Home Big Grid The Power of One: Shopping malls & retailers must join forces to...

The Power of One: Shopping malls & retailers must join forces to prevail

By  
SHARE

Shopping centres – the hubs of economic, commercial and social activity in India – faced an unprecedented situation this year. A pandemic, lockdown, unlocking phase, a second and a third wave of the virus severely crippled the industry. Malls were shut for months and when they finally re-opened, it was a kind of a new beginning for them. While the forced shutdown due to COVID-19 halted many developments, once malls were back in business, and consumers started to return, the industry adopted the grand old adage ‘the show must go on’ and focused on the new normal, consumer safety and convenience.

At the ‘The Show Must Go On’ session of the Phygital Retail Convention, many dynamic developers and retailers from both the Shopping Centre and Retail Industries discussed recent developments and the plans ahead, plans which are already on the fast track. The session was moderated by , MD, .  The panelists included:

Rahul Saraf, MD, Forum Group, started the discussion by highlighting the current situation of the industry and its road to recovery period in terms of business and footfalls. He asked panelists to talk about the key learnings and experiences they had taken from the pandemic and how they are utilizing it to prepare themselves for the coming months.

Dalip Sehgal, CEO, said, “The last six months have been life changing for all of us in many ways. The learning and lessons are still not over and a lot will be added to the list in the coming six months. There are four or five key things which have happened in this period and all of them are important in terms of how we look at the future.

Collaboration: Collaboration is the first and foremost objective. It is due to the ‘Power of One’ we have managed to do the comeback in such a short period of time.

No Single Theory: The second learning has been that ‘there is no single theory that works in a crisis. People have to adapt and change as per situation. There is no single theory to revive the business, one must look into new perspectives and corners for the business to fall into place. Different things need to be done differently, and therefore we dealt with the situation of our each and every shopping mall as per requirement and demand. Strategies implemented for Elante Mall in Chandigarh will not work in the mall in Pune. One needs to be very specific in terms of what needs to be done.  One size doesn’t fit all and hence need to be very careful in understanding the market need. Therefore the marketing plans, budget, sales recovery all of it and that detailing is what is required.

Change in Retail Paradigms: The third thing is that retail paradigms have changed drastically in the last six months, the cost structure being one of them. It has permanently changed for restaurants, cinemas and it is very important to understand the new cost structure. Malls and cinemas are very high capex cost businesses and we need to figure out how we are going to spread the assets much more than what we do today. The utilisation of the mall currently is 30-35 percent of the time, which means 60 percent of the Rs 1200 crore asset is just sitting on the ground. Going forward we will need to collaborate and utilize more assets.

Change in Narrative: The show must go on, but the narrative must change. Without implementing these changes into their portfolios, it will be tough for the industry and therefore all the players must act on this accordingly. Being Omnichannel is one such buzz, which everyone is looking at as if now. One should not get carried away by the change happening around them now and in coming six months. Once the things will start to open up, the consumer behavior will change again. Issues are short term but relationship and reality are long term.

Opportunities for Collaboration

The key areas/perspective for the collaboration can be between retailers/ shopping malls or retailer/technological service providers or retailers/retailers currently.

  • Connecting Store Inventory to Online Portals
  • Hyper local assortment
  • 24* 7 availability

Talking about the stress as a retailer as well as the positive opportunity for collaborating, Neelendra Singh, MD, Adidas India, explained, “There has never been a time from a consumer perspective to operate and engage the entire eco-system collectively than before. Making the store inventory useful by leveraging them to the online channels can be a huge area of collaboration. Hyper local assortment is one area that is emerging strongly for us. As we have linked our store inventory to the online portal, we have realized that the catchment area of demand has increased a lot. The dynamics of running a store in a mall is going beyond expectation as the reach and relevance of the brand has increased.”

