Description
Future of Malls in India
Future of Malls
Table of Contents
Table of Contents....................................................................................................... 2 Chapter 5: Future of Malls in Rural India..................................................................20
Chapter 1: Introduction
The advent of shopping malls has ushered in a different shopping culture around the world. It started from the west and is now getting grips with the Asian countries as well. There are various factors which are responsible for the success of a mall. These factors hold the key for sustaining the competition and emerging as a successful player in the market. With the rising real estate prices, it is becoming all the more difficult to have a sustainable and profitable business model. Also, the global recession has led to a slight change in the consumer spending habits. Keeping all the challenges in mind, the future of shopping malls lies in how successfully the malls are customizing to the regional preferences. This will involve a detailed research on the consumer decision making process and studying the consumer tastes and preferences and coming up with offerings to match their needs. The advent of technology has changed the way businesses work today. It has catapulted business outputs and has shown vast improvements in business processes. This technology is slowly gripping many sectors which have resulted in a technology driven business enterprise. Thus, with developing technology, there could be a host of opportunities lined up to be embraced by various businesses. The future of shopping malls is in exploring the things which may be the need of the hour but have not yet taken the form of a mall. The key is to make the right choice at the right time after assessing the opportunities and threats associated with it.
Chapter 2: Concept Malls
The evolution of modern retailing, from a nascent industry to an organized sector, has been a subject of discussion in recent times. Indian retailers are still experimenting with various modern retail formats; we have seen the emergence of various new retail formats such as stationery, laundry, health and beauty, medical, etc in almost all parts of the country. Similarly, developers are also coming up with different mall formats to attract consumers. A notable emerging format is the specialty malls that are planned as unique centers. These themebased malls have varying positioning structures that could be adopted depending upon the development potential, catchment characteristics and product penetration. It is critical for each retail development to position itself clearly in reference to the neighborhood, trade and tenant mix. Specialty malls take a step further and create a niche and water-tight positioning for themselves. Specialty malls are generally developed around a product category (automobile, electronics, furniture, jewellery, health, etc) or a target segment (women, kids, western, ethnic, discount, etc). Presenting a Similar Theme A perspective on specialty malls and theme-based retailing is relevant today. A very wide range of similar merchandise, price range and focused consumer are the key considerations for a brand to take position in a theme-based mall. Given the higher rate of in-store conversion of footfalls (50-65% in a specialty mall) against an average of 15-25% in general malls, there is a marked benefit for retailers to opt for specialty formats. According to the Retailers Association of India, specialty malls should make up nearly 10% of total malls in India in the near future. With growing retail competition, differentiation is important. These malls provide an opportunity to transform the fundamental shopping format to a unique selling proposition. While they are traditionally associated with exclusivity and high-priced merchandise, the target segment remains fairly defined. Retailing in specialty malls is likely to benefit from the rising
disposable income of buyers since they provide the end consumer greater freedom of choice in price and variety. Theme malls are in operation in many cities, including tier II and III ones. Specialty malls in the automotive, furniture, and consumer electronics sector are at various stages of planning, implementation and operation in different parts of the country. It has also been noted that prosperous northern cities like Jalandhar, Ludhiana, and Patiala are gaining importance among retailers for specialty malls catering to niche customers for automobiles and jewellery. The Magic Formula The common factors for the success of a mall remain the same, which are trade and tenant mix, customer experience and infrastructure. In the product-based specialty mall, infrastructure is vital. In automobile malls, for instance, the movement of automobiles across the mall, service areas, workspace for the car improvement shop, would be a jewellery mall in Gurgaon essential. Along with this, an entertainment area with a theatre, bookstore and cafeteria would be helpful to provide a complete enjoyable experience. In a specialty mall, the range of goods plays a critical role in attracting customers. The concept of specialty "Luxury malls" is also evolving in Delhi, Mumbai and Bangalore. The success of these malls would be in getting the premium tenant mix, quality dining services and premium real estate. Well-researched market analysis and a lucrative catchment area can assist in the popularity of these specialty malls. But it must also be noted that a specialty mall takes away the flexibility of changing the tenant mix and hence requires a detailed study of the space demand and infrastructure requirement. The success of specialty malls is entirely dependent on the catchment areas, diversity with the product category and brands, the demand of the product/brands in the city and overall experience in the mall by the niche segment of customers. The entry of organized players into retail development and mall management would help address issues like project execution and operational efficiency. The concept of theme-based retailing is likely to gain more momentum as players transcend the learning curve. The ramping up of operations with big investments by both domestic and foreign participants in retail is likely to facilitate greater diversification, leading to the growth of specialty malls.
