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Amity Business School

CASE STUDYCASE STUDY

“ANSAL PLAZA LOOSING ITS “ANSAL PLAZA LOOSING ITS SPARK”SPARK”

• RAMNEEK S SANDHEY (E-46)

• ANISH GUPTA (E-36)

• SANDEEP AGGARWAL (E-26)

• MEETA MEHTA (E-05)

• DEVENDER CHHILAR (E-16)

• ABHAY KUMAR (E-55)

Amity Business SchoolINTRODUCTION • It is built on 35 acres of land.

• It was the first Retail mall in the heart of Delhi, started the mall culture.

• It was initiated in the year 1999.

• The twin-level basement car parking area can accommodate 700 cars while another 300 cars can be parked on the ground level


• Early on it provided the comfort and variety to the customers.

• It is built in a circular fashion around an amphitheater with a center stage.

• It was initiated for promoting the organized retail.

• The surrounding area of the mall is beautifully landscaped with plants and fountains.


RISE OF ANSAL PLAZA………


• Major reason behind its success was that it was the first shopping mall of NCR.

• It had the first mover advantage.

• It didn’t have any competitors in it’s vicinity so it was the sole survivor of it’s area.

• It was a new concept and it was promoting organized retail.


• It was an ideal leisure place for the crowd of NCR.

• Property prices and the lease rents were not very high at that time so the retailers had to pay lesser lease rent for the outlets which they hired inside the shopping malls.


Brands At Ansal Plaza

The Anchor Brands

• Shoppers Stop- Multi branded shopping experience.

• Marks & Spencer- Internationally well renowned brand


Retail Brands

AdidasAgrani SwitchArchies GalleryAsweraBenetton's KidsBabiesColor PlusCrecheD'seoulGuessJashnLacosteLevis

Meena BazarMusic WorldNaqash Royal ArtsNikeNitanjali Art GalleryOriental BloomOsho WorldPhotogenic SoftwarePlanet SportsPushpamReebokShaw Brothers

Shoes'n'ShapesSital Dass and SonsSmart HomeSpacesTantra T-shirt shopThe Book WorldToyzT-zoneUnited Colors of BenettonVLCCWalk in M&BWeekender


Food & Restaurant

AmorettosCafe NescafeCandy Land

Geoffrey'sHot n JuicyHot DogKasa GelatoMcDonald's

MirchiSubway

Kids Amusement

Funkie Orbits

Services

ClubMahindra Holiday

Vodafone J&K Bank


PROBLEMS FACED BY ANSAL PLAZA…..


1.Lower foot fall & Conversion Rates:The construction cost of a mall of mall is in the range of Rs 1,500-2,000 per square foot. For this investment to break even, the mall needs to generate at least 4,000 footfalls a day, with 50 per cent of these people actually making purchases.


LOWER CONVERSION RATES

The problem which Ansal Plaza is facing these days is lack of conversions that is the footfalls are low but the conversion rates are further lower that people who actually purchase the products from the retail outlet are very less and majority of the customers enter the shopping mall for leisure or in other words they are lookers that is they only look at the things they do not have any intention to purchase them. There are two types of customers one who are there in the mall with the intention to purchase and others are lookers.

Although there is a chance that lookers may go for impulse purchase but the probability is very less. The construction cost of a mall of global standards is in the range of Rs 1,500-2,000 per square foot. For this investment to break even, the mall needs to generate at least 4,000 footfalls a day, with 50 per cent of these people actually making purchases.


Reasons for low footfall

• Connectivity problem of the two blocks• Typically expensive shopping outlets• Traffic problem during entry of mall• Absence of Cineplex• People went to Ansal plaza primarily for window

shopping.


1. Rival Malls– DT mall– Sahara mall ( big

bazar)– GIP( multibranded)– Center stage mall


In India 96% of retail is unorganized retail and only 4% of the retail is organized retail and as a result the revenue generated by the organized retail is very less compared to unorganized retail and inside a shopping mall there is only organized retail. So the revenue generated by the retailers is very less inside the shopping mall because of the low footfalls and conversion rates inside Ansal Plaza and as a result the tenants find it really difficult to pay that lease rent which is round about Rs.120-150/sq feet.

Because the revenue generated by the organized retail is less and footfall is further lower in Ansal Plaza so about 30%of the revenue generated by the retailers inside the shopping mall goes in paying the lease rents and with the remaining money the have maintain the inventory and they have to give the salaries and wages to the employees and workers respectively and have to pay electricity bills also. Taking into account the usual sales various stores make today, this translates into a monthly rental of anywhere between Rs 25 and Rs 75 per square foot. Ideally the lease rent should be 9-12% of the revenue generated by the outlet.

The reason why the lease rents are higher is that the property prices are very high and lease rents are totally dependent upon the prices of the property and contribution of organized retail is very less in Indian market. Lease rents are increasing every year but the contribution of organized retail is not increasing proportionately.

3. Higher lease rent and lesser amount of revenue generated by the retailers


It is a method which is being adopted by the various real estate companies and the builders. They construct a shopping mall after purchasing a chunk of land and then instead of selling the showrooms and the office spaces inside the malls themselves they hand over the shopping malls to property dealers. Like when Ansal constructed the mall in 1999-2000 then instead of selling it itself it handed over the mall to the property dealers that is the mall was sold to the dealers and once it is sold to them then they are solely responsible for setting the price and at times they increase the profit margins and sell the outlets inside the mall at higher prices.

If the customer has purchased an outlet at higher price then so as to achieve the breakeven point earlier he/she will keep the lease rent higher when he will rent out that outlet and as a result because of higher price lease rent further increases and tenants find it difficult to pay that rent. So tenants don’t want to do their business inside a mall they prefer to have outlets in a place which is relatively cheap.

4. Underwriting


EFFECTIVE MALL MANAGEMENT……..


1. Zoning – Formulating the Right Tenant Mix and Its Placement in a Mall.


2.Promotions and Marketing.


3.Infrastructure Management.


4.Ambience Management.


5.Tie ups with other organizations or consultancies (Cushman & Wakefield and Collers )


RECOMMENDATIONS

• There should be a better connectivity between the two blockes which has not been countered till date.

• There can be inclusion of stores like big bazar which attract buyers.

• The traffic problem is resolved with the presence of underpass from main road.

• The projector should air movies etc on a paid basis. Ie concept of open air theatre can help ansal plaza regain itself.

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