the mall boom in india

The “Mall Boom” in India

EXECUTIVE SUMMARY

It has been noticed so far, that the retailers, with their glitzy shops and direct consumer

interface have been in the limelight as a key factor driving the growth of organized retail

in the country. However, mall development has been driven primarily by the real estate

developers who have started looking at retailing as seriously as corporate and residential

sectors. The boom has been fueled by the attractive returns obtained by the mall

developers over the last couple of years.

Moreover, the Indian metro skylines and people's lifestyles have been significantly

impacted by the Mall phenomenon. With high novelty value, the malls are almost

becoming a status symbol for the communities, generating a substantial excitement and

curiosity amongst the consumers. With increased customer acceptance of organized

retailing, there has been an increasing demand for high quality space from large format

retailers, the food and apparel chains and the multiplex operators. Mall development has

attracted many real estate developers across all large and mid-size cities. From just 3

malls up to 2000, India is all set to have over 220 malls in different stages of planning,

design and construction, by 2005.

In the face of such fierce competition, a mall has to clearly segment the market and

define its target audience. It should also have a clear positioning and differentiating

strategy. This will help them gain competitive advantage. In fact it is expected that the

malls with the right planning, positioning and management will prove to be good

investments. Having done this, a mall developer has to consider various factors like

location; layout and design; infrastructure; product & tenant mix; tenant profile before

establishing the mall. If he successfully considers these factors, then the mall will surely

be a success. Once they are successful the 4 A’s of malls would be effectively catered to

since they will be looking into consumer’s convenience, costs, communication and value.

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However, there are several developments with a “me-too” approach. Such malls have

unclear positioning, sub-scale standards and ad hoc mall management. With oversupply

in some markets and emergence of new, more professional players, such malls will find it

a challenge to retain tenants and attract footfalls.

Malls and organized retailing in India are here to stay. Given the size of the market, many

new retailers, Indian and foreign will come into the country. The large retailers will get

professional and will follow standardised practices for mall management. This is a great

opportunity for the Indian real estate developer. However, the way the forward will

eventually be determined by the Indian consumer. Also, over the same duration mall

management practices will get more professional.

Thus, the main objective of the project was to analyse the mall boom India taking into

consideration the following:

The current retail scenario in India

The boom of organized retailing in India esp. malls

The factors that effect establishment of a new mall

Growth and Progress of malls

Marketing of malls

Viewpoint of retailers

Customers shopping behaviour

Future of malls

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TABLE OF CONTENTS:

CHAPTER

NO:

CHAPTER NAME: PAGE

NO:

1 Overview of Indian Retail:

Introduction

Evolution of Indian retail

Organised Retailing: the emerging Revolution

Reasons for organized retailing in India

Classification of organized retail sector

Growth & Progress

Policy on foreign investment in retail holds

back sector’s rapid progression.

2 Malls and Organised Retailing

Definition of a mall

Emerging Mall Landscape

Stages of Evolution of Malls

3 Profile of Indian malls- Trends

Size of an average Indian mall

Mall financing

Mall Management

Footfalls and Conversions

Outlets in a mall

Advertising

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4 Target market, Segmentation, Positioning and

Differentiation Strategy for malls

5 Mall Mix:

Location analysis

Layout Plan & design

Infrastructure

Product & Tenant Mix, Tenant Profile

6 The 4 A’s of Malls

Acceptability

Affordability’

Accessibility

Awareness

7 Malls Developments – Growth and Progress:

‘A’ Category Cities

‘B’ Category Cities

8 Future of Malls

9 Case Study

10 Conclusion

Research

Annexures

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CHAPTER 1: OVERVIEW OF INDIAN RETAIL

INTRODUCTION

Retailing is the simple act of selling goods and services to the end-consumer.

Unorganised retailing in India is as old as the Indus Valley civilization and has been

allowed to grow the natural way. Company stores like Raymond and localized chains like

Nalli's in Tamil Nadu, Nilgiri's and Spencer's in the south, Akbarally's in Bombay and

Snowhite in Delhi have been there since long.

Thus till the early nineties, the organised retail industry had not evolved. There was no

consumer culture, there were limited brands and people bought what was available. There

were no ‘shopping areas’. The retail industry lacked trained manpower. It was also

difficult to compete with the unorganised sector because they operated with minimal

labor costs and overheads. Tax laws and government restrictions added to the problem.

But evolution of organised retailing as a professional service-oriented set-up, as a vehicle

to provide the consumer with a whole new shopping experience, is a phenomenon of the

mid-'90s.

In fact, through the 1990s, organized retail in India added just 1 million sq. ft. of space a

year. The pace picked up from 2001 onwards. But estimates have it that in 2003 alone, a

breathtaking 10 million sq. ft. was picked up by this fledgling industry. The most exciting

phase for the retail industry lies ahead.

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Thus Organised Indian retail real estate market has witnessed a boom over the last two

years, nearly a decade after the first signs of its evolution. In most economies organised

retailing passes through four distinct phases in its evolution cycle. In the first phase, new

entrants create awareness of modern formats and raise consumer expectations. During the

second phase, consumers demand modern formats as the market develops, leading to

strong growth. As the market matures, intense competition forces retailers to invest in

back-end operating efficiency. In the final phase, retailers explore new markets as well as

inorganic opportunities as growth tapers off. Supply Chain Management (SCM) attains

top priority in the third phase of evolution. India is currently in the second phase of the

organized retail evolution.

Evolution of Indian Retail

Historic/ Traditional/ Government Modern formats/

Rural Pervasive supported International

Reach Reach

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Exclusive Brand Outlets (EBO’s)

Super/Hyper Markets,Departmental stores

Shopping malls

PDS,Khadi storesCooperatives

Convenience stores, Mom and

Pop/ Kiranas

Weekly Markets/Village fairs/

melas


Source of Neighbourhood stores/ Availibilty, Shopping

Entertainment Convenience Low cost, Experience/

Distribution Efficiency

ORGANISED RETAILING- THE EMERGING REVOLUTION

Retailing is one of the businesses that have the most rapid, most visible and deepest

impact on economic development and growth.

The new organised retailing phenomenon in India is at the centre of a lot of attention and

media coverage. From young entrepreneurs to blue-chip companies and corporates,

everyone seems to be part of the bandwagon. The swiftly changing dynamics of retailing

are bound to be noticed because they intimately and directly touch each one of us,

regardless of age, class and profession.

The Indian Retail market, rated as the second most attractive destination among emerging

markets globally, is in the midst of a gigantic transformation, thanks to a plethora of

changes within the segment and outside. With mounting international and domestic

pressure to open up the economy, with Indian corporate houses and investors taking

active interest in retailing, and with Government realising the importance of modernising

the sector, organised retail could well become a major driver of the economy in the years

ahead. The sector can greatly induce consumer spending in the domestic market, which in

turn is bound to lend the necessary push to achieving higher production levels

WHAT DROVE ORGANISED RETAILING IN INDIA?

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The factors that led to organized retailing in India are:

Domestic customers have become more demanding with their rising standard of

living and changing lifestyles: The customer has evolved. He has more spending

power, is better educated, and most importantly, exposed to brands and products

through television and foreign trips. The Indian customer now has the desire to

acquire. Personal consumption is on the rise. Besides this, there is also rapid

evolution of the new age young Indian consumers.

Change in customers' focus from just buying to broad shopping (buying,

entertainment and experience): Experience shopping is set to become the order of

the day. Increasingly, shopping is being viewed as a recreational activity; as much as

79% prosumers- the breed of consumers with the influencing power- believe it is so,

reveals the latest ET Euro Prosumer study. Prosumers are the trendsetters among

consumers, who are the first to try a new product and share their opinions. They set

the pace for the rest of the market. Experience shopping is set to increase at the

expense of brand shopping. Shoppers not only love a good experience, but also a

good hunt and good deals. This has led to the concept of “Shoppertainment”. This is

one of the factors that have led to a pick-up in momentum in organised formats of

retailing.

Retail space no longer a constraint : Pro-active steps taken by the government

permitting use of land for commercial development in various cities, including

Mumbai and Delhi, have also contributed to increased availability of retail space in

the country. This has also led to organised retailing since unavailability of quality

retail space has been one of the main constraints for development of organised

formats in India.

Consumerism and brand proliferation also enhanced organised retailing in the

country: Most of the world's leading brands, including L'Oreal, Espirit, Louis

Vuitton, Marks & Spencer, Tommy Hilfiger, Louis Phillipe, Levis, Pepe, Lee, Arrow,

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Dockers, Red Tape, Clairns, Hugo Boss, Tiffany, Bulgari, Ecco, Chambor, Revlon,

Philips, Corelle, Magppie, Nike, Reebok have already come into India. In fact

consumers prefer buying such brands and such proliferation of brands is one of the

factors that has enhanced organised retailing in India.

Media proliferation: Another factor that accelerated the growth of organised

retailing is media proliferation. Increased advertisements and brand promotions have

led to a growing consumer spending across a wide range of product categories.

Scalable and Profitable Retail Models are well established for most of the

categories: Last few years have seen development of the scalable and profitable retail

models across the categories. Further, large Indian corporate groups like Tata,

Reliance, Raheja, ITC, Bombay Dyeing, Murugappa Group, and Piramal Group etc

have expressed serious interest in investing into the retailing sector. In addition,

foreign investors and private equity players are also firming up plans to identify

investment opportunities in the Indian retail sector. The quantum of investments is the

inherent attractiveness of the segment and thus lures more and more investors to earn

abnormal profits.

Suppliers /Brands willing to partner with retailers: Manufacturers in industries

such as FMCG, consumer durables, paints etc are waking up to the growing clout of

the retailers as a shift in bargaining power from the former to the latter becomes

imminent. Already, a number of manufacturers in India, in line with trends in

developed markets, have set up dedicated units to service the retail channel. Also,

instead of viewing retailers with suspicion, or as a 'necessary evil' as was the case

earlier, manufacturers are beginning to acknowledge them as channel members to be

partnered with for providing solutions to the end-consumer more effectively.

Hence, in this fast changing retail scenario, one-store management has gradually given

way to chain stores; grocery stores have given way to supermarkets, and market places

have been replaced by malls. In terms of format and customer behavior, the entire

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concept of shopping has changed, so that there is now a strong shift towards one-stop

shops like malls and supermarkets.

BROAD CLASSIFICATION OF THE ORGANISED RETAIL SECTOR:

Broadly, the organised retail sector can be divided into two segments, In-Store Retailers,

who operate through fixed point of sale outlets located and designed to attract a high

volume of walk-in customers, as referred to as the brick-and-mortar format, and the Non-

store Retailers, who reach out to the customers at their homes or offices through direct

selling, tele-marketing and e-commerce. The common formats of brick-and-mortar

retailing can be summarized as follows:

FORMAT DESCRIPTION VALUE

PROPOSITION

1) SPECIALTY STORE

(Multi-Brand)

Focus on a specific product category,

Medium sized layout in strategic

location

Example: Footwear stores, Music

Stores, Electronic & Household stores,

Gift stores, Food & Beverages retailers

etc.

Greater choice to

the Consumer,

comparison

between brands

possible

2) EXCLUSIVE BRAND

OR COMPANY OUTLET

Exclusive Stores owned/ managed Or

franchised out by a given brand or

manufacturer; Can be Exclusive

Single-brand or Multi-brand store

Example: Levis store, the Pepe store,

etc.

Complete range

available for a

specific brand or

manufacturer

with certified

product quality

3) DEPARTMENT

STORE (Multi-Product /

Large stores having a variety of

products, organized into different

One-stop shop

catering to varied

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Multi- Brand) departments such as clothing, house

wares, furniture, appliances, toys,

books, etc; skewed towards apparel.

These stores are focused towards a

wider consumer audience catchment,

with in-store services as a primary

differentiator.

Example: Shoppers' Stop, Pantaloons,

Westside, Ebony, Lifestyle, Globus,

Piramyd

consumer needs,

Service as

differentiator

4) CONVENIENCE

STORE

Small self service formats located in

crowded urban areas/ location

Convenient,

multi- functional,

extended

operating hours

5) DISCOUNT STORE Stores offering discounts on the retail

price through selling high volumes and

reaping the economies of scale

Low prices

6) SUPERMARKET Supermarkets, generally large in size

and typical in layouts, offer not only

household products but also food as an

integral part of their services. The

family is their target customer

Examples: Apna Bazaar, Sabka Bazar,

Marzin Free, Subhiksha, Haiko,

Nilgiri's, Foodworld from the RPG

Group, Food Bazaar from Pantaloon

Retail, Haiko, etc

One-stop family

shop in food &

household

categories

7) CATEGORY Category killers focus on a particular Consumers get

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KILLERS (Multi-Brand) segment and are able to provide a wide

range of choice to the consumer,

usually at affordable prices due to the

scale they achieve

Example: 'The Loft' footwear store in

Powai, Mumbai measuring 18,000 sq

ft.

extremely wide

choice of brands

in a specific

product category

8) HYPERMARKET Hypermarkets offer a large basket of

products, ranging from grocery, fresh

and processed food, beauty and

household products, clothing and

appliances etc.

Example: RPG group's Giant

hypermarkets and Pantaloon retail's

Big Bazaars.

Low prices, vast

choice, including

services; value

drivers

9) MALLS A huge enclosure housing different

formats of retailers, form ideal

shopping destinations in Metros, large

cities and easily accessible urban

outskirts/ rural settings. They include a

combination of the above-organised

retailing formats.

Examples: Inorbit, Crossroads, High

Street Phoenix, Nirmal Lifestlye, R

Mall etc..

Variety of shops

available close to

each other, all

under a common

roof & uniform

shopping

environment;

ideal hangouts

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GROWTH & PROGRESS OF ORGANISED RETAILING:

Source: Images Research

The retailing industry in India, estimated at INR 930,000 crore (2003-04) is expected to

grow at 5 percent per annum. The size of the organised retailing market in 2004 stood at

INR 28,000 crore, thereby making up a mere 3 percent of the total retailing market. In

line with predictions made by the first IMAGES-KSA Retail Report 2002, organised

retailing is well on its way to become an INR 35,000 crore market by end- 2005. Moving

forward, organized retailing is projected to grow at the rate of 25-30 percent p.a. and is

estimated to reach an astounding INR 100,000 crore by 2010. Further, its contribution to

total retail sales is likely to rise to 9 percent by the end of the decade.