The retail sector in India is the country's second largest employer after agriculture. The increase in the disposable incomes has led to the retail boom in India. Bigger corporate houses, including large real estate developers, have now entered the retail sector. This is a sign of the modernization of Indian retailing which has led to the rapid growth in the number of specialty malls and theme malls. Emergence of specialty retailing Though organized retailing is still at a nascent stage - accounting for only around 2% of the $180 billion retail market in India - it is likely to touch 10% by the end of this decade. Mainly, four product categories have led this organized retailing wave: Foods, lifestyle products, Apparel, Consumer durables and electronics. In recent times, several theme malls such as Gold Souk (jewellery malls), Wedding Mall, Electronic Mall, Auto Mall, etc which cater to specific needs and occasions have been launched. Jewellery Mall Gold Souk is a jewellery mall of approximately 1.8-lakh square feet and is India's first mall dedicated to jewellery retailing. Designed by Oliver Vidal of US-based Swanke Hayden & Associates and built at a cost of around Rs. 400 million, the Souk in Gurgaon will be followed by nine more in the country over the next three years. Each Souk will require an estimated investment of Rs.1 billion. In the next phase, Aerens Group will develop Gold Souks in Mumbai, Hyderabad Bangalore, Ahmedabad and Kolkata. Said G. S. Pillai, President, Aerens Gold Souk International, "With so many malls coming up, it is specialized malls that will succeed. Specialty malls are the place where the consumer will go shopping since there will be more choice and variety under one roof. Since the concept is in its infancy, most people are not aware of the advantages. It's only a matter of time before consumer preference shifts towards specialty malls." Wedding Mall The Rs 70-crore mall being set up by the real estate developer, Omaxe, is India's first Wedding Mall in Gurgaon. It will cater to all wedding related needs of people, right from designing and printing of invitation cards to buying honeymoon packages. Omaxe is building a fully AC 1, 75, 000 sq ft marriage mall, which will have two banquet halls. The tenants will be a mix of leading brands, both Indian and International, and wedding-related
service providers, including makers of bridal wear, clothing, jewellery, cosmetics, entertainment, decor, floral, footwear, white goods, accessories, wedding planners and travel agencies. The Omaxe marriage mall will take away the hassle of numerous visits to the market. The focus will be on maximizing the customer’s comfort and provide complimentary products under a common roof. Auto Mall Coming up along the National Highway 8 is Senior Builders' Auto Mall exclusively for products related to automobiles. Leading players After establishing a presence in the lifestyle retailing business through Westside, the Tata group's retailing arm Trent is making a foray into food retailing. Consumer goods giant Hindustan Lever has joined the retailing bandwagon by starting Kwality Walls parlours for selling ice cream brands. 'Plugin Sales' is the new consumer electronics retailing venture of Raymonds. Raymonds has 60 per cent stake in a newly set up company with the rest held by a team of professionals - senior executives of consumer durable companies who conceived the idea. The $3-billion Starbucks Corporation, the world's largest premium specialty coffee pub, is also planning to enter the Indian market. Earlier it tried unsuccessfully to pick up a stake in Barista. Shoprite, Africa's largest grocery retail supermarket group, too plans to set up base in India. Also, some specialty players like Loft for footwear retailing, Vijay Sales for consumer durable retailing, Fabindia (clothing / accessories) and even local players (e.g. Bombay Selection and Mehrasons in Delhi) have been able to draw consumers from the high streets to new swanky malls. Many top developers are now toying with the idea of developing specialty malls. Specialty malls are already a success in the West, whereas the concept is in its infancy in India. One could venture so far as to say specialty and theme based retailing will drive the growth of organized retailing in India. The golden days of the booming Indian economy have witnessed a parallel and correlated phenomenon' the rise of malls across the country. In the last decade, malls have been sprouting across the country, reflecting a gradual shift from unorganized retail to more organized formats.
Indian customers show an increasing propensity to spend, and now expect the conveniences available in developed countries to be there in India as well. The surging confidence in the Indian economy promised significant growth in consumer demand, and the high levels of optimism drove real estate developers and retailers alike to invest heavily in malls. With malls coming up by the dozen in metros and tier-1 cities, the growth has been rapid and uncontrolled. A case in point would be MG Road in Gurgaon, which plays host to about eight malls over a two-kilometre stretch. The duplication of offerings at these malls tends to confuse customers, and footfalls are shared across them. Retailers need to have multiple outlets, in order to ensure that they are present in the malls people choose to go to. Therefore, there may be two franchisees of the same leading pizza chain just across the road from each other. Some of the malls are practically empty 'white elephants' for the developers. This overcrowding clearly goes against business sense for both the developers and the tenants. Most major cities in India are reaching a scenario similar to that in Gurgaon, the supply of retail space is increasing incommensurately with the demand from the customers. It is fast turning into a competitive market of malls, akin to competition in any B2C business. Gone are the days when a developer would build a mall with all the space rented out on prebookings, and customers would automatically flood in from the first day. Following the gloomy economic scenario and with somewhat limited consumer spending expected in the near-medium term, it is time for both developers and retailers to understand that this is no longer a supply-driven market and shift to a customer-centric approach. Developers need to focus their energies on understanding the needs of the customer. They must work with the tenants right from the conceptualization stage to provide customers what they want, thus making them want to visit repeatedly. Developers would do well to adopt an attitude similar to that of the hospitality industry. Soft strategies and customer relationship management are essential to convert a mall from a plain vanilla mall to a favored destination for customers. The critical question to answer here is: What makes a customer come to a mall? The drivers can be classified as a need to purchase goods, the desire for a superior shopping experience and a place for social experiences with entertainment and dining facilities. Differentiation is the key and malls are transforming from generic models into innovative spaces for specific target audiences.
The Niche Customer behaviour varies in accordance with the products purchased. Premium and superpremium products such as suits and jewellery are generally purchased after significant planning due to the high monetary or sentimental value these products hold for the consumer. A customer would be willing to travel the extra mile to choose the perfect product, and is likely to prefer a destination where he can compare a variety of offerings before making his choice. Niche malls with a specific focus, such as the Gold Souk in Dubai with over 300 jewellers situated within the mall, are specifically designed with this aim in mind and attract serious buyers. Random walk-ins are less likely, and the conversion ratio of customers is likely to be high. Such malls would typically be smaller in size, but highly profitable both for the developer and the tenants. For products that require relatively less decision making, and are more likely to be impulse purchases, customers expect a more complete experience, along with some entertainment and refreshments. These malls should focus on attracting large audiences and look to convert footfalls into purchases by strategically and creatively conceptualizing the layout in order to convert the high footfalls into purchases, while ensuring a satisfying shopping experience. It has been a recent trend to integrate hypermarkets and supermarkets inside malls as anchor stores. While this is likely to continue, it makes sense for large tenants like Future Group and RPG to continue with both independent and mall-based formats, with the focus of the former being on residential areas and the latter on the up market areas. Malls as Entertainment Zones Over the last few years, customers have been visiting malls focusing more on entertainment than on shopping. Customers regard malls as some of the best locations for social interactions, be it with friends or family. Movies are the largest avenues of entertainment and a significant number of footfalls are driven by the multiplexes. As seen across cities, multiplexes are fast replacing standalone movie halls with their integrated offerings of movies, dining, partying and shopping. The multiplex culture is likely to continue to be one of the largest crowd-pullers at malls. Restaurants have also been attracting good business due to their presence alongside movies
and shopping, and are likely to continue in the same manner. However, unlike multiplexes, standalone restaurants are also expected to survive outside the mall-based model. With new trends like food tourism catching up fast, there are interesting niche models possible 'a cluster of restaurants serving different cuisines integrated in a single building, for example' a more elaborate dine-in version of the food courts, on the lines of Dilli Haat.