Create a Common Platform beyond Amazon & Flipkart

Abhishek Bansal, ED, Pacific Malls emphasised on the importance of creating new platforms and breaking the existing myths of the phygital platforms. “When we talk about phygital or digital retail, we have a set of boundaries in our mind that physical means malls and digital means only dot.com websites. We can’t think beyond this for a phygital platform. We need to think beyond two three things, to truly become a phygital retailer. The brands and malls need to come together, and at the end of the day when a customer is walking into the store in a mall, he is not only the customer of that store but also of the mall. Both of us need to come together and figure out a way and build a program where we can collaborate on the full-fledged phygital platform for that center. Data is one such point. We can collaborate to bring a solution to at least the hyper local customers. If there is a phygital platform available, these hyper local customers can be dealt in a more organised way from both the mall and brand present in the mall,” he said.

It is a known fact that online retail cannot survive with just an app today. It requires a platform where the product is available. Therefore it is very important to create platforms which can be easily available, accessible and reachable to the customers.

“Physical retail is a contact sport. It has to be done in a physical form, yes, online can augment the experience, but I don’t think two are replaceable. There is clearly space for both. Retail also helps in creating relationships with the consumers and we tell the best of the stories in the physical retail format. The concept of boring retail is definitely dead and the new era of physical retail has everything.  It has convenience, stories and has the best experience for the consumers. What we need to do is to differentiate and look at the portfolio so that every unit would make the same amount of profits. There are different economics for different locations; therefore the portfolio in general should make sense,” added Singh.

Utilising the Infrastructure  

One pain point of retailers inside malls in COVID times – apart from the fact that they were forced to shut down for many months longer than their high street counterparts – has been the fact that malls usually start winding up daily operations by 7.30-8 pm, as opposed to standalone stores and food outlets which as per government guidelines can stay open till midnight in many areas. This is very demotivating for the brands and as far as consumers are concerned, no one wants to walk into a building which is dark in what many still consider business hours.

Anjan Chatterjee, Founder & MD, Speciality Restaurants explained this saying, “One thing which we have noticed is that the pattern of dining attitude cannot be changed, because people will come out when they want to come out and the conduct cannot be changed over a period of time. Deliveries have become a reality and this space will keep growing in the shorter term. Fortunately the concept of the food business cannot be virtualized. It is an experiential business and people will always have to eat food in any situation, be it by getting it delivered or by stepping out for it. But with restricted timings there are certain things which need to be highlighted.

I think the behavior of the consumer is effectively directly proportional to the mall owners and the retailers and therefore building the confidence measure for them should be the prime objective.  Our business is full of touchpoints and going by the current scenario, we must find ways to be contactless in order to build the confidence of consumers on grounds of safety and convenience.  We are on our way to introducing more innovative ideas ensuring that consumers are entirely safe because there is another layer attached to this, which is economic downturn etc.”

Support of Cinemas to Malls

Cinemas are one of the biggest crowds and revenue pulling categories in malls. Unfortunately, in the pandemic, cinemas in many states are still waiting for a green signal to open. Even the ones which have been given a go ahead by the government to open have had to follow social distancing rules aside from the standard safety and hygiene protocols. Despite this, consumer response has not been encouraging so far. The sector urgently requires new collaboration to get back on its feet as soon as possible.

Pramod Arora, Chief Growth & Strategy Officer, PVR said, “Collaboration and empowerment are the new buzzwords. As far as empowerment is concerned, we need to take some reverse steps by re-imagining business. From virtual reality and Machine Learning to actual reality and human learning should be one of our objectives. The other thing is that consumers are coming out of their homes and visiting the mall. In terms of collaboration, as a multiplex cinema operator, we should be probably doing far more than what we are doing right now. We need to create more opportunities around these two buzzwords and accordingly take convenience to higher levels, to re-gain trust and confidence of consumers so they can return to watch their favourite movies.”

What Else Can a Mall Offer?

During the lockdown when consumer movement was totally restricted, shopping malls worked on innovations and concepts to reach their consumers both virtually and physically. Some malls turned the current crisis into an opportunity and did good business with innovative services and as a result earned loyalty. Some of these inventive concepts were:

  • Taking the Shop to Home/ Virtual Shopping Sessions
  • Contactless Delivery
  • Click and Collect

Ashwin Puri, Director, Lake Shore talked about this saying, “If a retailer has a standardised product, the likelihood is that the acceleration of consuming that product online /offline is going to happen. There are a number of categories to look at which will be in demand whether they are offline or online and retailers will make sure that they are available on both platforms. COVID has reinforced our strategies to a great extent. In India, everyone focuses on the location but when you are sitting with five-six storey of retail assets with inadequate space for consumers, I don’t see that potentially as a future trend. Trends toward experiences have changed dramatically since 2000. Food and entertainment, being the largest category is the prime focus currently as well as in the future. Creating convenience on these parameters will be and should be given convenient location in the mall. So, selection of assets in the mall should be done accordingly. I think the consumption story is important. Building and allotting assets is very important and without it brand/malls will struggle.”