POLICY ON FOREIGN INVESTMENT IN RETAIL CONTINUES TO HOLD

BACK SECTOR'S RAPID PROGRESSION:

Earlier, when the Government announced its intention to open up the retail sector to

foreign investment, it was debating whether to allow 26 per cent or 49 per cent FDI in the

sector. But now, the department of commerce has recently proposed that 100% FDI

should be allowed in retailing. The prime minister too, expressed the desire of freeing up

Indian retailing sector and inviting foreign investment. The proposal is, however, meeting

stiff resistance from local traders and other political parties. The main fear is that that

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local traders and retailers will suffer a huge setback if FDI is permitted in the retailing

sector.

The positive impact on the Indian economy due to opening up of the retail sector to

foreign investment could be in the following areas:

FDI could have an impact on the economy not only in the retail sector but also in

many other activities such as manufacturing, food processing, packaging and logistic

services.

This will also mean improved tax collections for local governments and the central

government.

Supply chains and local procurement would boost the performance and business for

local enterprise. Manufacturing and supply chain management businesses are indeed

expected to witness further growth.

The direct impact of foreign direct investment in the retail sector is likely to be on the

absorption of retail space over the next few years. We anticipate that the average size

of malls will continue to increase. Average rents could come down since the large-

format retailers have a lower capacity for rent. Finally, developers will be encouraged

to retain ownership of properties and will exercise more control over the tenant mix,

to ensure success of the malls.

Finally, FDI in retail will entail a significant increase in employment, both in front-

end retail stores and in the downstream supply chain.

The negative impact that FDI in retail would have on the Indian retail players:

The small local shops might get affected and most probably the share of individual

retailers will come down. Yet, all enterprises that are able to manage the supply

chains effectively will continue to reap the benefits of growth and remain competitive

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in terms of pricing and profitability. Retailers would certainly have to refine their

supply chain models to remain competitive and profitable.

But, however the Indian retailers have the advantage of understanding the Indian

consumers and their habits much better since they have been in the market for a longer

period. They should build on this advantage and leverage their brand awareness to retain

the customers.

The fears expressed in certain quarters that FDI in retail sector will short-change the local

kirana stores and smaller players and that there will be job losses are exaggerated.

Since the total size of the retail trade is expected to grow at a robust pace in the coming

years and the consumer segments patronising the big malls are going to be different, the

traditional outlets are unlikely to be affected.

On the contrary, the opening up of the sector to FDI will lead new economic

opportunities and there will be more employment generation.

It is understood that the multinationals that invest in retail business in India would also

source Indian goods for their international outlets in a big way and thus provide a boost to

Indian exports.

Indian retail chains would get integrated with global supply chains since FDI will bring in

technology, quality standards and marketing.

According to the World Bank, opening the retail sector to FDI would be beneficial for

India in terms of price and availability of products.

As of now, the Indian retail sector, largely due to its fragmented structure, suffers from

limited access to capital, labour and suitable real estate options. In contrast, China, which

allowed 49 per cent FDI in the retail sector since 1992, benefited immensely with foreign

players bringing capital and new technologies and growing export market for domestic

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products. At present, around 40 foreign retail players account for almost 20 per cent of

the organised retailing in that country.

The policy-makers would do well not to dither any more over opening the sector to FDI.

FDI will provide a big boost to food products, including vegetables, fruits, fishery and

dairy products with food chains going for direct procurement from farmers and investing

in cold chains and other infrastructure.

Similarly, textiles and garments, leather products, etc., will benefit from large-scale

procurement by international chains. This, in turn, will create more jobs at various levels.

CHAPTER 2: MALLS AND ORGANISED RETAILING

WHAT IS A MALL?

DEFINITION:

There are as many definitions of malls as the number of malls! One such definition is:

Largely, organized retail developments by the private sector that the country has

witnessed over the past few years are colloquially referred to as “malls”.

Malls include almost all the above-discussed organized retailing formats like Super

Markets, Hyper Markets, Departmental stores, Exclusive Brand Outlets (EBO’s),

Specialty Stores etc..They also include Multiplexes’, Gaming Zones and Food Courts. A

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mall is, therefore, a very broad concept that not only looks into retailing but also caters to

the food and entertainment needs of the consumers.

A mall should create an experience of economic well being, serve the community and

create greater involvement with the larger community.

“EMERGING MALL LANDSCAPE”

Driven by the increase in number of organised retailers, a distinct change in the

aspirations of the society and profile of the Indian consumer, a large number of

developers and corporates are realising the potential and focusing on developing retail

real estate mostly malls. Importantly, the government has also woken up to the need for

adequate supporting infrastructure and revision in policies to promote the sector.

Following these developments, various companies are now setting up supporting services

to cater to the requirements of malls.

The mall market in India received tremendous importance since the country witnessed the

success of its first three malls in 2000 Spencer Plaza, Chennai, Ansal Plaza, Delhi, and

Crossroads Mall, Mumbai. The rate of development has been phenomenal and while

there has been talk about a correction or consolidation stage due to oversupply of such

retail spaces, however research shows quite the opposite. Findings suggest that India's

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retail space is, in fact, in short supply and the sector is likely to boom further with

possibilities for mall developers and associated services to thrive in such a positive

scenario.

Moreover, over 72 per cent of the mall areas in 20 new malls that became functional by

2004, had been already been pre-leased to anchor and smaller vanilla retailers. For malls

that will begin to function by 2005, anchor area of over 48 per cent of the total mall area

has already been pre-leased, and as for malls to hit business by 2006, 32 per cent of the

mall area has been pre-leased by the anchors. So as it should have become evident by

now there is no real oversupply of malls in India.

Unlike their foreign counterparts, where 'have enough' has saturated the market, Indian

consumers are now demanding bigger and newer retail formats. In fact, studies show that

organised retail in India is growing at 25-30 per cent, as against six per cent for the

unorganised retail market. And if the number of malls already in existence in our country

is any indication of things to come, Indian retail is at an all time high.

Hence we can say that malls, in particular, are contributing hugely to the development of

organised retail. Malls are coming up both within cities and at the outskirts vowing to

create destinations that will attract thousands of customers every day. Malls are

witnessing a boom because they combine all the factors and their unique mix of tenants

ensures that all the members of the family find what they need, in one huge complex,

which offers provisions for entertainment, like multiplexes, culinary delights at food

courts that serve both Indian and international cuisine. They cater to every segment of the

society, ranging from elite to the middle-class, fulfilling consumer’s every need, whether

in fashion, food, lifestyle, or viable family entertainment.

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STAGES OF EVOLUTION OF MALLS:

1. Evolution: This stage is marked by the development of the country’s first malls –

Spencer Plaza in Chennai, Crossroads in Mumbai and Ansal Plaza in Delhi – that

together account for a total built-up space of approximately 650,000 square feet.

2. Acceleration: India is currently in this stage. Beginning 2001, mall developments

picked up in a big way, especially after the market was witness to the success of the

first few malls. Enthusiastic developers announced mall projects in every conceivable

format, at every available location. . Changing consumer-expenditure patterns and the

growth in the number of organised retail chains further fuelled this boom.

In the initial acceleration phase, most developers were able to sell 50-70 per cent mall

space prior to, and also during, the construction phase and generate the requisite

funds. An example would be of the Garuda Mall in Bangalore, a joint project between

the city development authority (BDA) and realtor company Euromer Garuda Resorts,

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wherein the management claims to have sold off the entire space even before the

completion of construction work. While these may be exceptional cases of good

planning, the location of the project also plays a considerable role in the successful

selling of space. In the same city there are other completed projects that are having a

tough time getting brands and retailers take up space.

Since most of the developers are joining the bandwagon sans the required planning, a

lot many projects lack clear positioning, proper space planning, adequate

infrastructure, parking, and an understanding of the basic principles of mall

management. Understandably, there are apprehensions about the success rates.

3. Saturation: The third stage in mall development, of saturation, is still a thing of the

distant future. Even if we find that domestic retailers have exhausted their appetite for

space expansion within malls, there is always the scope for allowing foreign direct

investment (FDI) to come in and explore the market further.

But however, a few cities are indicating signs of “saturation” for the current market

size. To illustrate, Gurgaon on the outskirts of the national capital Delhi and with a

population of 1.8 million, is expecting some 4 million square feet of retail space by

2006, and so, would appear to be headed towards a stage of saturation in mall space.

But as per the study conducted by Chesterton & Meghraj, the actual availability of

mall space in the next two years will be 9.5 million square feet. In fact if the plans of

key Indian anchor retailers like Pantaloons, Shoppers’ Stop, Westside, Piramyd,

LifeStyle, Ebony and Globus, and also the multiplex operators, are taken into

consideration, the total available space is less than the requirement of just these key

retailers.

3. Consolidation: Most mature markets have gone through this stage of mall

development. In the United States, up to one-third of the nation’s 1,200-plus malls are

already obsolete. Following a decade of consolidation, the 10 largest mall real-estate

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investments trusts now control 47 per cent of all malls, which includes almost all of

the 200 high-performing ones.

Mall development in India is passing through a decisive stage. The supply of retail space

is increasing not only in metros and mini-metros but also in non-metros. At the same

time, we find that project implementation has slowed down, possibly due to introspection

by developers, trying to figure out more sustainable models to proceed with. The ultimate

outcome, whether there will be a further boost to malling activity or a gradual slowdown,

will actually depend on the performance of some of the innovative mall concepts likely to

make a debut within the next one year.

CHAPTER 3: PROFILE OF THE INDIAN MALLS – TRENDS

SIZE OF AN AVERAGE INDIAN MALL

The Indian mall developments range between 50,000- 500,000 sq ft. On the basis of size

the malls have been classified in three categories, that is small, medium and large sized

malls. This can be seen form the table below:

Classification of Indian Malls on the basis of size:

SIZE DESCRIPTION AREA (Sq. ft.) LOCATION EXAMPLES*

SMALL Comparable to

community

50,000-

2,00,000

A Grade cities,

B Grade Cities

Banglore

Central, Sigma

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Centres Mall, Ansal

Plaza

MEDIUM Depending on

the market and

mall size, these

may be either

comparable to

community

centers or

serving as

regional centers

2,00,000-

5,00,000

A Grade Cities,

B Grade Cities

Prestige Forum,

Metropolitan,

Sahara Mall, R

Mall, Centre

One

LARGE Comparable to

Regional/ Super

regional

shopping centres

5,00,000 and

above

A Grade cities, The Great India

Mall, Nirmal

Lifestyle,

Mantri

Heritage,

Grand Central

Mall, Expo

Mart

*Examples are both for existing and proposed malls

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MALL FINANCING

In the US, over 47% of the malls are owned by institutional investors like Real Estate

Investment Trusts (REITs) and run by professional mall managers. The mall managers

plan the product mix, monitor traffic, joint promotions, and shopping festivals and so on.

However, this requires a high degree of control over the development. Therefore, space

within the Malls is not sold like office or residential spaces.

However, in India, developers have been selling space in retail malls to investors who

further lease it out to retailers. Most mall developments are pre-marketed on paper before

the groundbreaking takes place. Considering that the investors have been getting yields in

the region of 10- 18 % on retail properties in different markets, several speculators also

enter the market and then try to maximize return by charging high rentals.

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Effectively such ownership and financing structures mean that most malls are owned by

neither the developer nor the retailer but piecemeal by individual financial investors. This

can result in unplanned and uncontrolled development of the Malls and eventual loss of

rental values.

MALL MANAGEMENT

An evolving concept: As discussed earlier, professional mall management is not yet a

widely accepted concept in the market due to various ownership issues, extent of

developer control and costs involved. Unlike mature markets, most malls in India are not

run as an operating unit. With most space sold to retail investors, the issue becomes

further complicated.

A few malls like Super mall in Mumbai and Mantri Heritage in Bangalore are

considering the services of professional mall managers. Also, Forum mall in Calcutta is

planning to operate the mall professionally by tracking footfalls in the different areas of

the mall to be able to identify weak areas and address the issues accordingly.

ADVANTAGES OF PROFESSIONAL MALL MANAGEMENT:

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1.Ability to maximize revenue: A mall manager earns a fixed percentage of the

operating revenues made by the mall a compelling reason for him to drive the revenues

up to the maximum and to reduce the operating costs. Revenue sources include those

achieved through rents, car parking, advertising and events.

2.Allows developer to concentrate on core business: A professional mall manager

takes on complete responsibility of the mall, hence allowing the developer to focus on

the core business (i.e., property development).

3.Value-addition to malls: The overall valuation of a professionally managed mall tends

to be significantly greater than owner-managed malls. It has been observed that a

professionally managed mall adds positive value to the land it has been built on in the

very first year of operations.

4.Ease of exit from business: A mall owner can choose to exit the business at any point,

without negatively impacting the overall mall operations.

5.Ensure transparency of dealings: A mall manager acts as an independent third-party

mediator between the mall owner and the tenant. This ensures transparent and smooth

dealings between the two parties.

With a large number of malls in the pipeline, one of the critical factors that will

distinguish one mall from the rest is the way it is managed. Over the next few years,

professional mall management service will establish its significance in the industry.

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FOOTFALLS AND CONVERSIONS

Fall in Footfalls: Initially when Crossroads opened in 1999, the footfalls were

alarmingly high in the range of 40,000 to 60,000 on weekends due to lack of competition.

The number has come down to almost 8,000 to 10,000 on weekdays in 2003. This trend

is true for most malls. Operational malls in Gurgaon attract footfalls in the region of

12,000 to 15,000 on weekends.

Source: Images research

Increase in Conversions: Most operational malls, on an average, have experienced an

increase in conversions over the past three years due to various factors like changing

consumer expenditure patterns and increase in disposable incomes. Assuming average

cost of mall development to be Rs 1,500-2,500/sqft, a mall needs to generate approx.