The close integration of entertainment and shopping is a trend that is likely to catch up in the near future, at a minimal additional cost. For example, men would love to watch a cricket match on a television while their partners shop around. Multiplexes could achieve a brisk sale of cobranded movie paraphernalia, perfumes endorsed by movie stars, limited-edition collectibles and the like. Developer-Tenant Relationships In the initial years of mall development, developers thrived on the success of the model, with curious customers flowing in to experience this new retail format. Tenants were more than willing to pay the high rentals charged by developers for space in malls and capitalize on the footfalls the mall generated. Over time, as more malls were set up and the mall concept was wellentrenched, tenants gradually started gaining a foothold in partnership structuring. Today, with the excess of mall space in the major cities and inter-mall competition, market rationalization is taking place. With falling real estate prices and the increasing scale of operations of retail chains, the bargaining power is in the hands of the tenants. Developers had to stall several mall projects in the major cities due to the increasing inventory of existing space that remains unoccupied. In the National Capital Region (NCR), the major developers have shelved plans or converted unoccupied spaces into commercial office spaces. Clearly, this is a period of consolidation and the realignment of real estate to market conditions is long overdue. Newer formats of arrangements will undoubtedly emerge in the relationships between developers and tenants. It is likely that the developers will shift their focus to ensuring the profitability of tenants, by entering into innovative risk-reward sharing arrangements. Revenue-sharing mechanisms and performance-based rental schemes are likely to become popular. This ensures that both the developer and tenant work towards the common goal of maximizing profits. In
addition, freebies and deal sweeteners such as lower maintenance charges are gaining ground. After tapping the potential of the major metros, both real estate developers and retailers are gradually shifting focus to tier-I and tier-II cities. Here, they have the opportunity to start building afresh and incorporate the knowledge gained from previous experiences. The positioning of upcoming malls is likely to be more inclined towards the mass market, but a few niche specialty malls are likely to emerge. Overall, we can expect a paradigm shift from a developer-tenant relationship towards a more mutual single focus relationship right from the conceptualization stages. The image of malls should shift from that of a commercial retail space as it is now 'with confused and distributed operational responsibilities' to a living, dynamic organism. This shift in viewpoint and structure would enable the resolution of the problems inherent with malls as they exist today.
Green Malls With technological advances and widespread support for ecologically friendly and energy-saving buildings, it is only natural that malls would also experiment with the ëgreen mallí concept. Green malls would be built using eco-friendly techniques and materials, with the objective of energy conservation, climate control, rainwater preservation, water reuse, solar energy harvesting, etc.
From a developer's perspective, the cost of construction for a green mall is expected to be 5 per cent higher than that of conventional malls, which would translate into higher rentals for the tenants. On the other hand, customers are not likely to be willing to bear the extra burden, as a green mall offers them no special advantages. Tenants would benefit in the long run by bearing the costs of the technology in terms of energy and water saving, but in the current scenario, they are likely to focus on protecting their struggling business and minimize the rental payouts. Hence, in the short term, we do not expect any significant progress on the green mall front. However, once the economy recovers and the ecological movement strengthens further, most developers will opt for the green mall concept.
Malls of the future will be environmentally friendly and will have zones specifically made for the entertainment of customers. These malls will provide a better shopping experience for their customers than the malls of today. What the Future Holds Indian retail enjoys the status of one of the ten major retail markets in the world. Thus, the fears that malls may be replaced by retail outlets like Wal-Mart and Big Bazaar may prove to be unfounded. Indian malls won't be relegated to a less important role in retailing. What is on the cards though, is a significant transformation in the look and feel of malls. Entertainment, niche positioning and customer-centric designs will dominate mall development. Malls in India will continue to develop beyond retail-becoming the prime spots for entertainment, socializing and leisure.
Chapter 3: Technology driven Malls
Introduction Technology usage in retail is going to change the operations of mall drastically in near future. The mobile phones and internet is going to be used extensively to simplify all kinds of activities
inside mall. These activities will lead to provide greater satisfaction and completely new experience to customers. Advent of the Smartphone and other mobile devices will change the malls operations drastically. It will certainly revolutionize the malls for that matter. Mobile Concierge: It’s one of the greatest innovations which is coming in technology in malls.
Various mobile devices, like iPhone, Kindle, Apple’s iPad tablet computer, promise to change the way we shop. Mobile devices and online shopping will superimpose physical and digital shopping to create different experience in shopping. The SmartPhones and mobile devices will be the key medium in future for satisfying shopping habits. Mobile devices and smartphones will be used extensively to:
1) locate properties in retail
2) Surfing through retail inventories
3) Pre-ordering store and mall services 4) Payments
The picture today Today, Smartphone owners can already use applications that enhance mall shopping experiences. A few examples include Point Inside, which provides up-to-date layouts of nearby malls; One Touch Concierge, which makes it possible to order mall services ranging from restaurant reservations to package delivery at participating properties; and Shop Savvy, which allows consumers to compare product prices at various shopping malls. Today shopping mall’s text messages campaign is solely target to inform customers about their promotional offers. But in near future the text messaging campaign will be more sophisticated and reliable in terms of promotions. The campaign will consist of analyzing buying behavior of shoppers and thereby understanding shopping needs of particular shoppers. The long databases will be maintained for that and will be used in text messaging campaign.
