitizing various points and controlled entry, no other retail model can do. From parking,entry, movement in the common area, managing the store and merchandise, everything is well organised and safe. The mall management’s daily security measures are more organised and safe in comparison to those present in the high-streets.”
Gajendra Singh Rathore, Sr Centre Director- Mall explains this further saying, “We have implemented contactless measures like QR codes for payment and seamless entry points. Fashion stores are sanitizing trial rooms after each trial and steam ironing tried clothes. Footwear stores are using light shoe covers and socks. We have an additional feature of shoe sanitizing, which is being appreciated a lot. As far as our contactless parking is concerned, we have put up a fixed charge at the parking. When the car reaches the ‘boom-barrier’, it opens automatically without touching anything.”
Technology: Leading From the Front
The Coronavirus pandemic has been a catalyst for technology adoption across industries. Post the pandemic, industries will be compelled to increasingly bank on technology for most of their needs and operations. During the lockdown, a number of malls implemented many safety measures which were part of their digital and technological aspects in order to make their premises more advanced, safe, Omnichannel and better equipped in form of consumer experience.
Shibu Philips, Business Head, LuLu Shopping Mall explains, “For the food court, we have tied up with an operator who can ensure that the customers can order their food without going to the counter. Consumers can do this by scanning a code and the order details are delivered on their WhatsApp number. They can pay their bill in the same way.”
Sanjeev Mehra, Vice President, Quest Mall says, “Technology is going to help us in the long run. Quest was the fi rst to have automated parking in the whole country. Today, contactless payments in car parking have become a norm, everyone is doing it. Going by the current situation, there are high chances that we might be instructed by the government to allow only a certain number of visitors in the mall in a day. In such a case, we will have to use our app to pre-book visits. We will have to be technologically prepared, because no one knows what guidelines we will be given in future.”
According to Shrirang Sarda, CEO & Managing Partner, Sarda Group, Nashik an app in helping to control crowd movement inside the mall is very important. “Nashik City Centre Mall recently designed a new app by which we can inculcate social distancing among the visitors present in the mall in a more organised way. Social distancing in the mall is actually a task. No one can actually figure out the movement of the consumer on the floor. To check that, we logically have defined areas in the mall, be it washroom, store, lift or passage, and with the help of Bluetooth sensors or QR code readers, people will have to either passively or actively scan before entering or exiting any particular area. The app generates a heatmap for every area and the logical extension of this that there will be red or green sides of the process,” he states.
Marketing & Promotion
As COVID-19 cases continue to rise, it is almost evident that the situation is going to stay the same in the coming three months. In these circumstances, it will be really tough for shopping centres to invest and execute events for marketing and promotional activities. As part of new norms, Sushil Mohta, Chairman,Merlin Group describes the three best methods for shopping malls for their marketing and promotion initiative:
– Social Media: Social media is the best platform for creating and spreading awareness. It is the only place where shoppers have been very active since the lockdown was imposed and hence creating a campaign on this platform will reach a wider audience.
– Unique Campaigns: Malls should work towards creating unique campaigns on the online platforms which will work towards boosting consumer confidence and helping them understand that shopping centres are safe havens.
– Staff Training: Educating and training the staff on the dangers of COVID-19, how it spreads and how it can be curbed is extremely important – especially the security and house cleaning staff. They must understand how to protect themselves and only then will they be able to protect and help visitors in the mall.
“We want to provide consumers with a minimal touch experience and hence we will need to inform them of certain things – like for instance, they must avoid using big shopping bags. We are also marking areas where things which they may need in a mall are easily available to them, in a hygienic manner,” he adds.
Rashmi Sen, Group COO – Malls, The Phoenix Mills Ltd. states, “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.”
Footfalls & Conversion Rates
With Unlock 2.0, most businesses have reopened in the country in non-containment zones – with the exception of cinema halls
and entertainment zones. The shopping centre industry has had the time to study footfall patterns and purchase behaviours over several weeks since the lifting of restrictions.
Bharat Shishodia, Centre Head, Vegas Mall says, “We are happy that we are achieving 80 percent of what we have targeted for this unlocking. We witnessed 20-25 percent footfalls in the first week and it grew by 35 percent in the second week. The conversion rate was around 70 percent. Brands like Puma, Under Armour and Lifestyle, did great sales. Categories like electronics and home appliances are also doing well. The average dwell time has been 50 minutes while the age group of the shoppers is mostly between 20 to 40 years.”