4,000 footfalls a day with 50% conversions and an expenditure of Rs 1,500-2,000 for the

investment to break even. According to Crossroads mall, even though footfalls have

dropped since 2000, an increase in conversions (From one in every 10 visitors spending

in 1999 to around 6 in 2003) and an increase in the size of purchase by about 3- 4 times

to Rs 2,000 has ensured stable returns. The estimated conversions for Pyramids in the

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same mall are around 25-40%. Overall, the conversion rates experienced by most malls

are in the region of 10 to 15% in 2003.

Conversion Rates in malls dip on weekends: Though footfalls during weekdays are 20-

25% lower and the average bill value is lower by 17-20% during weekdays; the

conversion rates are higher on weekdays.

However, the conversion rates are lower during weekends. This is a direct reflection of

the creaking infrastructure during weekends, as neither the size of the store nor the

number of people, is able to handle the rush of consumers, which leads to lower

purchases as consumers are not well attended to.

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OUTLETS IN A MALL

The outlets in a mall can be on the basis of three arrangements. They are:

Outright sale: In this the outlet is sold to the stand-alone outlet at the time of the

development of the mall.

Lease: Under this arrangement the outlets are on rental basis whereby the retail outlet

pays a fixed amount of rent every month to the investor.

There has been decrease in Mall rentals since 2000: Although when compared to

models around the world, mall rentals are higher in India but there has been decrease

in mall rentals since 2000. This is because of fall in property values, increase in

supply, competition and reduction in novelty value. For instance, rentals in

Crossroads have reduced by over 25% since 1999.

Note: the data is for Crossroads mall, Mumbai with themaximum values indicated

Revenue Sharing Basis: Under this kind of arrangement, a tenant would give the

mall owner a percentage of his revenues, with or without a minimum guarantee. (Few

anchors pay the mall owners in advance for construction, the way it happens

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elsewhere in real estate development.) The agreement would vary for different tenants

depending on the real-estate cost of the tenant - it would be low for an apparel store,

whose inventory expenses will be higher, and high for a gaming and entertainment

hub, which doesn't really require any additional expense after the machines have been

set up. This is the simplest way for a retailer to minimise his risk. Even if retailers

have poor sales, a large part of their turnover is not lost to rentals. Such agreements

have other benefits. They could reduce tenant turnover significantly and ensure that

the mall remains well occupied. They could also prompt the mall developer to look

for ways by which footfalls can be increased, as that would be to his advantage

Example: A revenue-sharing agreement between Shoppers' Stop and Nirmal Lifestyle

(a mall in Mulund, Mumbai), whereby the mall receives 3.5-4% of the monthly

turnovers. Shoppers' Stop has also entered into an agreement with Inorbit, where

Shoppers' will pay either monthly rentals of Rs 30-40 per sq. ft, or 6-7% of the

turnover, whichever is higher.

A lot of debate is still going on among various sections of the business community over

the mall management as to what is better. That is whether to buy a space in a mall or go

for a lease or revenue sharing basis in this regard. Some say that leasing is best as it gives

alternative choice to the mall managers to keep experimenting with tenant-mix

composition to induct new shopping elements in the mall to increase the footfall, others

feel the best way is to take the middle road and lease some stores and sell some small

outlets. In fact, small retailer may benefit if he/she buys or they will be at the mercy of

mall managers after it becomes a thorough success. The mall managers may ask them to

vacate or increase the rent or lease amount.

An Example: Banking on its experience in running Ansal's Plaza, Ansal Group has taken

an entire mall on lease from a property developer. This major deal indicates a new aspect

placing confidence in leasing space in malls instead of selling it outright. The executive

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President of Ansal's Plaza feels that the mall under the leasing mode than any other

arrangement.

According to the research conducted by me, all the malls under the survey have outlets on

different arrangements. There is no fixed format followed as far as the arrangements of

outlets are concerned.

50% of the malls (Phoenix High Street, Nirmal Lifestyle and Crossroads) under the

survey have all or almost 95% of the outlets leased. Out of the remaining 50%, no fixed

pattern was observed. Either all the outlets are sold or they are on revenue sharing basis,

or a combination of arrangements is done, like some are leased, some others are sold and

the remaining are on revenue sharing. Thus it is observed that it is entirely a mall’s

choice to decide the kind of arrangement for the outlets within its mall and there is no

fixed pattern followed.

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ADVERTISING:

There are various ways in which advertisements are done within the malls. They can be

done either for the stand alone outlets present in a mall or even for any outside brand that

is not situated in the mall. The brand wanting to advertise with the mall has to pay a

certain amount of rent for the same depending upon the period and the type of

advertisement. Moreover malls also undertake advertising to market themselves and

make people aware of the happenings in the mall.

The methods that a mall uses for advertising its outlets as well as itself can be divided

into In mall and External advertising. :

IN MALL ADVERTISING:

In mall communication includes the following methods:

Floor Graphics: These are graphic prints, which are put on the floor, and the

customers can notice them while walking. Because they are different they make the

customer take notice.

Door graphics: These are prints, which are put on the glass doors. So when a

customer opens the door he notices the signage or the poster.

Standees: These are stands on which a branding visual is mounted. They can be used

for communicating about the promotions, launches, brands etc. If they are done up

properly they draw a lot of attention. A lot depends upon the visual, which has been

used.

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Flyers: These are handout, which are given to customers walking in a mall. They

may also be used at newspaper inserts. They can be used for appraising the customer

about the events, promotions, new launches etc.

Tent Cards: These are visuals which can be placed on tabletops, cash counters etc.

they are a form of display.

Frontlits and Backlits: These are a form of display which are mounted on the wall.

Depending upon the location of the light it is termed as backlit or frontlit.

PA system: The PA system carries the sound throughout a mall. It can be used for

making announcements as well as informing people about the happenings.

Scroller

Besides the above for advertising in a mall posters can be put in the elevators on the

escalator sides etc. The main aim is that wherever a customers vision goes, that area can

be used for advertising.

EXTERNAL ADVERTISING:

External advertising is done by the following methods:

Newspaper ads: Malls generally advertise in newspapers, magazines etc. These

advertisements can be done for advertising about the events, promotions or launch of

a new concept.

Bombay times, Westside plus, Down Town Plus, Mid-Day etc are mostly used by

malls.

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Hoardings: Under this method of advertising, big hoardings are put up at strategic

locations in the city. People notice these hoardings and this helps to create recall

value.

Inserts: Fliers can be inserted in newspapers or they can be put in the building letter

boxes. This is cheaper than a newspaper advertisement and it helps to cover a wide

area.

Bus Shelters: In this, posters are put on the bus shelters. This is similar to hoardings

but it is on a smaller scale.

Radio Mentions: There are 2 methods of radio mentions; RJ mentions and Radio

spots. The trend of listening to radio especially FM has caught up a lot in India

especially in the metros.

Slides: A new method of advertising that is being used is a slide which is projected

during a movie at a theatre or a multiplex. Depending upon the timing of the show,

the desired audience can be targeted.

Internet: Pop-up screens are also increasingly being used by malls. However not

everybody has access to the net and there are many people who close the pop-up

without reading. As a result one cannot measure the hit rate.

E-mailers: In this method, the malls send mails to a very huge number of people

informing them about the latest events and happenings at the malls. People are also

informed about the offers that they can avail of at the mall. this is a very cheap

method of communicating with their target audience.

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Direct Mailers: In this method, the mall sends direct mails to the residence of their

target audience. This ensures that the people at least go through their letter unlike in

case of E-mailers where the e-mail may be deleted. But however, in case of both the

E-mailers and Direct mailers it is necessary for the mall to have a huge database of

customers.

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CHAPTER 4: SEGMENTATION, TARGET MARKET,

POSITIONING AND DIFFERENTIATION STRATEGY

FOR MALLS

SEGMENTATION AND TARGET MARKET OF MALLS

The process of identifying subset consumers who have distinct, homogenous demand

characteristics is called market segmentation. Market segment consists of a group of

customers who share a similar set of wants.

When a mall is opened in a particular area its main target area is called the cachement

area and the people residing in that area are its main target audience

Segmentation in case of malls is done on the basis of the income group a person belongs

to. The segments that the malls usually target are the upper class and the upper middle

class. But however with the rising income of people in the middle-class, an additional

segment of people belonging to this class, also forms a part of their target audience.

Under these segments the target audience of malls comprises of all that is kids, parents,

youngsters and even adults.

Malls have a combination of outlets that would cater to their wide target audience. For

example: Kids can go to a mall just to enjoy themselves at the gaming zone, mothers can

go to but groceries form the supermarkets and hypermarkets present at the mall and

youngsters and adults can either go for entertainment like watching a movie or go

shopping.

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Thus, the different outlets present at a mall would look into the various requirements of

all people. The various requirements would be either of food, retail or entertainment.

Since malls have all the above three, people can go to a mall to satisfy their respective

requirement.

Under these categories that is food, retail and entertainment, there are various outlets

whereby the customer can visit any outlet depending upon his budget. For example if a

person goes to a mall to buy clothes, he has an option of either going to the expensive

boutiques or just satisfying his requirement from any other retail outlet present at the

mall.

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POSITIONING OF MALLS

Positioning is the act of designing the mall’s offering and image to occupy a distinctive

place in the mind of the target market. The end result of positioning is the successful

creation of a customer-focused, value proposition, a strong reason why the target

audience should visit the mall.

Currently most operational malls are riding on the first mover advantage and the boom in

the retailing sector (with a number of chains emerging) and have no clear positioning.

Since there are a handful of organized retailers, malls generally have the same set of

retailers taking up space. Therefore if one were to limit the discussion to “organized/

chain stores-type” retailers only, most Indian malls would look and feel the same.

Crossroads: But an exception to having a clear positioning strategy would be that of

Crossroads. Crossroads has clear positioning. It has done ‘premium’ positioning since it

has a lot of international brands and outlets that are present only at Crossrods. Some of

them are Mango, Ninewest, Morgan de Toi, Zegna etc. It mainly positioned itself as a

premium mall keeping the quality of people coming at the mall in mind rather than the

quantity. This means that they mainly targeted the upscale premium class with household

income of more than Rs. 3 lakh.

Earlier Crossroads, attracted footfalls close to 30-40,000 on weekdays and around

1,00,00 on weekends. But however the conversion rates were a meager 15 per cent. An

unpopular entry fee and the opening of another mall, High Street Phoenix, led to

stagnating revenues for Crossroads. Therefore Crossroads decided to go in for

“repositioning”. Crossroads repositioned itself as a “premium” mall that targeted only the

upscale customers.

Another example would be of the Pantaloon group that has established the Central malls

in Pune, Hyderabad and Bangalore. These are seamless malls. The advantage of this type

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of a mall to a customer is that there is a centralised billing system similar to that in a

departmental store. However the space in the mall has been leased or sold out like in a

mall to different retailers and brands. This is a method of differentiating itself from the

other competing malls and providing convenience to the customers.

It has positioned itself as a seamless mall. However not many people realize that it is a

mall and they generally equate it to being a departmental store.

Hence we can say that with so many malls coming up, each mall has to position itself

clearly in such a way that it can effectively differentiate itself from its competitor.

Positioning of the mall should also ensure that people are attracted to come to their mall

rather than their competitors to satisfy their requirements. In fact once the mall market

gets saturated, it will become pertinent for all malls to have a clear positioning, especially

relevant for malls located within a distance of 2- 4 kms.

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DIFFERENTITATION STRATEGY FOR MALLS

Differentiation is a key word for success in any business. Malls usually differentiate with

respect to retail/service mix, ambience, design, target consumer segment, and anything

else that can be imagined. This means malls are trying to differentiate themselves on the

basis of a few minor aspects that they feel would help gain competitive advantage. But

however, such minor aspects do not actually help them in effectively differentiating

themselves from their competitors since some malls have similar differentiating aspects

which no longer would be then called a differentiating strategy.

For example in the malls surveyed by me, 2-3 malls are trying to differentiate themselves

on the basis of some minor factors like parking space etc.

R Mall: According to the marketing head here, the USP of their mall is that each and

every floor in the mall is connected to the parking area. Thus, no season affects (like the

monsoon) their customers’ shopping activity. Moreover, the customers shopping trolleys

can be taken right up to the car.

Nirmal Lifestyle: The marketing head here told me that their mall is differentiated from

the others since theirs is a street mall which has an open space of around 1.5 lakh from

the total 5.5 lakh that is exclusively reserved for events an promotions. Thus, it is not a

confined mall, which is their USP.

High Street Phoenix: Even High Street Phoenix’s manager feels that the open space is

the USP of the mall.

Infinity and Hub: Malls like Infinity and Hub try to differentiate themselves on the basis

of the location they are present in. The mall managers here feel that the premium and the

high-profile area they are present in is their USP and hence the differentiating factor.

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As seen from the mall manager’s survey, none of the above malls have a unique

differentiating strategy. There are just minor aspects in relation to their mall that they feel

help them in differentiating them from their customers. But again, as observed, malls like

Infinity and Hub have the same differentiating factor of location. Similar is the case of

Nirmal Lifestyle and High Street Phoenix.

But a few announced malls are differentiating themselves on account of tenant mix.

These are known as the “specialty malls”. This new concept of specialised malls,

catering to one area or industry, is going to usher in a new trend, which would change the

entire pattern of retail sale and consumer behaviour in the country. This is a very new

differentiating strategy for malls.

Thus, we have jewellery malls like Gold Souk, electronic appliances malls, malls

exclusively for women and kids, “seconds” or factory outlet malls, furniture malls,

wedding malls, and the like.

In order to survive, malls will need to cater to specific segments which means that the

target market of such malls will be very specific unlike normal malls that target everyone

from kids to youngsters to adults etc..

For example: Pune Based Gera developments’ mall completely went in for transition in

order to differentiate itself as a specialty mall. This mall will only cater to the needs of

female customers which means that their target customers will be only females.

Another example would be of The Senior Auto Mall in Gurgaon that aims to be a one-

stop mall for automobiles and anything related to it, including loans and insurance.