Mr. X, buys a new pair of shoes at Shopper stop every 18 months. Mr. X is willing to opt to participate in its promotions program. Mr. X buys shoes only when the need strikes him. In a scenario which is predicted in near future, Shopper stop or the branded shoe shop in shopper stop might be able to estimate when Mr. X’s shoes are wearing down and send offers related to offers in that particular brand. Mr. X might then complete the transaction online through his mobile device, or locating a nearby Shopper Stop that carries his preferred brand of shoes in his size. In case of a more interactive campaign, if sensor-embedded advertisements detected Mr. X’s mobile device at the mall, Shopper stop could text him while he was on site. Moreover, if associates at a Shopper stop know that Mr., X is coming by for shoes, they can gear their sales strategy based on Mr. X’s purchase record. He sometimes buys a belt or two with his pair of shoes, he explains, so that would be the kind of product that might turn into an impulse purchase. The salespeople might then be able to further narrow down the list of items to tempt Mr. X with by checking the amount of store credit on his account and the average price of belts he’s bought in the past.
Thinking ahead In future technology will ease the activities in malls. For example shoppers will be able to purchase amusement part tickets online in advance, they will be able to book parking space through their mobile phones. Even in situations like if some parents lost their children, they can communicate with the mall staff through mobile phone having dedicated help service in that particular mall software which is pre-loaded in their phone. During 2009 Mall of America in America had started using Twitter account to notify their shoppers about parking conditions, directions to mall, various offers and sales assistance. Mall of America’s marketing team also hopes that eventually Smartphone apps will help them drive traffic to their stores. For example, when customers focus their Smartphone camera on a poster in the mall’s common area announcing the arrival of a new tenant, it will immediately take them to the retailer’s Web site, so they gain a sense of what that store is all about, says Bridget Jewell, a public relations coordinator with the Mall of America. Few marketers are also hoping that because of technology driven mall shopping in future, the shopping will become better planned
Some smartphone-oriented personalized sales techniques are already in the early stages of development. For e.g., in November, IKEA launched an augmented reality application that allows shoppers to take photos of various furniture within the collection and superimpose them on photos of their rooms at home to see how well the items fit in. A recent iPhone application contest organized by Mobclix and apparel retailer Gap Inc. yielded an application that allows shoppers to browse through Gap’s current merchandise selection and superimpose the clothes on a photo of themselves to get a sense of how they would look and whether various items would create a cohesive outfit. The application helps shoppers cut the amount of time they spend browsing in the store. It also helps shoppers locate nearby Gap stores and browse the merchandise on iPhones, giving them the option of forwarding photos of items they like to their friends and even providing a selection of background music to simulate a reallife Gap shopping experience. Virtual Trial Rooms:
Researchers are looking forward to develop a software in which through web cam one can take photo and then try different cloths on the digital image. One can also send these photos to twitter and facebook to have peer opinion before buying. These kinds of Virtual dressing rooms will certainly add value in shopping and thereby enhancing overall experience. New configurations Shopping malls should also eventually be able to use face recognition technology to market products to every shopper directly. In the not so distant future it might be possible for Shopping malls to install LCD screens in their storefronts that will recognize customers through a signal on their mobile device and beam a digital image of that customer wearing items from the Gap’s latest line. It will be much like a scene in Steven Spielberg’s 2002 blockbuster Minority Report. In the film, Tom Cruise, when walking through a futuristic mall concourse, is bombarded with holographic advertisements addressing him by name. In a later scene, he walks into a Gap that asks about a recent purchase. In fact, Spielberg tapped high-level consultants in envisioning the technology that would appear in the film. So the fact that some of the technology is coming to reality shouldn’t be a total shock.
LCD screens with motion sensors combining video-streaming and face recognition are already available from companies like Microsoft. During the 2010 Consumer Electronics Show, Intel introduced 7.5-feet-tall multi-touch, multi-user digital signage screens that allow shoppers to take virtual store tours, access sales information and even share their finds with family and friends through social media and mobile devices.
Mobile marketing specialists predict that one day Smartphone users will be able to pay for their purchases directly from their mobile device, rather than having to exchange cash or enter credit card information into the retailer’s system. Today concept of ‘Mobile Money’ is already in place in India. Here one can top up the required amount in phone and then can purchase things by transferring mobile money through SMS or Bluetooth.
New role of Malls Mall owners and developers might have to rethink many aspects of their business, from leasing strategy to rent collection to layout arrangements. This is because now a days the malls are acting not only as point of sale but also a place to watch movies, to play games, to have food and to have a good time with family and friends. So all these activities need to be coupled with shopping will require larger land area. The challenge for mall owners would be to provide offerings to keep shoppers coming back for enhanced mall experience. One way for mall property owners to combat their fatigue would be to rotate tenants on a much more frequent basis —and allow space for emerging vendors to showcase their wares. The monthly rotations would best be suited to local merchants who have a unique product offering. In the future, the concept of the pop-up store might evolve into that of a pop-up mall.
The end result of all the recent technological innovations, coupled with ongoing focus on New Urbanism, means that enclosed regional malls will continue to become obsolete. Going forward, the shopping centre industry will continue to redevelop those properties into mixed-use centres, creating vibrant, social spaces that will keep people coming back to physical stores for a long time.
Chapter 4: Business Opportunities with Malls
Malls: Future filled with opportunities Shopping malls have taken India by storm. The popularity of lifestyle malls has increased so much that it is driving growth which is in turn creating new opportunities and posing some challenges in the way that leases are negotiated and structured..
Lifestyle malls when they first emerged, they targeted mainly high-end and urban shoppers with their locations and upscale ambience. But now, the popularity is driving more tosuburban locations where real estate is at a cheaper price. Also, in order to accommodate the push for a smarter growth, different uses are being incorporated into these developments, such as office and hospitality, to offer people the opportunity to socialize. Lifestyle malls are the future. With intense planning at the preliminary stages of development and careful attention to lease negotiation, these malls will continue to blossom and provide people with a fun place to shop, play, work and also make a home if they so choose. A mall also offers loads of business opportunities. The entrance of the mall is the starting point where you are greeted with bright, colorful outdoor hoardings, and then attendants assisting with the parking. At various entry points, guards frisk visitors for security assurance, thus ensuring a threat-free environment. Kiosks are also placed at various locations displaying and promoting the latest products. Escalators and lifts provide comfort, while the housekeeping team ensures that the ambience is absolutely perfect. Is there an opportunity window? A mall from the first day itself becomes a quarry of opportunities for lot of businesses. There are many opportunities in every mall apart from the shops, restaurants, and entertainment hubs. These include mall management, facility management, and design houses which specialize in mall interiors, hoardings to advertise products or services, etc.
