COVID-19 has had one of the most severe impacts in history on the Retail and Shopping Centre Industries worldwide and the resultant lockdowns and the consumption story globally and in India has gone down several notches.
In a session of Phygital Retail Convention – NEXUS Dialogue partnered by Nexus Malls – Amitabh Taneja, Chairman, Shopping Centres Association of India (SCAI) and Bijou Kurien, Chairman, Retailers association of India (RAI) discuss how can this consumption be accelerated.
The topic of discussion, under the DUETS track at the convention, was ‘Shopping Centres and Retailers: Accelerating Collaboration to Co-Build India’s Consumption Story’.
Amitabh Taneja: Shopping centres are the infrastructure of modern retail and COVID has sped up the collaboration that shopping centres and retailers should work together for consumption. What’s your thought on this collaboration? How should we take this forward?
Bijou Kurien: COVID has been the catalyst for having these engaging discussions. Prior to this shopping centres were in one direction and retailers were in another direction and as shopping centres thought they have met their business objectives, they were quite happy and retailers thought they had met their store objectives, they were also quite happy. However, at the end of the day, who are we serving? We are actually serving a customer and at times, we end up thinking that we are serving the banks or the company. Shopping centre is a physical structure in a certain location and being in that location, it is serving a certain community which is all around it. So, the community has certain expectations and these expectations are – it is convenient, it is a nice socially engaging location, it is a place where they get products and services, it is a place where they go and spend some time when they have to complete the chore of shopping. It is important that both retailers and shopping centres should think together about how they serve the needs of the community in which they are located. Shopping centres have a catchment which can extend up to 10 kms and they by size are designed to cater to a larger catchment. There should be alignment in the thinking between both retailers in that shopping centre and the shopping centre itself – how do we actually cap the opportunity this catchment in which community exists. That is the basic thought on which we should start. If we start from the thought – what is my rent, will the store make money, who are the people who are going to be populating my mall, what is the rent that I can get out of them and what is the monthly yield that I am going to get and will it be able to service my debt obligations – then you are not thinking about the community and the customers.
Amitabh Taneja: How will this partnership work? In my opinion, RAI and SCAI should work together and create a model of the working of this collaboration.
Bijou Kurien: I agree. This crisis has spurred the retailers to think together and work together. It is also a challenge for us that how retailers can share their concerns, their worries, how effective they are because of COVID, share their problems that they need to talk to the authority to how to address a closure notice, or they need banks to able to figure out to extend the moratorium. We are trying to build upon this. Antagonistic attitude between retailers and shopping centres, especially, when it came to discussing about the rent for the times when the malls were locked up. Neither shopping centres know nor retailers as to what is going to happen in the future. The essence of all this is trust. It is necessary for both the parties to compromise a bit to create an optimal solution for the tenants and the structure so that both pain and gain are equally felt. Everybody needs to work together because it is a competitive world and you have to be able to create a strategic point of difference to be able to make sure that you attract customers first to the shopping centre and then to the retail store. Data, as we know today, is the big difference which is there between a digitally native online business and a physical business.
Amitabh Taneja: We must do retail indexing every month. It is very important to give direction in terms of various is the consumption going. We have to collaborate with each other rather than compete with each other at this stage of retail evolution.
Bijou Kurien: Retail intelligence in India is very low because it is individual retailers that seem to have that intelligence, and it is not pooled intelligence. In foreign countries, organisations like NRF have enough intelligence about the market – this is contributed by retailers, shopping centres and is pooled together such that individual retailers and individual shopping centres do not have to go through the trouble of trying to figure out what is happening.
Due to COVID, food and electronics are doing better than fashion and even under fashion daily wear is going ahead of occasional wear. The North and the East are going ahead of the South and the West. If you are a retailer, you might not have the access to this entire pool of data and if you are able to create a collaboration between shopping centres and retailers across the country then you can pool the data, understand the data at each level to figure out whether ‘this is a problem only I am facing or is this a problem that we are facing across the entire country’.
On the flipside, online players have the exact answers to all these questions. We also have the same data, the only problem is that we do not pool it together and if you do not pool it, you do not get intelligence out of it.
Amitabh Taneja: Shopping centres are very serious about collaboration. If RAI agrees then we can crack this issue and change the economics of retail.
Bijou Kurien: As retailers, we know what our customers are doing, we know what is happening in our stores but do we have a macro-understanding, do we know what customers are thinking, do we that they are deferring some lifestyle purchases today or are they actually accumulating money to splurge during the festival season ahead. We do not have understanding of what is likely to happen. It is important to build up on the data and technologies which is available. Most shopping centres have data on traffic and conversions, but we need to figure out the dwell time of customers.
Amitabh Taneja: Big data is going to be the game of the future and we must work towards it.
The consumption story of India is not at the level at which it should be. Where is the consumption happening besides weddings and a few festivals? The idea of creating occasions is the agenda that shopping centres and retailers must pick up in the coming years and work towards it. What is your thought around it?
Bijou Kurien: Indians have the capacity to spend. India has one of the highest saving rates, but they need the motivation. It is a very value-conscious market. It is not a market which will accept expensive, branded products because of the status of the brand. You have to be able to create a architect that delivers something to the Indian consumer which will actually spur consumption.