Commenting on the new layer of service and convenience that consumers are looking forward to, Puri stated, “As a mall owner we can build products and can manage safety standards and environment in a manner which gives consumers confidence. If you look at the top ten fastest categories in the e-commerce space in April and May, there was nothing in fashion. The only thing that came up was in fitness goods with 170 percent growth. Interestingly, menswear on e-commerce sites in April showed 62 percent de-growth. I do agree that the personalisation part adds to the experience, but during COVID people were consuming less so there hasn’t been a dramatic shift of trends, especially in the fashion category. So, we definitely had an edge over the other categories.”

Arora agreed with Puri saying, “The world is moving towards experiential retail. Whether it is F&B or cinemas, consumers are looking forward to three hours of experience and magical moments which they cannot enjoy at home. The competition to cinemas is not neighbouring movie halls or even from OTT, but their success completely depends on the experiences they can provide. The more the experiences, the more the consumers.”

Investment in AI & Data Building

Observing consumer behavior and capturing data of new trends saw a significant rise in the COVID period. In fact, the key objectives for every mall in COVID times has been:

  • Data building
  • Investment in Artificial Intelligence
  • Online Presence

“If you want to market your assets, your presence online is very important. So, malls with an online presence will definitely stay ahead of the pack. Getting on Instagram and creating a Facebook page is no longer enough.  As far as capturing data is concerned, I don’t know the level of personalization a mall requires at this moment. But it has at least accelerated our thought process in the direction of personalization and in providing essential services like free Wi-Fi, mall apps etc. Adoption of digital is going to change very dramatically in the next 5 to 7 years,” Puri pointed out.

Sehgal then explained how data building is different for malls in comparison to other industries saying, “Data is important and that is a well known fact. One example is the Hospitality industry which successfully manages data. We don’t own consumer data, and it is available to us in parts. Getting data such as what shoes is a consumer buying, where is he eating and what movie is he watching doesn’t give a clear picture. We need to start sharing data and until we do this, this problem of personalization will never go away. E-commerce is doing a great job, as they own the data completely and keep on updating it on a regular basis. Along with data, we also have to co-create experiences simultaneously.”

Bansal said that when building a mall, developers now need to co-create a platform to store consumer data on and then share it with brands and retailers inside the mall and ask them to update it regularly. “This will need a certain amount of investment but there is no way out of it. Build that platform, take notes from the experts and understand what they would need, put in the money and then take it to the retailers/brands on board and ask them for the data. This has to be done systematically with both parties being very clear on what they are offering to each other. This will build trust and no retailer will hesitate in exchanging data or so,” he concluded.

 

Product Launch: The New, Collaborative Trend

Do shopping malls need to become a launch platform (for example a car launch) for any brand in an attempt to get more footfalls? This practice has been conducted by many malls in the past and with the pandemic still in full force; the trend is coming into the limelight again.

Sehgal explained how malls are looking to capitalize on this trend. “Why it is not possible for a brand to curate something specifically for malls that can go with occasions or events? The entire endeavor so far should be on co-creating something which we can launch in a number of shopping centres. Pull out your endeavor and the mall will give you space as per as your requirement.”

“This is a collaborative effort, a way of doing things together. Usually malls to let space for a new product launch and place it in the line of consumer sight, in a way that it grabs consumer attention as soon as they enter the mall. It is basically renting out space so that malls can make most of their asset. The problem with restaurants is that the products they have are more of experiential value rather than sighting value. Seeing and believing doesn’t work in the F&B industry. This idea can work in F&B, if we bring-in something within the industry. A normal product launch of a car or similar products won’t work for us,” added Chatterjee.