Management of Malls There are various activities involved in managing a mall. The company has to take care of the entire operations of a mall, including procurement of various equipment and maintenance. Thus, all the Facilities Maintenance Operations like leasing out shops and advertising space to interested parties, procuring the necessary equipments, to maintaining the mall. Generally, a mall management company usually outsources many of these functions to facility management companies that deal in specific services. Thus, Mall management encompasses various activities
like operations, facilities management, marketing, area maintenance, leasing and all the other functions. Revenue Generators A mall management company has many avenues throught which they can get their revenue. It generally is involved in the pre-launch, launch and post-launch promotion of the mall. Thus good revenue can be generated through kiosks, hoardings, various other events. The biggest advantage in this opportunity is the fact that there is no single mall management company that is into catering to malls other than their own. So if we take this revenue model into account, then the income from mall management could range anywhere between Rs 5 crores and Rs 50 crores annually, and from just one mall! Challenges The biggest challenge in this industry is to find the right kind of target group. The right kind of tenant mix ensures the right footfall for the mall, and sustainability of the mall. Thus, while leasing out space to people, it is imperative to keep in mind the brand image that you want to create in the consumer’s mind. Facility Management Mall management companies usually outsource many operations like parking, security, housekeeping, and cash management. Services like fire detection and suppression, power management, access control, water management plumbing along with soft services like cleaning and pest control, physical and security surveillance, concierge services, and administration services are also provided. Some other services include conducting research for malls to find out their requirements before actually starting to service them. Advertising opportunities The BTL advertising activities have grabbed a 31% share in the overall advertising market from what used to be a space dominated 100% by ATL advertising. Companies are realizing the importance of promoting their products in a way in which people can actually touch the product and get a feel of it.
Specialty Leasing Retail Merchandising Units can be offered in a mall along with floating Retail/Kiosks, and Temporary In-Line Stores which gives a great opportunity for test marketing the product and if some changes and improvements need to be done. It’s a great way to keep current update on the latest industry trends.
Chapter 5: Future of Malls in Rural India
Rural India: Untapped Potential India is witnessing a retail boom. Variety of factors such as healthy growing economy, increasing employment, rising disposable income coupled with the increasing propensity to spend have transformed India into a giant consumer market. Traversing across the metros, the retail boom is now infiltrating down to tier 3 and tier 4 cities and even farther towards rural and backward areas
of the Country. It is estimated that substantial purchase capacity is locked in these areas and the potential is yet to be tapped. India’s rural markets offer a sea of an opportunity for the Retail sector. The urban-rural split in consumer spending stands at 9:11, with rural India accounting for 55 per cent of private retail consumption. Indeed the market can be tapped with focused attention and strategy. According to National Council of Applied Economic Research (NCAER) reports, rural India is home to 720 million consumers across 627,000 villages. Seventeen per cent of these villages account for 50 per cent of the rural population as well as 60 per cent of rural wealth. This implies that reaching out to just 100,000 plus villages will ensure access to most of the rural opportunity. The urban market undoubtedly continues to grow but with most of the retail initiatives concentrated in the metropolitan and Tier-I and Tier-II cities, these markets are fast getting saturated. Realizing this, most of the big retail companies have started targeting the Tier-III cities and the rural towns to spur their growth. The ‘bottom of the pyramid’ market is for sure now looking attractive for companies wanting to explore new turf. Existing Rural Mall Initiatives Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV) have already set up rural retail hubs, Choupal Sagars (ITC) has done the same and so have Reliance Fresh, and others like the Naya Yug Bazaar, Kisan Sansars (Tata). The group's two companies, Tata Chemicals and Rallis India, ran separate rural initiatives till 2003. Tata Chemicals ran a chain called Tata Kisan Kendra, which offered farmers a host of products and services ranging from agriinputs to financing to advisory services. Rallis, on the other hand, was partnering ICICI Bank and Hindustan Lever in offering deals to farmers that covered operations from the pre-harvest to post-harvest stage. In 2004, the two operations were merged and Tata Kisan Sansar, a network of onestop shops providing everything from inputs to know-how to loans, was launched. Today, the Tata Kisan Sansar has 421 franchisee-run centres in three states and reaches out to over 3.6 million farmers. Like the Tatas, the $2.6 billion Mahindra group has successfully established a synergy between its current businesses and the planned rural forays. Its flagship, Mahindra & Mahindra Ltd is India's largest farm equipment company. Its subsidiary, Mahindra Shubhlabh Services, has operations in 11 states, and leverages the strong Mahindra brand, the 700,000-strong Mahindra