Senior Builders is also developing a 300,000-square-foot Senior Circuit City, a mall

catering only to electrical consumer durables.

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These malls don’t just save time for the consumer, with various brands positioned under

one roof; they will also reinforce competition, which will finally benefit the consumer.

However, conceptualizing a specialty mall calls for intensive as well as extensive market

research. Specialty malls will thrive provided they take into consideration parameters like

consumer preferences, behavioural patterns, consumers’ level of exposure to media, and

lifestyles.

Mall developers will thus have to redefine their objectives and reposition themselves to a

select audience. With competition building up, differentiation on basis of ambiance,

design etc. may not always work and thus they may have to reposition themselves as

specialty malls, local malls, regional malls, discount malls, or destination malls. When

the larger cities are exhausted, there is ample scope for further development in the

smaller cities, towns, and even in rural areas.

Thus, some of the specialty malls in existence are

S.No. Mall Product Category Location Description

1) Gold Souk Gold Gurgaon The development measuring

180,000 sqft. Is promoted by

the Aerens group. The mall is

expected to have over 70

jewellery retail outlets with a

parking provision of over

80,000 sq.ft

2) Auto Mall Automobiles Gurgaon Promoted by Delhi-based

Senior Builders, the mall

measures over 2,00,000 sqft. It

is expected to house

automobile company

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showrooms related car

accessories, finance

companies etc.

3) Urban spaces Construction industry Pune Developed by the Deepak

fertilizers Pvt. Ltd., the mall is

spread over 10 acres and

positoned as one stop shop for

everyone in the construction

industry.

4) The Homeland Home-making Kolkata Kolkata based Merlin group is

developing a mall, measuring

around 1,00,000 sq.ft housing

retailers in the home-making

industry.

Another way of differentiating malls would be by coming up with seamless malls. These

are actually malls but look like departmental stores since they do not have different

outlets. Everything is located like in a departmental store but it is actually a mall that has

food, entertainment and even facilities like health spa etc. There is also a centralised

billing system unlike in a mall. An example would be of Pantaloon group that has

established the Central malls in Pune, Hyderabad and Bangalore. These are seamless

malls. This helps them differentiate their malls from the normal malls.

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CHAPTER 5: MALL MIX

A mall before entering the market has to consider the factors which are mentioned below.

If it properly plans and decides for the same then it might be able to gain competitive

advantage and thus achieve success.

The factors influencing the establishment of a mall are as follows:

LOCATION ANALYSIS

A proper analysis of the location has to be done before setting up a mall at a particular

place. Location analysis typically comprises of two stages.

Inter-city analysis: This is the first stage in location analysis whereby the key

objective is to identify and prioritise the cities relevant for the proposed mall. The

critical issue involved and discussed here is.

Market Potential: In this the market size has to be assessed on the basis of its

demographic and socio-economic profile (for example, total population base, age

profile, income profile). It is also necessary to find out what is the level of

spending/ownership and proportion of the population in various socio-economic

classes (viz., SEC A, B, C). This enables a high-level assessment of the potential

of various cities.

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Intra-city analysis: A Detailed Intra-city analysis has to be done to identify the

specific location best for the mall, within a selected city. In this step the various

locations in a specific selected city are to be analysed and then the mall developer

should come up with a ranked list of locations. The actual location decision will then

depend on the following factors:

Proximity & Suitability: Proximity to, and suitability for, the target market, and

the expected footfalls and conversions at the location, have to be taken into

consideration under this. The same can be assessed through market research and

relevant market Benchmarks

Cost factor: The cost impact of the locations is governed by both real-estate-

specific factors (such as availability and cost of real estate) as well as non-real-

estate factors (such as manpower costs and quality, availability of supporting

infrastructure) around the location.

Parking: Reaching the mall or entering it should not be a challenge. The retail

experience begins at the parking lot, and it must be addressed from that point

onwards. In the foreseeable future, the experience and adequacy of parking will

be a significant determinant of the mall's success. Firstly, it is not the absolute

parking that is of importance or even of primary importance, but of how much

more parking you have from the next, closest mall. However as parking is a

crucial differentiator, parking must be planned with a five-year time horizon. The

current thumb rule of one parking space for every 300 square feet of people space

is already proving inadequate.

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Hence, we can say that it is very essential for a mall developer to analyse a particular

location for building a mall since getting the location wrong can become an ongoing

drain on financial and management resources, while also diluting the brand.

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LAYOUT PLAN & DESIGN

Once the location has been decided, developer should look into designing the mall since

proper planning and designing of malls is very important. Efficient designing drives

people to visit malls to a great extent. A good layout and floor plan of a mall is very

essential as it facilitates even regulation of consumer traffic. Design should be

homogeneous with the surrounding without being lost in the maze of surrounding

structures. A retailer or prospective tenant can easily find out which placement would suit

him most if he devotes a few moments to study the floor plan. The perfect floor plan can

make a customer pass through each and every store in the mall.

Aesthetic designing concept coupled with efficient space planning can create stunning

effect. Landscaping is another element that makes it very attractive for consumers leading

to better footfall.

Indian consumers today are more global with their thinking; they have experienced the

changing retail scenario and can relate to the design elements. They are a lot more

demanding and are constantly driving the mall developers and architects to innovate. In

projects such as DLF City Center (located in Gurgaon, Haryana India), In-orbit (located

in Mumbai, Maharashtra India), The Forum (located in Bangalore, Karnataka, India) etc.

there has been a significant growth in the style, kind and variety of architectural designs

projects across India. The mall layout and design should be such that it addresses the

following issues:

Optimum Utilisation Of Space: The design of the mall should be such that it utilises

the space in an optimum manner and that there is no unnecessary wastage of space.

Amenities And Structure: Amenities such as a controlled environment with 100%

power back-up, central air conditioning, round the clock security are a few of the

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expected features in new developments. There should not be too many structures in a

mall that would confuse the consumer.

Synergies of Adjacency: The layout and the design of a mall should also look into

synergies of adjacency which means what should be next to what; what should be

opposite to what - the best neighbours are those that cater to a different categories in

the same want, like women's shoes and clothing and by the same token what should

not be in proximity the worst neighbours are those that cater to a different wants in

the same category, like fast food and health food - grooming next to food; lingerie

next to men's apparel and so on. It is also possible to create zones of specialisation

within a general mall like women's clothing, electronic and audio equipment - any

category where comparative buying is predominant.

Comfort Factors: Among comfort factors, those that address hygiene must be

sincerely addressed, both in design and maintenance Other comfort factors include

lux, level of lighting, safety features, air quality, indoor air quality management,

kiosks, help desks, mobile charging, etc.,

Circulation Space: The design of the mall should ensure proper circulation space for

the customers otherwise it will result in congestion within the mall.

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INFRASTRUCTURE

The mall building should have open spaces, large atriums and have a contemporary look

and feel in line with the global best practices.

The big atrium, amphitheatre, fountains, escalators, lifts, marble and granite flooring,

walls and five-star public conveniences are other value-added elements compliment

overall design of the mall.

New trend of integrating Cineplex in a mall and display of large plasma screens to show

ads and other documentaries or ad films provide them extra-large frontage making them a

landmark in itself. For Example: the large screen at Crossroads.

Infrastructure also includes foolproof air-conditioning system; extensive car-parking

capacities and complete power back up.

ARCHITECTURAL VOCABULARY:

Most Indian Malls, like most upcoming office buildings, have a “modern” look, with

glass treatments. In an attempt is create an “international” image, the architectural

vocabulary of the mall does not evolve from the surrounding context, but has a heavy

western influence. However, there are burning issues of “cultural identity” in mall

architecture and questions regarding synthesis of modern aspirations with context

sensitive design vocabulary and principles, which remain unanswered. Common central

Space/ Atriums: Though most malls have a common atrium space, very few malls have

planned to be a central hub for the development. These spaces are typically small in size

(with respect to the overall mall area), with circulation corridors leading from it to

various parts the mall.

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The Metropolitan mall located in Gurgaon, is a fine example where the mall atrium space

truly is a congregational space and binds the shopping center together. The mall has three

well-connected full height, atriums or courts, providing a unified filed of vision, on to

which all the shops open, with adequate frontage and visibility to most retailers. Further,

atriums allow for comfortable circulation and easy movement. The various kiosks located

in these spaces give an active street character, adding to the vibrancy of the development.

Typically the character of common space in most western malls is comparable to the

ambience at the Metropolian mall, Gurgaon. However, as per the Indian context, a few

developments blend the mall with the traditional concept outdoor streets and plazas.

Examples include Nirmal Lifestyle in Mumbai which has outdoor common open plaza

type of spaces. Ansal Plaza in Delhi is another example of the same, where there is no

central congregational space inside the mall.

In smaller towns, a large common interior space may not be viable due to high air-

conditioning costs.

Design Elements to make a statement: In an attempt to cultivate an identity of the mall,

a few malls are including design elements which make a statement. These could be

freestanding sculptures or features in the roof design etc. These elements also help attract

attention and announce the presence of the mall. For example, a sculpture at MPM mall

in Hyderabad. The tower at Ansal Palza or the protruding roof of Sahara Mall located in

Delhi serves similar purposes. Another example would be of the “Glass Dome” at Nirmal

Lifestyle

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PRODUCT & TENANT MIX, TENANT PROFILE

TENANT MIX

Tenant mix basically comprises of all the tenants that include the retail outlets, stores,

entertainment destinations, food courts etc. present in a mall.

The mall manager can decide upon the tenant mix by going through the list of the retail

categories and the range of merchandise on offer. Then he should find out whether the

available merchandise would serve the mall's customers well.

Before investing a huge sum in picking up prime space in the mall, the retailer should

keep track of the developer's balancing approach as this too is a very vital factor that will

expose shoppers to a greater number of shopping alternatives generating higher traffic

flow. This will, ultimately, lead to a retail dynamic and net maximum profitability for all

retailers.

It would serve the prospective retailer better in long run if the mall has the right

combination of stores strategically woven around the anchor retailer. So that each shop

within the mall compliments each other instead of poaching on neighbour retailer's

customers.

A retailer needs to check whether the mall managers have done enough to create a

dynamic tenant mix and whether there is synergy between retailers to maximise sales.

ANCHOR TENANTS: Anchor Tenants refer to the tenants that help in attracting

maximum footfalls at any mall. In other words, anchor tenants are the main crowd-pullers

at a mall. The key anchors in malls are department stores, super markets, hypermarkets

and multiplexes.

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Usually the key anchors in a typical mall are:

KEY ANCHORS SIZE (sq.ft.) EXAMPLES

Department Stores 10,000-60,000 Shoppers Stop, Westside, Pantaloons,

Lifestyle, Pyramids, Globus, Ebony

Super Markets 20,000-50,000 Foodworld, Haiko

Hyper Markets 50,000-1,00,000 Big Bazaar, Giant

Multiplexes 3-12 screens PVR, INOX, Wave Cinemas, DT

cinemas, Fun Republic

Multiplexes as anchor tenants: As malls are being promoted as retail entertainment

destinations, the multiplex segment is making fast headway as the anchor tenant.


* Proposed and operational malls in Delhi

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As an indication of the growing popularity of multiplexes as tenants in malls, it is found

out that over 42% of proposed and operational malls in Delhi have a multiplex.

According to my research, while deciding upon the tenant mix, all the malls give prior

importance to the brands. This shows that a good brand may be a pre-requisite to be

present in a good mall. Moreover the mall managers decide upon the tenant mix in such a

way that all the possible categories of products are made available to him when he visits

the mall since catering to everything that one needs under a roof is the main purpose of a

mall.

Besides brand name, some mall managers may also decide upon the tenant mix on the

basis of the facilities required by the outlets and even catchment area.

A problem of anchoring: Sure they are crowd-pullers, but they cannot bring in the

kind of spending profile the rest of the mall wants. For example: An average

daytime filmgoer, probably aged 16-24, is unlikely to buy a shirt or a pair of shoes if

he comes to watch a film. A discount store like Big Bazaar has really not helped

Phoenix Mall's other tenants. Families shop for their monthly groceries and then

head straight home, without even looking at the other options that the mall has to

offer.

But an anchor tenant provides the rest of the mall with far greater visibility: People

coming in for movies will notice the other shops in the mall and could revisit the mall in

future.

TENANT PROFILE

Tenant profile refers to the percentage of space allocated to each of food, entertainment

and retail. Typically in most Indian Malls, around 30% of the space is dedicated to the

apparel sector and over 12% to as high as 20% going to the food and Beverage sector.

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In most of the malls surveyed (that is 4 malls), the percentage of space allocated to Retail

lies in the range of 65%-70%. Except in case of “Hub” it is 55% and in case of Nirmal

Lifestyle it is as low as 45%. This is because besides allocating space for food, retail and

entertainment it has also allocated around 18% of open space in its mall for brand

marketing activities which include promotions and events.

The percentage of space allocated to Food ranges between 10-20% in all the malls

surveyed.

The percentage of space allocated to entertainment is between 10-20% in 2 malls

considered in the survey. “Hub”, “Infinity” and “R Mall” have allocated almost 35% to

entertainment. This is because all these malls have multiplex as their major source of

entertainment. That is the reason why entertainment occupies around 35% in these malls

since multiplex occupies more space than other entertainment means like gaming zones

etc.. In case of “Nirmal Lifestlyle”, space allocated to entertainment is around 24%. Even

though it has a multiplex like other malls, the percentage of allocation is low since it has

allocated open space for events and promotions.(almost 18%)

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Where as, in “Crossroads” and “Phoenix High Street” only 10%-20% is allocated to

entertainment. Here mainly entertainment includes “Jammin” (gaming zone) and CO’s

(bowling alley) respectively.

It has been observed that a lot of importance is given to food & entertainment besides

retail since sometimes people visit malls mainly for food & entertainment and this may

result in impulse purchases i.e. they might end up buying something by having a look at

the different stuff available there. Hence, these two play a very important aspect in

attracting people who eventually become customers for the malls

Thus to conclude, we can say that both Tenant mix and Tenant Profile are very important

factors that decide the success or the failure of a mall since a good tenant mix and typical

tenant profile adopted helps in attracting people to shop at malls. If a mall has a poor

tenant mix that does not have many branded shops and franchisees and also has no proper

distribution of space allocated to each of food, entertainment and retail then maybe the

mall will not do well. On the other hand, a mall that has branded stores and franchisees

with the right percentage allocated to food, entertainment and retail then the mall is sure

to be a success.