There are about 12 million weddings happening every year and they are very important spending occasion because people do not think of budgets. Traditionally, festivals have become for us large spending occasions either because we are used to it sometimes there are associations with it. There is an opportunity to spur consumption provided that the brands are able to deliver cutting edge innovations which will help consumers to rush into stores to buy products and services. There are opportunities to collaborate in terms of marketing, so that we are able to leverage these occasions and locations and then create joint or co-operative marketing programs which will help to drive traffic in.
However, at the longer term level, the insights that we have about consumers should actually form the basis on which we are able to innovate and create brands, products and services towards which consumers will start rushing in to be able to buy.
Amitabh Taneja: Shopping centres would love to be a part of this, and I feel that everybody would like to be a part of something like this.
Bijou Kurien: The additional cost will be minimal and because a lot of what that you want to do is already available. It is just a question of being able to share it and then putting more minds together to how to drive value out of whatever we have needs to be done.
Amitabh Taneja: Retailers and shopping centres should work towards this whole partnership model to compete with other categories of the wallet share.
Bijou Kurien: From the consumer’s perspective, especially with the Gen Z and Millennials, we are seeing that while their expenditure basket is a very significant part of their income, what is happening is that the retail basket has started shrinking out of that expenditure basket over the last 5-10 years because neither we have consumption data and consequently expenditure data, nor that we track this in any significant manner at an industry level. We have not been able to figure it out. But in reality, the spends on things like home loans, spa treatments and holidays has certainly much larger proportion today than what it used to be 10 years back. From a retailer’s perspective, why are we not able to grab that same share of wallet that we used to enjoy 10 years back. That is the question that we should be able to reflect on.
Amitabh Taneja: Because of technology, Uber today is changing that buying pattern. Consumers are now more interested in rental homes. We do have that opportunity to grab that wallet share.
Bijou Kurien: As retailers, we should try and make sure that how our basket does not shrink in the larger pie.
Amitabh Taneja: Consumer awareness about fashion and lifestyle is not as much it should have been. How can we work towards this?
Bijou Kurien: Today, social media provides the opportunity to reach far beyond. There are opportunities for us to be able to popularise lifestyle statements. If we are able to sell fashion, the way we always sold it in the past saying that this is my new seasonal collection , look at it and buy it, then will also get the results that we used to get in the past. We have to work together in terms of social media to be able to see how to build these lifestyle statements.
Fashion is half physical and half psychological. One part of it is to clothe you and other part of it is to make the person feel good. We should make sure that we should not confine ourselves only to the physical aspect of fashion. We also have to focus on the psychological aspect of look good, feel good.
Amitabh Taneja: How can we work on this with RAI?
Bijou Kurien: It is in everybody’s interest to promote consumption. We are unhappy to see the levels at which consumption has grown because 10 years back we used to project by 2015, we will be a US$ 1 trillion retail market and by 2020, we will be US$ 1.3 trillion retail market, unfortunately, we have reached 2020 and we are still struggling around US$ 850-900 billion. Consumption cannot be driven only at the point of sale. It has to be driven right from the creation of the product, building of a brand, stimulating the demand to consummating the sale.
We tend to have a narrow focus, we seem to be struck season to season, we need to be looking at much longer time spans and with a much broader objective in this.
Amitabh Taneja: Retailers are stuck with their balance sheets. It is going to be very important that we realise that somebody from outside needs to put all these efforts together and work on this.
Bijou Kurien: We cannot deny the fact that any listed retailer or any private retailers will have this quarterly pressure and with this they will always be doing things in order to ensure that their quarter looks good and subsequent quarter looks better than this. When you draw a product development level exercise, you realise that you have to divide it into different buckets – today and tomorrow and we have to make sure that we create activities and plans and programs in manner which will be able to help us deliver in our quarterly budgets and the quarterly sales targets as well as not take away from the longer term strategic objectives that we maybe define for a one year or a two year life span.
We will have to get companies, institutes, shopping centres and government to come together. We will have to get rules and regulations changed in order to suit some of the requirements of new tomorrow. There is a lot that needs to be done. At the end to drive consumption is not one man’s job.
Amitabh Taneja: What is your thought on the way technology is changing businesses. How can retailers and shopping centres leverage technology?
Bijou Kurien: Technology is going to play very important part in our lives in the future, whichever way we look at it. Today, there is more information available about the consumer, unfortunately, we do not capture any of it. If we look at high-frequency data, we can see patterns emerging. Both shopping centres and retailers use very little technology to be able to understand. Lot of technology interventions in retail and shopping centres are driven by small startups and they are coming forward to do innovative things. The world is now more and more technology oriented and we all have to learn to change. We cannot do the business the way we have done in the past. Our fist motivation to adopt technology on a significant scale was this crisis. But why it require a crisis to fast-forward our technology plans? We should think technology in the context of what is the customer getting used to and if the customer is comfortable with that technology, then why can’t we adopt it? Customers are keeping ahead of retailers and technology agents. Technology has played a great role in spurring the change.