tractor customer base and the 400-plus dealer network, to provide a complete range of products and services to improve farm productivity and establish market linkages to the commodity market chain. Cases of Rural One Stop Shops The various retailers who have ventured in rural retailing are discussed in detail as under: Case 1: Hariyali Kisaan Bazaar DSCL backed by years of experience in the agribusiness, has implemented a one of a kind rural retailing initiative, the Hariyali Kisaan Bazaar rural departmental stores, to provide single-point solution to the diverse needs of the contemporary Indian farmer. Each store covers an area of 3-4 acres and is managed by a team of 7-8 people whom the Company trains continuously. The total number of Hariyali outlets stood at 101 as of 30th Sep, 2007, which DSCL plans to expand to 250-300 outlets by the end of FY 2008-09. Hariyali Kisaan Bazaar offers the rural household all farming and consumer products and related services along with financial services under one roof. These include wide choice and multi-brands of agriinputs, FMCG, consumer durables, apparels, footwear, toys, general merchandise, insurance etc. The outlets also provide the farmer, the expert advice of agronomists and the technological support in shifting from subsistence farming to technology led commercial farming. The company also launched credit services during its second quarter 2007-08, in association with HDFC bank, providing loans for various purposes. The company also stepped up its bulk procurement activity and trading activity under review to include various grains (maize, wheat), pulses (chana), oilseeds (mustard), menthe oil, coriander etc. Case 2: Aadhaar Godrej Aadhaar is an agriculture services cum retail initiative of Godrej Agrovet Ltd. It is a comprehensive solution provider to the Indian farmers and provides professional guidance with an objective to improve productivity, get higher returns and improved cost benefit ratio. The services on offer are crop advisory services, soil & water testing services; buy back of output, crop finance, supply of agri inputs and animal feeds, transfer of information (weather, price, and demand supply), door delivery of products etc. The venture has now diversified into offering a number of other product categories like – durables, FMCG, apparels, footwear etc, thus catering
to the complete requirement of the rural household. A number of corporates are already in the process of partnering Aadhaar for various projects for furthering the initiative. Presently there are 49 Aadhaar Centers across the country in the States of Maharashtra. GAVL also opened its second petro format Aadhaar Express in Kashti, Maharashtra. GAVL revamped its Warden Road “Nature’s Basket” outlet by positioning it as “Authentic World Food”. This store has introduced new product categories like wine, cheese, cold-cuts, processed foods in addition to its existing portfolio of fresh fruits, vegetables & herbs and specialty foods. Case 3: E-Choupal and choupal Sagar E-Choupal ITC’s e-Choupal is an example of how a commercial venture can provide a channel for knowledge and opportunity, bringing global resources and practices to Indian villages as well as higher incomes for farmers, and helping create the conditions for many other enterprises to cater to the rural market. E-Choupal is an entirely new channel for procuring the purchase of the farmers. Today they operate through 6,500 choupals in 9 states. In e-Chaupal they started with two channels known as Sanchalak and Sanyojak. Sanchalak: Sanchalak is the person in whose house the ITC sets up the e-Choupal. E-Choupal consists of a computer; linked to the Internet via phone lines or, increasingly, by a VSAT connection. Each Sanchalak serves an average of 600 farmers in 10 surrounding villages within about a five kilometer radius. Samyojak: Samyojak is the cooperating commission agents. They look for the logistical support and are responsible for cash disbursement to the local farms for their produce. They basically facilitate the purchase of the products for ITC from farmers. They take care of 40 Choupals and the average distance a farmer has to travel to reach Samyojak to sell his produce is 25-35 kilometers. Choupal Sagar Following the runaway success of its e-Choupals, the tobacco-to-hotels-to-foods major ITC’s rural foray, which kick-started a silent revolution amongst the harried soya farmers of MP in June 2000, the company has now moved on to the second phase. And the result is Choupal Sagar, the first of which was unveiled at Sehore near Bhopal in August 2004. A rural hypermarket or a rural mall, Choupal Sagar provides multiple services under one roof, like selling produces and buying quality products for farm and household consumption. Choupal Sagar are built near
Samyojak, so that when farmers come to sell their produce to samyojak and receive cash money then they can shop in Choupal Sagars. Till now there are 19 Choupal Sagars. All of these stores are located in the rural areas of Madhya Pradesh, Uttar Pradesh and Maharashtra. Case 4: Kisan Seva Kendra Kisan Seva Kendra is a low cost business model by Indian Oil corporation of a retail outlet offering fuel and other non fuel value added services with penetration in rural markets generating high returns. KSK a one stop center of service (seva) for the farmers at his doorstep making available Pesticides, Seeds, Children stationary, grocery, personal care, etc. It currently has approx. 100 operational stores. Thus, taking forward such examples, the envisaged rural malls would be base on an amalgamated model of supermarket and discount store and would offer substantial savings over the goods as compare to the local conveniences stores. The proposed facility would be a geographic concentration of shopping and warehousing space, eating joint, facilitation cell and other amenities of specific and generic use. The rural malls would offer one-stop shop solutions and a unique integrated shopping experience to the rural population and would specifically address the needs and utilizing tendency of these. Malls as two way supply chain The rural malls would act as a two way supply chain. Apart from selling goods to the farmers, they would also double up as selling market and would assist the farmer by selling their agriculture production at a competitive market price thus providing true value of their produce. Employing a direct to customer business model, these rural malls would buy all the goods, directly from the manufacturers. The elimination of intermediary distribution channel would lead to significant saving of trade margins which could be passed on to the customers as discount. Availability of discounted goods would be the unique selling proposition of these malls which would assist in creating a loyal customer base. With several states in the country permitting retailers to purchase produce directly from farmers, the farmers too are adapting to the new opportunity to cultivate assigned crops and take special care of the same. This gets them instant credit at higher prices than what they received from the erstwhile traders/middlemen. Corporate retailers like ITC, Godrej, Reliance, AV Birla and many
others have already established the farm linkages. Indian farmers are finally making good money, after centuries of social and economic exploitation. Thus not only will the companies benefit from the rural opportunity for the malls but farmers will also benefit from linkages with such retails formats.