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CHAPTER 6: THE 4 A’s OF MALLS

In August 2005, a group of marketing theorists like Philip Kotler, Jagdish Sheth, Venkat

Ramaswamy, Nirmalya Kumar and Jerry Wind gathered at Bentley College in

Massachusetts, US to discuss the future of marketing. Some of them felt that Kotler’s

marketing mix is in trouble since it is not built around the customer and therefore an

alternative framework called the 4 A’s is suggested that is far more consumer-centric.

The degree of success depends on how close to 100% a company is able to achieve on

each of the 4 A’s.

A simple formula is used to evaluate the overall marketing program. That is on the basis

of these 4 A’s and is known as the ‘market value coverage’.

Market Value Coverage = Acceptability*Affordability*Accessibility*Awareness

Since the malls are booming, I have considered the 4 A’s of malls. Here I am discussing

how the malls have addressed these A’s. I have also mentioned why the malls are

acceptable, affordable and accessible to the consumers. Furthermore, they are aware of

these malls mainly because of the variety of promotions done at malls to attract people. It

is because the malls are acceptable, affordable, accessible, and the mall mangers create

proper awareness, more and more malls are coming up and hence the malls are booming.

But we have to wait, for the future in order to see how many of these malls will actually

survive in this face of fierce competition.

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ACCEPTABILITY

Most Indian consumers have started preferring malls to other traditional formats of

shopping. It is because of this preference amongst the Indian consumers regarding malls;

we can say that they are gradually accepting the concept of malls. Following are the

reasons for the preference and thus the acceptance of malls in India:

1) Convenience: The Indian consumers search for convenience and shopping in a

world-class ambience. People find that they have less time than before because of a

number of factors that include the increasing number of nuclear families, working

women, greater work pressure and increased commuting time. Hence they are looking

for convenience, especially when it comes to shopping so that they don’t have to run

all over the city to complete their shopping. Thus they prefer shopping at malls since

they provide the customers with the different variety of products under one roof and

hence prove to be convenient for them.

2) Ambience: Indian consumer prefers the infrastructure at malls. It gives him an

international shopping experience. Moreover for the SECA+ and SECA customers

the ambience in mall is very important. They do not like to shop at places where the

noise levels are excessively high, or a place which is not well maintained.

3) Entertainment: Families seek worthwhile entertainment combined with shopping,

food, and options like theatres, bowling alleys and gaming zones. The members of the

family find what they need, in one mall, which offers provisions for entertainment,

like multiplexes, culinary delights at food courts that serve both Indian and

international cuisine. The needs of the entire family can be met at 1 place. The

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children can amuse themselves with games; the wife with the household shopping and

then can also dine there.

4) Product availability, quality, display and customer services: The customers also

pay attention to factors like product availability, quality, and display and customer

services. All the possible products from clothes to groceries etc. are made available at

malls. Moreover, they are of superior quality. Consumers now have a wider rage of

choices, as liberalization of the market for consumer goods has bought many well-

known international brands to India and there has been marked improvement in the

quality of local manufacturing.

5) ‘Self-service’ format: This format of shopping has brought about great changes in

customer behavior, leading to a higher propensity to purchase, when people are

allowed touch and feel the products without unnecessary interference from sales

attendants.

Thus we can say that the malls are acceptable because they look into customer value.

Value from the point of view of customers is the experience that he gets while shopping

at the mall. They basically look for experience shopping that is “Shoppertainment” The

malls effectively look into making the experience of the customer a memorable one by

the fact that they give so much importance to ambience, entertainment, quality and

display of goods etc

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AFFORDABILITY

As mentioned earlier, the malls cater to the food, retail and entertainment related

requirements of the consumer. Under each of these categories there are various options

available to the customer. He can visit the outlet that best suits his requirement and is also

within his budget. For example in case of food, there are many food outlets in the food

court. Depending upon his budget he can either choose to go to an expensive Chinese

restaurant or just have simple fast food. Similar is the case of retail. The customer can

either go to a designer boutique or any other retail outlet to buy clothes depending upon

his budget.

Thus the variety of outlets that offer a wide range of prices present in a mall caters to the

affordability factor of its target audience.

Thus, malls are affordable because they try to address the consumer costs by providing

variety of outlets that offer a wide range of prices to the customer. The customer can buy

from whichever outlet best suits his budget.

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ACCESSIBILITY

Since the malls are being preferred and accepted by people, more and more malls are

being developed. In fact statistics say that India is all set to have over 230 malls, and

quality retail real estate space of over 40 million sq.ft. of quality retail real estate space by

2006. It is not only the metros like Delhi, Mumbai, Banglore, Hydrebad, Chennai and

Kolkata (that is ‘A’ grade cities) and mini-metros like Pune, Ahmdebad, Chandigarh etc

(that is ‘B’ grade cities) that have malls coming up, but also non-metros like Kanpur,

Vadodra, Nasik, Panchkula, Agra etc have a number of malls that have been announced

and will soon be developed in the near future. This shows that the malls are coming up

almost throughout the country and hence the accessibility of such malls will become even

easier. In fact in Gurgaon, that is called the “city of malls”, has malls in almost each and

every street.

A mall before coming up has to do the analysis of the location it plans to set up in.

Location analysis has to be done keeping in mind the customer’s “accessibility”. See

Location Analysis.

Again malls are accessible since they look into consumer convenience. Convenience

factor depends upon the location. To make the malls easily accessible to their target

customers, malls are ensuring that they do proper location analysis for the same.

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AWARENESS

There is awareness of the malls amongst the consumers, which can be ascertained by the

fact that the malls are being tremendously accepted as mentioned earlier.

Basically the new malls entering the market try to create awareness about their mall in

the market by way of promotions. Moreover even the existing malls try to increase the

footfalls in their malls by way of promotions.

EVENTS & PROMOTIONS: AN EFFECTIVE TOOL

Events and promotions as mentioned earlier are an important tool for creating awareness

about new malls as well as help in increasing footfalls in the existing malls that is it acts

as an effective advertising tool.

With so many malls coming up in India, each one has to develop strategies that would

help them attract people at their malls. Besides other strategies undertaken to attract

crowds, all malls give tremendous importance to promotions and events.

Promotions and events act as a major tool for advertising as well as attracting people to

visit their malls. They act as effective crowd-pullers since these promotions and events

are a source of entertainment for the target audience. Moreover they feel like

participating in such events, promotions, and competitions etc. As a result, they may

eventually land up buying something by looking around at the stuff available at the mall.

So it proves to be an effective marketing strategy. In fact promotions at malls help in

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increasing footfalls to a very great extent even during time when people do not usually go

shopping like the monsoon season.

Usually different promotions and events at malls are held at different parts of the year

that is from April to March. They are:

April - June: Summer Promotions

July-September: Monsoon Promotions (Sales, Offers)

October-November: Diwali Promotions

December: Christmas Promotions

January-March: End Of Season Sale (EOSS)

Hence we can see from above that Promotions and events conducted at the malls are very

diverse. Most malls have promotional activities and events throughout the year which

include events for kids, mothers, youth etc. This effectively enables malls to attract all the

different age groups. Examples would be “Summer Programmes” for kids during

vacations which would include games, drawing competition etc.; Fashion show for

youngsters, culinary shows for women etc.

They also have Promotions of leading brands that would help them get tremendous

response from their daily footfalls too.

According to my survey, all the mall managers said that events definitely do help in

increasing footfalls in a mall. From this we come to know that all the malls undertake

promotional activities in order to increase footfalls.

Promotional activities undertaken by malls surveyed by me are discussed below in detail:

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1) NIRMAL LIFESTYLE (MULUND): Nirmal Lifestlye is one the few malls that has a

huge amount of open space approximately 1.5 lakh sq. feet reserved exclusively for

events, promotions and brand marketing activities. Mr. Dhaval Vadhar, event manager

of Nirmal Lifestyle told me that the following are promotions and events usually

undertaken at Nirmal Lifestyle:

Model Hunt & Fashion show

Painting workshops

Ronald playing with kids: They also have a tie-up with Mc. Donalds for

promotions wherein Ronald not only plays with the kids but also teaches them how to

maintain hygiene by giving certain tips for the same.

Cooking contests where Sanjeev Kapoor is the judge.

Monsoon Masti Food Hai Tasty: The “Monsoon Food Hai tasty” is a food festival

that is organized at the mall during the monsoons. At this festival there is an

unimaginable line up of exciting recipes for the food lovers. This festival helps in

attracting people to come at the malls even during the monsoon season when people

usually shop less.

Women’s Day celebrations: During women’s day there are special programs that are

designed to celebrate Women’s weekend.

World Family Day: Family fortune and many other impromptu games are held at the

mall to celebrate the World Family Day.

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Festival celebrations: Usually the following two festivals are celebrated at Nirmal

Lifestyle:

Diwali : Even during diwali the mall has a special event that makes the occasion far

more jubilant and a vibrant one. Everybody receives cordial invitations from their

lucky mascot ‘the ever Smiling Willy’. There is a perfect combination of sparkling

fireworks, mind-boggling games and dance shows that set the mood for a perfect

evening to be spent at the mall.

“Holi week” Celebrations: In March they celebrate the ‘Holi Week’ at the

mall wherein various games and interactive programmes are conducted to entertain

shoppers.

Christmas celebrations: During Christmas there is a Santa Claus, who moves

around the mall, plays with the kids and also gives them gifts.

Nirmal Youth Talent Hunt (N.Y.T.H): This is a mega event which encourages

dancers as well as singers to come ahead and showcase their talent. It tries to explore

the potential within these aspirants. Usually they have celebrities who come to judge

this event. Like last year Mr. Rahul Dravid was the celebrity guest and this year it

was judged by The Band of Boys.

Summer Programme for kids: In April since it is vacation time for kids they usually

arrange for a summer programme wherein different kind of games, puppet shows etc.

are held over the vacation period to attract the kids at mall.

“The Nirmal Cricket Academy”: The mall also has a cricket academy named “The

Nirmal Cricket Academy” that is set to impart training in Cricket to children from all

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over Mulund. This will help in grooming cricketing talent for a better tomorrow.

These matches are hosted by the academy. This again is a way of promotion.

Brand Promotions: Various Promotions of leading brands have previously happened

at the mall which got tremendous response from their daily footfall. Some of these

companies were:

EPSON

Dettol

Scorpio

Ford Endeavour

Standard Chattered

Mountain Dew

Godrej A.C.

Sony Handycam

They also have had various shootings at their mall that again helps in attracting people.

The Vanilla Coke Ad and a sequence from the movie Kis Kis Ki Kismat are examples.

Besides having promotions and events to attract crowds, they also organize certain events

for their staff that would have help the employees in building stronger relationship with

their colleagues. In January last year, there was an inter-staff cricket match held that was

an opportunity for the staff members to interact with each other.

2) R MALL: The G.M of R Mall, Mrs. Rowena D’Souza, mentioned about the following

events and promotions usually held at their mall:

Back to School Day: In the 1st week of June they have the “Back to School” event

for kids where Drawing Competition etc is organized for kids.

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They also provide free Jammin tickets to kids

Every Wednesday is Women’s Day at R Mall: All the women shopping on this day

at the mall get special discounts.

Comic characters: It also has tie up with Nickelodeon channel whereby comic

characters come and entertain the kids

Festive events: Various events for the different festivals are also organized

Celebrity Shows: There are celebrity shows organized whereby the celebrities come

and perform at the mall. Shankar Ehsaan and Loy, Bombay Vikings musical shows’

are examples.

3) INFINITY: Infinity has started its operations just 4-5 months back. In fact, all the

outlets are not operational as yet. During vacation time that is April-mid June, the

marketing manager, Mr. K Narang told me that they organized various events to

attract not only the kids but also the mothers to their malls. Examples of the same are:

Puppet Making workshop

Ek Minute Show for the kids

Skin care Reflections for women

Duo Dance competition

Magic show

Contests for Best hairstyle, Best Dress etc.

Mummies Contest

Culinary show

Musical games

Fashion show

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In the mall there were also instant acts like Jugglery and Clown acts. This attracted kids

to Infinity to a great extent. There were also mehndi artists, jewellery making artists and

sketch artists, face painting artists etc present in malls at the time of these events and

promotions. Infinity being a newly opened mall managed to attract around 3000-4000

footfalls on weekdays and around 8000-10,000 footfalls on weekends in the month of

April-June during these events and promotions and that too only with around 15% of the

outlets open at that time. This shows that events and promotions prove to be a very

effective tool for pulling crowds even for new entrants.

It also plans to organize events for festivals like Diwali, Christmas etc. in future.

4) CROSSROADS: Ms. Dolly Jitani, Marketing Manager of Crossroads, told me that the

following events and promotions are usually held at Crossroads:

“Summer Promotion" during April-May:

Fungama: Kids camp. These camps are for a period of 1 week i.e. from Monday to

Sunday. The kids learn various activities during this period, they play games, and

they dance and sing. On Sunday they perform what they have learned

during the week.

They are provided with lunch and snacks everyday.

During the summer there are other activities also like bungee jumping, rock

climbing, some eating counters etc.

There is also a raffle draw in which customers shopping for more than Rs

1500 can participate.

The media activity for the same includes newspaper ads, radio mentions, bus

hoardings and mailers. These are external media.

Monsoon Promotion during July-August:

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Big Splash: the event was called big Splash

This year there were ek minute games, bollywood quiz, happy hours (at food

outlets), discount booklet and also the biggest umbrella was at display at

Crossroads.

There was a raffle draw for the cutsomers to participate in.

The external media cativity included newspaper advertisments, bus shelter

etc.

Anniversary Promotions: Crossroads opened on 5th September 1999.It celebrates

its anniversary every year. For this there are a number of activities prior to the

anniversary:

Band playing at the mall, games, quizzes, raffle draw etc.