Pankaj Pandey, Mall Manager, Pavilion Mall, Ludhiana adds, “Now, footfalls are improving with 1,500 people a day. The conversion rate is good. The average dwell time has reduced to 40 minutes from two hours. The conversion rate has gone up to 90 percent after reopening. The sales are at 50 percent of pre-COVID levels on all the operational stores. The shoppers are majorly middleaged with 70 percent of them women. The mall is working on introducing contactless dining and contactless parking.”
Sunil Agrawal, Group CEO, Prakash Jha Group of Companies explains, “Earlier we used to get 20-25,000 footfalls but now we are getting 2000-3000 only. The second week saw growth and we received a footfall of around 5000. The conversion rate is much better and currently stands at 40 percent. We are witnessing real buyers in the mall. The overall sales have been much lower. Big Bazaar is doing only 25 percent of what it was doing earlier whereas stores like Meena Bazaar, Allen Solly, Van Heusen, and Titan are also doing well.”
Justin Masih, Head of Malls, Gaur Group, Noida elaborates, “The mall so far has got very good response in the reopening period. The footfalls have been quite good. We are getting an average footfall of 4,000 on a daily basis. The conversion rate has been 70 percent. Electronics segment is doing very well. The mall is 70 percent operational currently. The average dwell time has been 30 minutes. As the mall is surrounded by residential societies, we are getting more family crowd.”
Some more challenges which came to the limelight in this survey include how malls are coping with reduced manpower, job cuts, brands exiting the mall due to less revenue or no business, retailers-mall developers’ rental/ waivers proposals etc. The situation is same for the upcoming malls as well, as they are finding it tough to sell their space / lease to brands.
Keeping the pandemic effect in mind, much has been spoken about the rental model as well. Apart from that higher costs of sanitization and staggered store timings are increasing operational costs and a cut in rentals and employee and other costs may not be good enough to turn green in FY21. Slower store rollouts and even slower retail space developments are expected to hurt medium-term growth.
Explaining the current situation, Arjun Sharma, Chairman, Select Group says, “SCAI and RAI (Retailers Association of India) are working together. There is very clearly a sense of partnership which we are talking about. Adding more to this, where there are reasonable requests, we also have been responding in a similar way. We are waiting to see how long the situation is going to continue. The situation for every organisation is different and there are retailers who are talking to us not for a waiver, but for postponements as well. Some have come with the proposal of doing the adjustments from the deposits which usually we do at the end of the contracts. It is very difficult to talk to 200 retailers as one. We have years of relationship and we don’t want to end it up due to a disruption which may last a year or two.”
Mukesh Kumar, Chief Executive Officer, Infiniti Malls added further, “By the end April, we all realised that we need to switch gears and instead of working against each other, we need to work together. There are different leases, different relationships. Each mall has different challenges and it is necessary to have collaboration between both parties so that we can come out of this crisis together.”
Partnerships: What We Can Do to Help
To support shopping malls and brands to come out of the current situation as unscathed as possible and help them understand how to instill confidence in the consumer, we asked the
respondents to explain what they need from us. Industry captains and titans emphasized that as an intelligence and analysis agency, IMAGES Group must:
– Share and highlight outstanding leadership stories
– Showcase fit-for-purpose technology innovations
– Showcase out-of-the-box consumer marketing successes
– Create business networking opportunities
– Conduct online masterclasses with global experts
– Organise virtual B2B shows
IMAGES Group crafted a survey for shopping centres developers/ owners across verticals to assess the on ground impact of COVID-19 on the Indian shopping mall industry, to help and make retailers understand what’s working, re-evaluate strategies and adapt to changing customer demands. Here are the results….
1. Describe the current consumer spending behaviour.
2. What is the consumers buying nature?
3. Change in the revenue same time last year.
4. Which segment of merchandise is being bought most?
5. What % of the shops in the mall have opened?
6. Which are the best performing categories?
7. What is the current average footfall as a % of pre-lockdown levels?
8. What is the age group of visitors to the malls since reopening?
9. What have been the average sales per square feet as compared to the same time last year?
10. What is the category of visitors to the malls since reopening?
11. What is the change in conversion rate since reopening compared to pre-lockdown levels?
12. Has the average dwell time in the store changed as compared to pre-lockdown levels?
13. Which of these is the closest to the ratio of dine-in to take away in food courts and restaurants?
14. Have any tenants terminated their lease and exited the mall?