Chapter 6: Future of Malls across Globe
Future of Malls across the globe When it comes to contrasting the trends in shopping malls in India against those across the globe and especially USA, we can note few key things: 1. Rural against Back to City: Opportunity for Indian malls lies in the Tier-III cities and the rural towns, as metros start getting saturated. As against this, USA malls are likely to experience back to city trend from the current out of the suburb locations. 2. Concept malls and One stop shops: India is witnessing growth of one stop shop malls whereas USA in particular is now moving away from preferring such mall concepts and preferring malls to be more like community centres which are integrated with non-retail functions. Against this, concept and theme based malls will get popular in both India. Malls as community centres
The retail center of the future will be designed to resemble a community, not just a place to shop. That means environments that place as much emphasis on recreation as they do on consumption. The developments point to a future in which retail sector blends with various other functions. The shopping center of 2020 might not look visually like an old-fashioned Main Street, but it will function like one. Consumers will be able to visit a post office, keep appointments with doctors, relax for a while, go for a movie, or enjoy a meal with their neighbours at a concert. With an unappeasable demand for new shopping avenues, developers saw little need for nonretail amenities and focused on finding great locations, lining up the best tenants and creating attractive spaces for consumers to move from store to store. They did succeed from coast to coast: The regional mall was the ideal product for America in the late 20th century — a land of upwardly mobile, mostly white, suburbanites living farther from the urban base. The 21st century America is starting to take on a different look. The changes affect what kind of consumers retailers will target and how they will want to reach them. The baby boomers, a huge demographic group that grew up with the mall industry, are now retiring. Their spending habits are expected to change. This will pose a tough challenge for the department stores they patronize — and which remain the most important anchors at regional malls. The department stores are having the fear of being type casted by the Baby Boomers generation. Role of Ethnic and racial diversity Ethnicity and diversity in race will also play an important role. Hispanic, Asian and African American populations are growing faster and accumulating significant buying power. The spending power of Hispanic-Americans will reach $930 billion by 2007, a 320% gain from 1990 — compared to an expected 131 percent gain for all American consumers. This Hispanic buying power, along with that of Asians and African Americans, is focused in and around certain cities. The way these consumers would shop will play an important role in retail development. Hispanic families, mostly take their whole family along when they go for shopping. Thus, a retail development that offers entertainment, dining and community events along with shopping will draw more such families. There would be more retailers specializing in ethnic clients in the local market.” Back-to-City movement
The back-to-the city movement is a clear trend poised to continue into the 21st Century, according to the Urban Land Institute. Inner cities will account for at least 40% of the total increase in U.S. purchasing power between 2000 and 2045. Nationally, the increase in city housing permit activity from 1999 to 2000 exceeded the average annual increase in city housing permits from 1990 to 1998 by 35 percent. By contrast, suburban housing permit rose 21 percent. The district of Washington, D.C., has seen a surge of retail development that reflects not only the gentrification of formerly blighted areas but also the rising affluence of the city's African American and Hispanic residents. In addition, developers recognize that the outlying suburban areas — where they have concentrated their energies for the past two decades — are reaching retail saturation. Fate of enclosed regional malls – Specialization is the key The standard-issue enclosed mall would not be able to stand the test of time. The current consumer finds the all products-under-one-roof concept inconvenient. Consumers do not have the time nor the inclination for an expedition anymore. So a mall of the future might be a stealth mall; one which is disguised as not being a mall. Retail may be developed on smaller sites Malls over time have begun to look very similar to one another. They have a similar occupant mix and are designed in more or less the same way. The offering needs to be constantly reinvented to adjust to the changing wants of consumers. The enclosed regional mall may continue to enjoy low vacancies, increasing rents and steady lease renewals. Productivity has not changed much for these malls and is unlikely to change in the future. Transition malls most likely will experience a transformation within 10 years into alternative retail formats such as power centers or non-retail uses. Many malls will attempt an upscale shift in merchandise mix to attain stronghold or downscale by bringing in more discount-store anchors and in-line tenants. Consumers will flock to centers that may deal only in home furnishings, apparel or footwear. If you know what you want, you know where to go. This would be the only way in which the malls ultimately would survive.
The future is to be local and not global. It will be integrated with hotels and housing. The mall will be much more focused on what the customer wants and where it is. There would be more programming and the broader edges of entertainment and sports would be explored. In fact, specialization is already happening. In the Georgetown section of Washington, D.C., the new Cady's Alley development has differentiated itself from the multitude other centers in the metro area with 130,100 sq. ft of retail focused mostly on furniture, floor coverings, accessories, and bed n bath products. The project has drawn rave reviews — and rents of almost $60 a square foot. In West Palm Beach, the struggling urban progress called CityPlace is about to be recast in the same mold.
Chapter 7: CASE STUDY
“Dreams- The Mall”- A fairytale or a nightmare Dreams the Mall at Bhandup is located in close proximity to the Bhandup Railway Station. It has a frontage of approximately 1,400 square feet on LBS Marg. The estimated built up area for the entire project is approximately 1.11 million square feet. The project involves construction of a retail mall with multiplex, food court, amusement park and parking space for 650 cars at the basement level. The project was completed in March 2008. The mall is huge and much bigger compared to the R-mall and the nirmal lifestyles mall nearby. The mall however has not done well since opening in March 2008. The competition: Dreams mall faces stiff competition from two malls located at close proximity to it. Nirmal lifestyles: A mall completely different from ‘dreams’ in positioning. Located on the LBS marg Mulund west, Nirmal lifestyles boasts of almost all the big brands in the retail sector. The mall has brands like Reebok, Puma, Adidas, Café Coffee day, Fab India etc. Major food chains like Mcdonald’s, Pizza Hut, Rajdhani are also located inside the mall. The mall has captured the imagination of the middle class as well as the upper middle class with the presence of PVR cinemas multiplex. The Dreams mall has suffered due to the better positioning and advertising of the mall. The brands have also stayed away from the Dreams mall due to the fear of over clustering in the same area. The location of Lifestyles is near an upper middle class residential area whereas the Dreams mall does not have that advantage. Nirmal lifestyles can also be considered to have the first mover advantage. R-Mall: The first mall in Mulund west R-Mall is characterized by the presence of the Big Bazaar a retail store for the middle income group. The huge popularity of Big Bazaar has given a huge boost to the mall and it continues to reap rich benefits from it. There are various brands ranging from apparels to shoes and food chains. A three storyed mall is not as big as the dreams