A number of free gifts are also given to the customers.

On the 5th September there is a cake cutting in the atrium where a huge cake

is cut. All customers are involved in it. Brownies are distributed to the

customers and mall partners.

Diwali Promotion: Diwali is the main time of the year when major shopping takes

place.

During Diwali they have various contests and offers for customers

Free gifts are also given to the customers depending upon their amount of sales

Christmas Promotions:

Again they offer special discounts to customers

Free gifts are given to their customers

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There a Santa Claus in the mall during Christmas who distributes chocolates and

gifts to children

5) THE “HUB”:

Hub that is situated on the Western Express Highway also organizes events and

promotions. The marketing manager of Hub, Mr. Rajesh Gupta told me that when the

mall had begun its operations, they had done tremendous promotions to make their mall

familiar amongst people. These events included games for couples and children, DJ

nights etc. Sometimes they also have mehndi artists coming at the mall who apply

mehndi to the visitors at free of cost.

Hub had undertaken these promotions when it initially came into operation. Now the

mall has given the responsibility of organizing events and promotions at their mall to

event management companies like Jacquar, Midas etc.

6) HIGH STREET PHOENIX: Mr. Tiwari, marketing head at High Street Phoenix

mentioned about the following promotions and events usually undertaken at the mall:

They have tie-up with Cartoon Network wherein cartoon characters move around the

mall and play with the kids.

There was also a launch of a new Star One serial at the mall recently

They also undertake charity events like Blood Donation etc.

Events against abuse on child labour have also been undertaken at the mall.

Besides this, there are also various product promotions undertaken at the mall from

time to time. In these events there are product demonstrations done that may convince

the people to buy such products.

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Thus, it can be concluded that all the six malls surveyed, undertake tremendous events

and promotions since that is a very important tool for advertising. It helps in increasing

the footfalls at malls even during time when people do not usually go shopping like the

monsoon season. So if proves to be an effective marketing strategy. As seen from above

there are a wide range of promotions and events that are undertaken by these malls that

would attract people from all the age-groups.

Finally people are aware about the malls since they are successful in conducting

promotions and events that act as an advertising tool for their mall. That is by doing this,

malls looks into customer communication (they have been successful in communicating

about their malls to the consumers by way of promotions).

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CHAPTER 7: MALL DEVELOPMENTS-GROWTH &

PROGRESS

The following two years will be critical in the history of mall developments in India.

From 25 operational malls in 2003, the country is expecting to have over 220 malls by

2006, estimated space is approx. 40 million sq. ft. The total space in the six A-Grade

cities Delhi (including Gurgaon and Noida), Mumbai, Bangalore, Hyderabad, Chennai

and Kolkata is expected to increase to over 21.1 million by 2005. Add to it the expected

supply in the key seven B-Grade cities -Pune, Ahmedabad, Lucknow, Ludhiana, Jaipur,

Chandigarh and Indore in the same duration, and the grand total comes to about 26.3

million sq.ft.

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The National Capital Region (NCR) Delhi, Gurgaon, Noida, Greater Noida and

Faridabad will account for over 40% of this total.

Out of the total 5.23 million sq. ft. mall space being developed in the B-Grade cities, over

40% is coming up in Pune.

The market place opportunities in A and B grade categories, where category A covers

Metros and the Mini metros and B covers the Cities.

‘A’ CATEGORY CITIES


NEW DELHI:

One of the fastest growing cities and an important business hub, New Delhi is ranked as the

second-largest market in terms of size (873.95 billion) and economic profile. Dominated by

business community, bureaucrats and politicians with huge disposable incomes, Delhi is

witnessing an exponential growth of malls, shopping complexes, multiplexes and family

entertainment centers. The key locations in the National Capital Region (NCR) comprise

Delhi state and suburban satellite towns, Noida, Greater Noida, Faridabad, and Ghaziabad.

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Gurgaon, has been the forerunner in the development, attracting a number of multinational

companies in the service sector followed by Noida and Faridabad.

NCR’s first mall, Ansal Plaza was fully operational in the year 2000, with Shopper’s stop

as anchor tenant. The past couple of years have seen a splurge in the number in the number

of retail malls in the suburban location of Gurgaon, closely followed by Noida. The market

acceptability and success of these developments have spurred a number of mall-related

developments in Delhi as well.

Source: Images research

Out of the total of over 104.6 lakh. Sq. ft. of space to be available by 2005 in the NCR,

Gurgaon has the lion’s share of almost 40%. The location offers a good demographic mix,

with large segment of middle and upper class together with an ever-increasing influx of

population owing to a number of multinational companies preferring to locate in Gurgaon.

Overall, the NCR retail market is growing at a rapid pace

Existing Malls: Gurgaon: DLF City Centre; MGF Metropolitan; MGF Plaza; Sahara Mall,

Noida: Sab Mall; Centrestage Mall, Delhi- Alankar; and Ansal Plaza, Ghaziabad: East End

Mall, Faridabad- Ansal Plaza.

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Upcoming Malls: Gurgaon-DLF Mega Mall; Regent Plaza, Paras DT; Gold Souk; The

Galaxy; Central Plaza; Senior Mall; the Mega City etc., Delhi-M2K; DLF Mall; Ansal

Plaza; Agarwal AE Mall; Rectangle1; Square 1;the Metropolitan etc., Greater Noida-

Omaxe Plaza; Ansal Plaza; Expo mart etc., Ghaziabad- Shipra Mall; AEZ Vaishali; East

Delhi Mall; Orbit Plaza etc., Noida- Supertech Shopprix; Parsvnath Plaza; Senior Mall etc.

MUMBAI:

The largest city-market and the most cosmopolitan city, Mumbai’s real estate market is an

intriguing mix of organized, semi-organized and unorganized formats. The city’s market

size of over Rs. 31,000 crore stands unrivaled, making it the prime catchment for every

retailer in the country.

There is heightened activity in the development of new malls. Over 90% is concentrated in

the suburbs, two-thirds of which is located in new retail destinations, in close vicinity to

densely populated residential pockets like Andheri, Malad and Kandivali, in the western

suburbs. The far-flung eastern suburb of Mulund has recently become the focus of retail

development activity with the two new malls, spread over a total of 13-lakh sq.ft.

Existing Malls: Fun Republic; City Mall; The Mall; R-Mall, Centre One; Crossroads and

Crossroads 2; High Street Phoenix-Phase 1,2,3; Nirmal Lifestyle Mall; Inorbit; Infinity;

Raghu Leela Mall; Cine Wonder; The Hub

Upcoming Malls: RNA Classique; RNA Millenium; Heritage; Milan theatre; Kanakia

Mall; The Eastern Mall; Dynamix Mall.

BANGALORE:

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Bangalore is a thriving, modern business center and a key hub of the IT revolution in India.

The rapid expansion that Banglore has seen since the early 90s has driven a real estate

boom, transforming and remodeling the old town through commercial, residential and retail

developments.

Existing Malls: Forum; Prestige; Banglore Central; Imperial Mall

Upcoming malls: The main shopping malls coming up in Banglore are Purva Mall;

Embassy Victoria Mall; Sigma Mall; Adarsh Capital; Adarsh Opus etc

HYDREBAD:

Hydrebad has established itself as a key emerging market in India. The increase in the

purchasing power, and the low commercial property rates are attracting major retailers.

With announcements of mall developments, the market may face an oversupply of space,

which might lead to soft rentals.

Existing malls: Hydrebad Central; Prasada Labs; MPM mall are the existing malls in

Banglore

Upcoming malls: GVK One; Hydrebad Central; Sigma Mall; City Centre; Sanali Mall;

Expo City; Methodist Attrium Abids; Prasad Imax; Babu Khan are the upcoming malls in

Banglore

CHENNAI

Chennai, the capital of Tamil Nadu, has some of the most successful and trend-setting

retailers in different sectors. The city is fast shedding its image of a conservative market,

and adapting departmental stores formats like Lifestyle, Globus, Westside, and Shoppers

Stop, thus popularizing the idea of destination shopping. India’s first retail mall, Spencer

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Plaza, that ushered in the first organized mega-format for retailing. Abirami Mall, a four-

screen multiplex and 50,000 sq. ft retail complex, is a recent addition. The total real estate

by 2005 is estimated at 12-lakh sq. ft, with average rentals in the range of Rs.65 to 100 per

sq. ft.

Existing Malls: RPG’s Spencer plaza is present since 1999. After, Spencer plaza, there is

Ishpani Centre operational since 2001.

Upcoming Malls: ETA Mall; RK Salai; and Abhirami Mall

KOLKATA:

Existing malls: Forum, City Centre and Metropolis

Upcoming Malls: Lake Mall; TAI Industries Mall, EM Byepass; P.C.Chandra Mall,;

Enclave; Gariahat Mall; Homeland Mall.

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‘B’ CATEGORY CITIES

The cities under this category comprise Pune, Ahmedabad, Lucknow, Ludhiana, Jaipur,

Chandigarh and Indore.

PUNE:

The trend of organised retail space in Pune is expanding at rapid pace, as is evident from

the number of malls in the pipeline. The city has an estimated supply of over 2,430,000

sq.ft of space up to 2006.

Existing Malls: E-Square

Upcoming malls: The upcoming malls in Pune are Nucleus; The Fun ‘n’ Shop shopper-

tainment; etc.

AHMEDEBAD:

Ahmedabad is an important market in the state Gujarat. The presence of departmental

chains like Pantaloons and Westside indicates the potential of the market. Although only

one mall is currently operational in the city, overall the real-estate market has been on an

upward swing and will witness a heightened activity in the following years.

The total supply of mall space is estimated to go up to over 1 million sq.ft. by 2005.

Existing malls: Iskon Arcade

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Upcoming malls: As per the market information reputed builders have acquired larre

property of land for redevelopment of large mall projects

LUCKNOW:

Lucknow is gradually witnessing a growth in organized retail real estate. There are a few

under-construction malls, which have generated a fairly positive response from retailers.

The estimated supply up to 2005 is over 1,067,000 sq.ft.

Upcoming malls: East End Mall; Sahraganj Mall

LUDHIANA

Broadly, the Ludhiana retail market has been traditionally an unorganised market with

predominantly local retail outlets. Now, however, the attractive population bases with

high incomes have triggered the entry of organised players in the retailing segment. As

per the current announcements, approximately 200,000 sq.ft. of retail space will be added

to the city by 2004.

Exisiting mall: Ansal Plaza

Upcoming Mall: Gold Souk

JAIPUR

Jaipur attracts a number of tourists due to its “old city” charms and cultural heritage. The

high streets and traditional bazaars, thus, have an eager market among the visiting

populace. Nevertheless, the upcoming mall projects do reflect the aspirations of the local

population as well.

Over 900,000 sq.ft. of organised retail space is expected in the Jaipur market by 2005.

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Upcoming malls: Ganpati Plaza

CHANDIGARH:

Despite a low population base, Chandigarh by virtue of its population mix and location is

emerging as an important market in the region. With the further increase in the IT/ITES

sector, the city market is likely to get a boost and attract attention from more retail chains

and developers.

The total supply of real estate is estimated to increase up to half a million over the next

two years.

Existing Malls: Fun Republic

Upcoming malls: Realizing the potential of the city, the Ansals group is planning to

develop a mall there; more shopping malls coming up in Panchkula

INDORE:

The largest city market in the state of Madhya Pradesh, Indore has a mixed real-estate

usage with residential, commercial office and retail developments often being

accommodated within the same development. Indore’s commercial real estate is essentially

focused around the Central Business District (CBD) of MG Road, and AB Road, which

runs along the eastern periphery of the city, and can be termed as the Secondary Business

District.

Existing and upcoming malls: Treasure Island; Landmark Citi; Velocity 3; Sapna

Sangeeta Theatre; Square; BCM Heights; Other retail projects include, Apollo Mall,

Navlakha Complex, PGI, etc.

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Some other cities that witnessing tremendous growth in retail activity

include Agra, Kanpur, Vadodra, Nasik, Panchkula, Jodhpur, Srinagar, Bhubaneshwar,

etc. The average size of a retail mall in these cities would range between 1 to 1.2 lakh

sq.ft. as compared to metros where malls measure up to 5 lakh sq. ft.

Thus we can conclude by saying that malls are not coming up only in “A” grade and “B”

grade cities but also in many other smaller cities and towns.

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CHAPTER 8: FUTURE OF MALLS

With 19.6 million square feet of retail space being made available by the year 2006 in the

six metro cities alone, and the list of mega malls (malls with more than 500,000 square

feet of space) on the rise, what will be the future of smaller malls, which not long ago

defined mall culture in India?

Chesterton Meghraj undertook an in-depth research over a period of eight weeks and

analysed India's future scenario by studying global mall movements. The impact of retail

spaces expanding from smaller to larger sized malls was studied in a global retail context

and this result was juxtaposed onto the Indian context.

These malls will be on the must-visit list of out-of-town visitors, and will provide much

needed respite from the lack of entertainment options for the populace within the city.

They will also emerge as places to congregate and socialise in. However, contrary to the

bleak future that has been predicted for the smaller malls in the media, it is believed that

with the rise of these mega malls, the smaller malls which are operational and doing great

business today are not going to disappear.

It will be a fight for survival and that is precisely our point. The smaller malls will

devise survival strategies that will help them stay afloat and not succumb to the

possibility of extinction that the big boys might inflict on them.

It is believed that the present day malls - of around 250,000 square feet or less - will, for

the purposes of survival, cluster on the basis of category, price or target consumer appeal.

It is also foreseen that the regular retailer (possibly the anchor) of the mall might relocate

to the mega mall, due to a predictable price advantage. With this happening, the ensuing

gap left behind will in all likelihood be taken up by a retailer who fits in with the then

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existing retail-mix of the mall. This will inevitably create a school of like-minded

retailers within that mall.

This again will invariably give rise to a cyclical process, whereby the existing local

retailer or new players in the market will be provided with the opportunity to move into

the smaller mall, giving them a platform to compete. For example, if an anchor that is

into apparel were to move out of the smaller mall into the mega mall - a lucrative

opportunity may be created for a garment wholesaler to set up his retail outlet. Hence, a

cyclical process ensuring growth of the market will set in motion. We also believe that

the pricing per square feet of the mall, after it releases, will only be marginally affected.

These malls, according to us, will then reincarnate them selves as 'neighbourhood malls',

and cater to the catchment in the immediate adjoining areas, focusing on providing

services like home-deliveries that the big malls will be unable to provide.

Another impact of this situation will be the inadvertent formation of the so-called

'Specialty Malls'. (See differentiation strategy for malls). Present day malls repositioning

themselves for survival and similar retailers banding together, will lead to the drive

towards categorisation.

We believe that the smaller malls will require an infallible survival strategy to counter the

possible impact of these mega malls and will follow the strategy outlined:

• The smaller malls will tie-up with other such existing malls to create a like-minded

destination, as is likely to happen on MG Road, Gurgaon, with Sahara, MGF and DLF

coming together and marketing the malls.

• The smaller malls must immediately fill up gaps (if any) left by previous occupants to

avoid large empty spaces contributing to what might look like remains of an erstwhile

mall.

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• They should try to favourably differentiate themselves from the bigger mall by

identifying an inherent USP such as a neighbourhood format

• Once the small malls have consolidated their retail-mix, they must re-position and re-

market themselves, while continuing to maintain the available infrastructure and

facilities within the mall.

The mall - an invention of the West - has reached its maturity in its place of origin. For

the current small format mall developers there are priceless lessons to be learnt from

international developments. Wal-Mart is the largest retailer and real estate developer in

the world, but a little known fact is that it also has the dubious distinction of being the

largest producer of empty retail stores.

To avoid a Wal-Mart like situation in India, developers of small malls will need to plan

ahead. They have to ensure that the space vacated by retailers who move to mega malls is

quickly taken up by similar or neighbourhood-type retailers to avoid encountering a

'sprawl'. A sprawl, incidentally, is defined as, 'poorly planned, low density, auto-oriented

development that spreads out from the centre of communities'.

While there is no need to sound the death knell for smaller malls, it might be wise for

present and future developers of malls in India to plan ahead and anticipate the trends for

facing the future with confidence and surety – forewarned is forearmed!

Franchising: the key to the success of the future of malls: The mall boom is in turn

giving a big fillip to franchising. It is greatly impacting the success of malls because a

successful franchisee is always a very useful partner to mall developers.

Mall means quality shopping and quality shopping means big brands which in turn mean

successful franchisee operations. Therefore franchisee operations are increasingly

influencing the functioning of malls.

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In today’s era of economic liberalization, lots of international brands are entering India

and are making the market increasingly competitive. Thus, to have franchise partners in

malls is one of the best options to stay ahead in the rat race. Also, since the government

has not opened FDI in retail, the best option that the foreign brands have is to enter Indian

market by forming alliances with franchisee partners.

Industry sources estimate that most of the malls that are operational now have about 40%

franchisee outlets and in malls being developed in smaller towns, the share of franchisee

outlets is as high as 50% to 60%.

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CHAPTER 9: CASE STUDY

Nightmare in Mallville

They invested big money in setting up malls. But the tenants aren't coming

In 2002, the general manager (retail and leisure) of Landmark Construction Company,

Shashi Kumar, began work on a mall called The Hub in Goregaon, a suburb in western

Mumbai. In December 2003, construction was almost over. The labourers were all set to

put the final touches on the first phase of the 2.85 lakh sq. ft complex in order to finish

the complete mall construction by January 2004.

Furthermore, Shashi Kumar had managed to get a good anchor tenant that is Kishore

Biyani-promoted Food Bazaar. Essentially, anchors are the corner stone of a mall's

success: they pull in the crowds. Most tenants would enter a mall only if they are

convinced of the anchor's capability of pulling in the crowd. That is the reason why malls

give the anchor tenants discounts on the rents. The Pantaloon group's food and grocery

retailing business, along with Movietime, a multiplex, occupied up to 40% of all the retail

space in the first phase of The Hub.

But yet, Kumar is facing problems. The problems include competition from four other

malls were coming up within 2 km of The Hub. More importantly, he realized that this

business might be nowhere as profitable as he initially thought. For example let us

consider his deal with Food Bazaar, which is anchoring the first phase of his mall

(pegged at 1.25 lakh sq. ft). Kumar had a rental agreement with Food Bazaar, where they

would pay a monthly rental of Rs 40 per sq. ft. When prodded on the significance of

those numbers, he reluctantly admits that he can't even recover the construction cost with

that kind of rent

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That is somewhat ironical. Setting up, running and managing a mall is supposed to be a

nicely profitable undertaking. If one would set up a mid-sized mall of, say, 2.5 lakh sq. ft

from scratch somewhere in suburban Mumbai, one might have to invest as much as Rs

100 crore given land and construction costs (See 'Mall Economics'). But if one would get

a monthly rental of Rs 80 per sq. ft, which is par for the course, one could break even

within 5-6 years even without 100% occupancy. That's an annualised 18-20% return on

investment (RoI).

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In case of Kumar’s Hub, 20% of mall space has been leased to Food Bazaar, from which

he will make barely Rs 1.2 crore per year, when it could easily have been double. When

the mall was almost ready to begin its operations, he found takers for less than half of the

total space - and for a far lower rate than he wanted.

This is the other face of the mall boom in this country.

Is this explosion justified? According to. B.S. Nagesh, CEO, Shoppers' Stop, who had

been watching the latest developments very closely, says that there is a certain need for

the malls. He says that if we consider just 1% of the entire Indian population, adding a

reasonable assumption of 20 sq. ft of retail space per person, there is an immediate

requirement for over 200 million sq. ft of space for customers. Nevertheless, the

mushrooming of the malls has made him a little cautious.

So if there is a requirement for malls, why are people like Kumar upset? The problem lies

elsewhere - in supply outstripping demand. There are simply too many malls chasing

too few tenants. Contrast this with the scenario three years ago, when retailers were

making a beeline for Crossroads in Mumbai and Ansal Plaza in Delhi. Kumar and his ilk

no longer have that privilege.

That is not to say that the retail industry is not growing. It definitely is. Only that the

retailers seem to have different considerations when it comes to setting up outlets.

Consider the Mehrauli-Gurgaon highway. Why would any retailer enter a mall here in the

face of competition? In an informal meeting with BW, Himanshu Chakravarti, general

manager, Trent (the company that owns the Westside store brand), recounted an

anecdote. A mall developer from Gurgaon approached them to enter his mall, one of

eight in a stretch. He really fails to understand, with that kind of competition, how could

he add any value to the mall.

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Yet mall developers probably think in a different way. Shringar Films' Shravan Shroff

makes an interesting point. He says that when Fun Republic opened opposite Fame (the

Shringar-owned mutliplex) in Andheri, his weekly profit after tax (PAT) came down to

Rs 17 lakh from Rs 19 lakh in the first week. But Fun Republic's PAT for the first week

was Rs 11 lakh. What interested him the most was not his decline in profits, but the

overall increase in entertainment spending of Rs 9 lakh in the same week, on the same

patch of road.

LEARNING TO FLOAT

This discusses the various problems faced by the malls in this face of competition and

also gives recommendations or suggestions as to how the malls should solve them.

1) Tenant Problem: Mall developers are now playing it safe. They are ensuring they

have a basic minimum number of tenants before they start work on developing the

malls. This means that the Mall developers have wisened up since they have realized

the amount of risk involved. Most of them start construction only after they are sure

that they have got tenants to occupy 35-40% of the mall. This would ensure at least a

cash break-even before the project gets off the ground.

Example: In orbit in Malad, Mumbai, and Unitech in Noida secured tenants for one-

third of the space before getting the projects off the ground. However, on the

condition of anonymity, a mall developer admitted he had to complete construction

even before he could convince tenants to move into the mall, because the clients

wanted to see the physical representation of the mall. This becomes an unviable

proposition if tenants do back out eventually.

2) Rentals: The main issue is rentals. Malls give anchor tenants space at a rate lower than

for the rest of the mall. Now there are but a handful of players large enough to anchor

a mall. The department stores include Shoppers' Stop, Pantaloon, Westside, Ebony

and Lifestyle. There are just two hypermarkets, Big Bazaar and Giant, while

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multiplex players include Fame, Inox, Adlabs and PVR. Moreover, a multiplex and a

hypermarket don't even make for an ideal anchor tenant (See 'A Problem Of

Anchoring'). The limited basket of large-scale organised retailers makes it very

difficult for malls to get the kind of anchor tenants they want. A mall developer has to

approach every available retailer to get him to anchor his mall. Even today, the

country has no big retail chain in the white goods or the pharmaceutical segment.

As rental expectations of the mall developer and the tenant are unlikely to match, the

best way out would then be to enter into a revenue-sharing agreement.

3) Problem of deciding tenant mix: To solve this problem mall developers rope in

consultants to study catchments, psychographics and spending habits of consumers.

The idea is to map out the brands they want in their mall. Example: Inorbit decided

what brands it wanted in their mall only after an exhaustive study of consumer

4) Lack of good synergistic combination: Inorbit has also conducted studies to tap

synergies that exist between tenants. So, it decided to plug its anchor multiplex

(Fame) along with food options McDonalds and Pizza Hut, and an entertainment hub,

Timezone. So, anyone who visits the mall is offered a complete entertainment option.

Inorbit doesn’t expect a consumer to buy jewellery or books when he comes to watch

a movie, but it would like to bundle the entertainment and food options together,

because that seems like a good synergistic combination.

5) Lack of Good infrastructure: Other malls are trying to sort out basic infrastructure

issues. Even today, many do not have sound infrastructure facilities. Crossroads, for

instance, doesn't have a service entrance for its retailers. At a mall in Gurgaon, an

employee of a food court was spotted cutting his veggies right outside the mall

entrance before operating hours, simply because there was no place within the mall to

do so! But now, Inorbit has a separate freight elevator and a loading and unloading

dock so that the regular mall activity is not disturbed. Prestige Forum in Bangalore

got Shoppers' Stop to anchor the mall after it ensured a 2-tonne basement and service

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capacity. GVK One in Hyderabad has a car park for 800 cars, while Inorbit has one

for 1,200 cars. Malls developers have also been roping in the best designers and

architects, both locally and from abroad to ensure that looks aren't compromised on.

6) Malls not sensitive to retailers’ needs: Yet, this is not enough. Malls also need to be

sensitive to retailers' needs. For example a multiplex owner turning off the lights at 9

p.m., before the last show began, giving the impression that the mall was shut. As a

result, the box office slackened. It took some confrontation before the mall managers

kept the lights on longer. The same mall also refused to help the multiplex with food

and theatre licences.

7) Lack of botheration for daily operation: Most have not really bothered with the

daily operations of the mall once the tenants are in. But now, they are realising the

need to actively do so even as they understand how low footfalls could lead to an

exodus of tenants. For that, they need to put a premium on quick, efficient and

satisfactory service, both to consumers and to the retailers. Inorbit and Prestige Forum

are already moving in that direction. They have installed footfall counters to map the

entire mall and study exactly where customers head to and how much time they spend

in different areas of the mall.

With this kind of competition, sustenance for malls will only happen if they continue to

draw in the crowds. And that task is not easy.

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CONCLUSION:

I would like to conclude my project, by giving the following recommendations.

Recommendations to Mall Managers:

1) A lot of people perceive departmental stores as malls. So mall managers should

clearly position themselves so that such perception does not prevail in the minds

of people.

2) Most people visit malls on monthly basis or even from time gaps ranging between

2-6 months. It may even be beyond than that in some cases. So in order to attract

people to malls on regular basis, malls should organise promotions and events

regularly say on weekly basis. They can also come up with frequent offers for the

customers that would attract people to come at malls.

3) Most of the people like shopping at a mall because of reasons like variety offered,

ambience, convenience, quality and the decent crowds at malls. Thus, mall

managers should ensure that their mall looks into each of these factors effectively.

Whereas there are a few people who do not like shopping at a mall since they feel

that the malls are either too expensive, or are located at far away places or they

are too crowded. In order to induce such people to visit malls, mall managers

should do proper location analysis. They should ensure that their mall is centrally

located so that it can attract most of its target audience. As far as the affordability

factor is concerned, they should try and inform the people that their mall does not

only have expensive outlets but also other outlets that would cater to their

budgets. They may also come up with schemes, offers and discounts that would

be beneficial to the customers.

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4) Since majority of the respondents go to the mall for retail followed by people who

go for food and entertainment, a mall manager has to ensure that he gives more

importance to retail than to food & entertainment. Though around 10-20% has to

be occupied by food and entertainment since they serve as add-ons but the malls

managers should not forget the importance of retail in a mall. Thus, around 70-

75% space should be allocated to retail.

5) Most of the people purchase apparels at malls, followed by people who purchase

footwear and accessories. The mall manger has to ensure that besides apparel

outlets, there are enough outlets for footwear and accessories too so that the

customer has enough variety to choose from. Moreover, product categories like

cosmetics; books; food and groceries; music; electronics; toys should not be

ignored since people do visit malls for purchase of such product categories too.

6) Since not many people are willing to spend a huge amount at malls, mall

managers should induce people to spend more by offering discounts, by providing

them with attractive offers like free items on purchases etc.

7) Since a majority of the people said that promotions do attract them to shop at

malls, all the malls should definitely undertake promotional activities from time to

time.

8) Malls should not charge an entry-fee since a majority of the people would not

visit malls if it would do so.

9) More than a majority of the people said that they would like a mall to provide

them with a printed mall map; an information desk and adequate parking facility.

Thus, mall managers should definitely provide these facilities. Moreover, other

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facilities like babysitter; wheelchair; PCO’s can also be provided by the mall

managers to attract people.

Recommendations to retailers:

1) The retailers should definitely be present in malls besides being present as a

stand-alone outlet. Not only are the footfalls higher at malls; but also people from

different age groups visit malls unlike fixed regular customers who visit the stand-

alone outlets. Even though such people might not buy much from these outlets at

malls, they will definitely have a look at the variety made available by a particular

outlet present in a mall. Thus, people who usually do not buy a particular brand

will at least be aware of the brand by visiting the mall and the various outlets.

Even though the sales are more at stand-alone outlets, more people will be aware

of the brand by visiting these malls.

2) They should not relocate themselves in a mall. Besides being present as stand-

alones they should also be present in malls.

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RESEARCH METHODOLOGY:

CUSTOMER RESEARCH:

The survey has been conducted to find out the behaviour of customers while shopping in

malls and also their needs and requirements in a mall.

For this survey 100 respondents have been personally interviewed.

Preferred place of shopping:

The respondents prefer all the 3 options i.e. Retail outlets, departmental stores and malls

more or less equally. This shows that the 3 formats can co-exist.

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Whether shopped at a mall or not?

94% of the target audience has previously been to a mall. Only 6% of the respondents

have never been to a mall. This shows that though people may not really shop at mall,

most of them have visited a mall at least once. This may be due to the novelty value.

Malls shopped at:

The respondents were asked to name the malls they have shopped at:

The various malls that the respondents have been to are as follows:

R Mall

Nirmal Lifestyle

Crossroads

Inorbit

Infinity

High street Phoenix

Citi Mall

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2/3rd of the target audience has been to Inorbit. An important observation here is that

around 42% of the people perceive departmental stores and super markets as malls. Since

some of them, when asked, to name the malls they have been to, named Shoppers Stop,

Pantaloons, Lifestyle, Options, Globus etc. These names were mentioned in addition to

other malls they have visited. In fact some of them have even named Big Bazaar and

Food Bazaar as malls. This shows that some people perceive departmental stores and

even other organized retailing formats as malls to an extent.

Frequency of shopping:

When asked about the frequency of shopping at a mall, a maximum 36% of the

respondents said that they go once in 2-3 months, followed by 32% of the respondents

who shop once a month at a mall. But only 4% of them shop once a week at a mall. This

shows that people do not shop as frequent as 1 week at a mall. However, this may be

possible since in general people may not shop so often. In that case whenever people

shop they might always visit a mall for the same since 68% of the respondents’ frequency

ranges between 1-3 months

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Like Mall shopping or not and reason for the same?

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As seen from above, 92% of the respondents like shopping at a mall. This is because of

the variety and the quality they offer, ambience, convenience factor and the decent crowd

visiting such malls.

Whereas, only 8% do not like shopping at a mall since they find them either too

expensive or they are located at far away places or they are too crowded.

Reason for going to a mall

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3/4th of the respondents go to a mall to shop. But half of them also go to window-shop or

for food and entertainment. Around 1/3rd of the respondents just go to hang out.

This shows that though there is a need for food and entertainment in a mall, they can only

serve as add-ons. The main selling point in a mall will always be the retail portion.

Product categories:

3/4th of the respondents usually purchase apparels at a mall. Almost half the respondents

also go to shop footwear and apparels at a mall. 1/3rd of them also purchase food and

groceries from a mall. However, no one purchases health and medical products at a mall

as of yet. However, there are a number of health product outlets like Health & Glow; The

Medicine Shoppe etc are opening up in malls.

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When people go shopping they want all their needs to be met under 1 roof. The mall

should be a destination point for the entire family.

Average amount Spend:

As far as spending at a mall is concerned, 41% of the respondents like to spend around

500-1000 at a mall. However, 31% of the respondents do not mind spending around

1000-2000 at a mall too. But only 2% of the respondents are willing to spend above 5000

while shopping at a mall. This could indicate that many people still think of malls as

more of an entertainment destination and a place for window-shopping.

Do Promotions attract them to visit malls:

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As far as the promotions are concerned, 64% of the respondents are attracted to shop at

malls because of promotional activities undertaken at the malls. Whereas only 36% said

that despite of the promotions, they are not inclined to go shopping at a mall.

This shows that a majority of people goes to malls because of the promotional events and

activities held at malls. Hence, promotions prove to be an effective tool of advertising

and attracting people at malls.

Entry-fee

When asked the respondents about an entry-fee being charged at malls, 69% of them said

that they would not go to a mall that would charge an entry fee. Some of the reasons were

that they felt that it was an unnecessary expense since whatever is available at a mall is

available at retail outlets too. Some of them said that anyways they go for window-

shopping so it is not feasible to pay an entry fee. However, some said that it would also

depend upon the amount of entry-fee charged.

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Whereas people who said that they wouldn’t mind paying the entry fee felt that even if

one would go to window shop at a mall it would be worth paying the fee because of the

diverse collection made available at the mall that is of good quality.

Various services that one would like to avail of in a mall:

Here, most of the respondents mainly wanted the parking facility, an information desk

and a printed mall map. Around 3/4th of the target audience wanted at least one of these or

all these facilities. Other facilities like that of Baby Sitter, Wheelchair etc. was not much

wanted by the people. However 1/3 rd of the target audience also wanted to avail the

facility of a PCO in a mall.

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Recommend people to shop at malls and reason for the same:

50% of the target audience said that they would definitely recommend people to shop at

malls since they are easily accessible, have variety and provide quality products.

Moreover, they also have good facilities and provide customers with good deals. It is

very convenient to shop at malls according to them.

46% of the people say that they might recommend others to shop at malls depending

upon what they want to buy and whether their personal experience at the mall was good

enough for them to recommend others to go to malls.

Only 4% of them say that they will never recommend people to shop at malls since they

feel that the malls are affecting the small retailers business and that there are other

options of shopping available besides these malls.

Retailer’s survey

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The stand-alone outlets surveyed by me are as follows:

Reebok

Pepe

Levi’s

Lee

And

Wills Lifestyle

Mc Donalds

Subway

Woodland

Present as only Stand-alone outlets or also at malls?

All the above outlets except Woodland and Pepper Tree are not present as only stand-

alone stores but are also located in malls. They are located in various malls as shown

below:

Reebok-High Street Phoenix (Skyzone), Nirmal Lifestyle

Pepe- Inorbit, Crossroads, Nirmal Lifestyle

Levi’s – Inorbit, High Street Phoenix, Nirmal Lifestyle

Lee – Crossroads, Inorbit

And – High Street Phoenix (Quorum), Crossroads

Wills Lifestyle – Crossroads, Nirmal Lifestyle, Inorbit

Mc Donalds – Nirmal Lifestlye, Hub, Crossroads

Subway – R Mall, Crossroads, High Street Phoenix, Inorbit, Centre One

Woodland – Not Present in any mall

Pepper Tree-Not Present in any mall

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2/3 rd of the stand-alone outlets are present at Crossroads and an almost equal number are

present at Inorbit and Nirmal Lifestyle too.

This shows that many retailers, which were earlier present only as stand alones, are

setting up stores in malls also. This is because they get more footfalls.

Where do they get more footfalls? At malls or as stand-alone outlets?

40% of the retailers (Levi’s, Woodland, Mc. Donald’s, Pepper Tree) under survey said

that they get more footfalls as stand-alone outlets than malls since they feel that as stand-

alone outlets they have a lot of space to showcase their entire range of collection. So

people prefer coming to stand-alone outlets since they get to see all the variety available

under a particular brand.

Another 40% (Wills Lifestyle, Lee, Pepe, Reebok) said that they get more footfalls in

malls since people like going to malls because of the variety of outlets present there. This

enables them to have a look at all the brands and then make their purchase-decision.

Whereas 20% of the retailers under survey (And, Subway) feel that footfalls at both the

places are the same.

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However malls do have the advantage of getting more footfalls for retailers depending

upon the mall mix. Also there are a number of services that the malls provide to

customers like parking, security etc that will be beneficial for the retailer also.

Where are the Sales more?

70% of the retailers surveyed (Levis, Reebok, Pepe, Mc Donalds, Woodland, Pepper

Tree, Wills Lifestyle) feel that their sales are more as stand-alone outlets again since the

entire range is made available at a stand-alone outlet unlike in a mall and they also have

their fixed et of loyal customers.

10%(Lee) of the retailers feel that sales are more at malls since people just like going to

malls because of the various brands available unlike stand-alone outlets. Many a times

even when they go window-shopping, attractive offers at malls induces them to make

purchases.

20% (And, Subway) feel that there is not much difference in the sales as stand-alones or

in malls since they have their own fixed class of consumers who visit both the places.

Malls competing existence as a Stand-alone outlet?

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80% feel that malls are not competing their existence as stand-alone outlets since usually

people just go to malls for window-shopping. But in stand-alone outlets people come

only if they intend to make a purchase. So even though the footfalls at a stand-alone

outlet are lesser when compared to malls, but the conversion rates at stand-alones are

higher. Thus, they feel that malls are not competing their existence as stand-alone outlets.

Moreover as mentioned earlier, they feel that people would prefer buying from EBO’s

since they have the entire range of collection unlike a mall where the retailers get a small

shop and so they cannot have the entire collection for their customers.

20% (Subway, Lee) are of the opinion that malls are competing their existence as a stand-

alone outlet since nowadays people prefer shopping at malls rather than stand-alones

because of the multiple brands available there and even because of the “basket of

offerings” at the malls for the customers.

Relocation in a mall?

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When asked about relocation in a mall, (that is if a mall would come up in the area where

they are currently present), 9 out of 10 retailers said they wouldn’t like doing so since

they are currently doing well as stand-alones and that relocating themselves in a mall

would not do any better as far as their sales are concerned.

Only 1 retailer that is Lee said that it wouldn’t mind doing so since they feel that in a

mall the footfalls as well as the sales both are high and so it would be better to relocate.

What is better? Stand alone or mall?

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60% (Woodland, Mc. Donalds, Subway, Pepe, Levi’s, Pepper Tree) feel that it is better to

be present as a stand-alone outlet since stand-alones more or less have fixed sales as they

have their own loyal set of customers. But in a mall, minimum amount of sales in a

particular month is not guaranteed since they do not have any loyal customers visiting

them at malls. Their sales are fluctuating. Sometimes they might just be average and at

other times they might be lower than that too. Moreover, in a mall they have to compete

with so many other brands present there.

30%(Reebok, And and Wills Lifestyle) are of the opinion that both the formats have

different cultures and their own identities. Both have their own advantages and

disadvantages. So it is not easy to conclude which one is better of the two, according to

them.

Only 1 retailer (Lee) said that it is better to exist in a mall since it is of the opinion that

the sales are more at mall (as seen form above). Moreover it also feels that malls are

competing their existence as stand-alone outlets and that they would not mind relocating

themselves. It is because of all these reasons it feels that it is better to exist in a mall.

BIBLIOGRAPHY:

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Newspapers & Magazines:

Economic Times: Saturday, 2nd April 2005

Economic Times: 28th June 2005

Business Today: December 2003

Business Today, July4 2004

CMAI apparel: August 2004

The Franchising World: 15th December ’04- 14th February ‘05

Franchise Plus: March-April, 2005

Business Standard: 13th June 2005

Business World, August 2005

Books:

Malls in India: KSA Technopak Study

India Retail Report 2005: KSA Technopak Study

Images Year book

Internet:

http://www.imagesretail.com/cover_story_oct.htm

http://www.imagesfashion.com/back/march/coverstory.htm

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http://www.imagesfashion.com/back/march/coverstory.htm

http://www.imagesretail.com/cover_story_oct.htm


ANNEXURES:

Mall Managers Questionnaire:

1) Allocate space within the mall for the foll:

Retail:

Food

Entertainment

2) What is the USP of your mall vis-à-vis that of the competing malls?

3) Do events and promotions actually increase footfalls in a mall?

Yes No

4) What kind of events and promotions do you have throughout the year at the mall?

5) What is it that attracts the customers most at the mall?

6) On what arrangement are the outlets here?

Leased

Out right sale

Revenue sharing basis

8) How do you decide upon the tenant mix?

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Customer Questionnaire:

1) Where do you normally shop?

Retail outlets

Departmental stores

Malls

Any Other __________________________________________

2) Have you ever shopped at a mall?

Yes, then which one (s)__________________________________

No

3) How often do you shop at a mall?

Once a week

Once a fortnight

Once a month

Once in 2-3 months

Once in 6 months

Any Other (Please Specify) ______________--

4) Do you like shopping at a Mall?

Yes

No

(Please specify the reason)

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5) What do you usually go to a Mall for? (Tick more if you like)

To Shop

Food and Entertainment (like movies, eating etc.)

To hang out

To window- shop

Any Other Reason (Please Specify) ____________

6) What product categories do you/ would you purchase at a Mall? (Tick more if you

like)

Apparels

Cosmetics

Footwear

Accessories

Electronics

Toys

Food & Groceries

Music

Books and Magazines

Medical and Health Products

Any other (Please Specify) _________________

7) On an average how much do you spend at each visit to a mall?

Less than 500

Between 500-1000

1000- 2000

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2000-5000

5000 and above

8) Do promotions attract you to shop at Malls?

Yes

No

9) Would you go to a mall if it would charge an entry-fee? (Support your answer with

reason)

Yes__________________________________________________________________

No__________________________________________________________________

10) What are the services that you would like to avail of in a mall? (Tick more if you

like)

Baby Sitter

Wheelchair

Mall Map (printed)

Information Desk

PCO facility

Parking facility

Any other__________________

11) Would you recommend people to shop at malls? (Support your answer with a reason)

Definitely______________________________________________________________

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I might________________________________________________________________

Never ________________________________________________________________

12) Personal details:

Name: ________________________________

E-mail: ________________________ Tel No _____________

Age: < 19 yrs 20 yrs- 25 yrs 26 yrs – 40 yrs 40 yrs – 55 yrs > 55 yrs

Area of Residence:________________

Monthly household income

<10,000

10,000- 25,000

25,000-50,000

>50,000

Retailer’s survey:

Retailers

Are you present as only a stand-alone store or also in a mall?

If present in a mall: Which malls are you present in?

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Where do you get more footfalls?

Where is the turnover/sales more?

Do you think malls are competing your existence as a stand-alone store?Yes NoHow?

If a mall were to come up in this area will you be ready to relocate?Yes NoWhy?

Which do you think is better, being in a mall or existing as a stand-alone outlet?

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the mall boom in india

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