mall but again has gained a huge first mover advantage. The target for the mall has been the middle income group and has been able to position itself perfectly. Dreams Mall The location of ‘Dreams’ the mall is strategic. It is located not very far away from the new prince of suburbs, Mulund and is also very close to the Bhandup railway station. The area available for shops is also very large and the infrastructure of the mall looks great. The mall has four main entrances covering its huge area. The entrances span from the railway station to the road that links Mulund and Bhandup. The premises of the mall are well kept and so are the interiors. The scope for the business inside the mall looks good and with majority of businesses entering malls the future may be promising. Kulraj Broadway, the multiplex is located in this mall, with multiplexes drawing in huge crowds to the malls the initial offerings from the mall seem commendable. The mall has 3 floors and the insides are well supported by lifts and escalators. The placing of shops or plots for shops are also well organized. The mall can be compared in size and structure to some of the biggest malls on India or internationally. The various positives mentioned above have not worked in favor of the mall. The mall having opened up in March 2008 is still about 95% unoccupied. The big brands have stayed away from the mall and it has hurt the footfalls in the mall. The reasons for the failure of the mall thus far can be cited as follows: 1) Electric Meters from authorized energy distributor are not provided 2) Drinking Water facilities for drinking water to shop owners, staff, visitors are not upto the mark 3) Maintenance costs of shops are too high 4) Footfall is not there in Mall and besides these no Anchor Shops or any branded supermarkets such as Big Bazaar, V Mart, More, Lifestyle, Shopper's Stop, D-mart, Apna Bazaar are ready to come & start their super-market in this mall for the reasons best known to them. 5) 95% shops are closed 6) Out of total buyers, 85% buyers are investors who never open their shops 7) There is extra-over surplus supply of shops i.e. 1300 shops in small suburb of Bhandup
in only this Mall 8) Society of shop keepers is not formed 9) The Re-Sellers are selling their shops below their actual costing i.e. ranging Rs.5,000 to Rs.5500 per square feet 10) Nobody has obtained appreciation on shop property investment in Dreams Mall at Bhandup 11) There is no scope that known brands & multi-nationals come in said Mall to open their outlets 12) Every shop keeper is suffering losses in their businesses 13) Most of the buyers are being cheated by salespersons of Builders by vague/false assurance of MOU with Brands/MNCs for lease 14) Shops are available on resale below market value or residential flats of same locality 15) Main entrance from station Road side is not got opened by clearing encroachments by Builders 19) It is next to possible that mall will be fully opened in next five year's period 20) The Builder of the mall does not have a great reputation
Future of Dreams Mall:
The mall owners need to rework their strategies and the positioning of the mall. The infrastructure will have to be updated and brought to the standard of the better malls in the city. The basic benchmark has to be some of the successful malls operating in the vicinity. The mall owners need to invite or persuade the bigger brands to step inside the mall so as to attract the customers. They need to either innovate or cleverly follow the market leaders. The mall owners need to also think of co-optition that is they may enter into a coalition with one of the successful malls. Promotional offers at multiplexes and the existent shops can be another method of pulling the crowds towards the mall.
The mall owners must understand that though malls offer great opportunity in the current scenario but in the future there might be a cluster or saturation of the market. The mall owners must either INNOVATE or PERISH in this era of strong competition
References
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http://retailtrafficmag.com/features/mall_of_the_future_02022010/index2.html Theme for a mall - The Times of Indiahttp://timesofindia.indiatimes.com/delhi/Themefor-a-mall/articleshow/969987.cms#ixzz0ztQp2Na9
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http://business.outlookindia.com/inner.aspx? articleid=327&subcatgid=42&editionid=14&catgid=12
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http://www.retailing360.com/article/15/20100709201007131516456957d0d0abc/Mallsof-the-Future.html
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http://retailtrafficmag.com/mag/retail_future/http://retailtrafficmag.com/features/mall_of_the_future_02022010/index1.htmlhttp://www.shoppingmalls-india.blogspot.com/http://www.dare.co.in/opportunities/services/there-is-more-to-a-mall.htmhttp://home.flash.net/~factoids/fact2/r0305b.htmhttp://retailtrafficmag.com/features/mall_of_the_future_02022010/index2.htmlhttp://retailtrafficmag.com/features/mall_of_the_future_02022010/index2.htmlhttp://www.apollopharmacy.in/newsdetails6a82.htmlhttp://www.thehindubusinessline.com/2006/01/10/stories/2006011001220800.htmhttp://www.indianrealtynews.com/real-estate-developers/omaxe-to-set-up-chain-ofwedding-malls.html
doc_119699928.doc
Future of Malls in India
Future of Malls
Table of Contents
Table of Contents....................................................................................................... 2 Chapter 5: Future of Malls in Rural India..................................................................20
Chapter 1: Introduction
The advent of shopping malls has ushered in a different shopping culture around the world. It started from the west and is now getting grips with the Asian countries as well. There are various factors which are responsible for the success of a mall. These factors hold the key for sustaining the competition and emerging as a successful player in the market. With the rising real estate prices, it is becoming all the more difficult to have a sustainable and profitable business model. Also, the global recession has led to a slight change in the consumer spending habits. Keeping all the challenges in mind, the future of shopping malls lies in how successfully the malls are customizing to the regional preferences. This will involve a detailed research on the consumer decision making process and studying the consumer tastes and preferences and coming up with offerings to match their needs. The advent of technology has changed the way businesses work today. It has catapulted business outputs and has shown vast improvements in business processes. This technology is slowly gripping many sectors which have resulted in a technology driven business enterprise. Thus, with developing technology, there could be a host of opportunities lined up to be embraced by various businesses. The future of shopping malls is in exploring the things which may be the need of the hour but have not yet taken the form of a mall. The key is to make the right choice at the right time after assessing the opportunities and threats associated with it.
Chapter 2: Concept Malls
The evolution of modern retailing, from a nascent industry to an organized sector, has been a subject of discussion in recent times. Indian retailers are still experimenting with various modern retail formats; we have seen the emergence of various new retail formats such as stationery, laundry, health and beauty, medical, etc in almost all parts of the country. Similarly, developers are also coming up with different mall formats to attract consumers. A notable emerging format is the specialty malls that are planned as unique centers. These themebased malls have varying positioning structures that could be adopted depending upon the development potential, catchment characteristics and product penetration. It is critical for each retail development to position itself clearly in reference to the neighborhood, trade and tenant mix. Specialty malls take a step further and create a niche and water-tight positioning for themselves. Specialty malls are generally developed around a product category (automobile, electronics, furniture, jewellery, health, etc) or a target segment (women, kids, western, ethnic, discount, etc). Presenting a Similar Theme A perspective on specialty malls and theme-based retailing is relevant today. A very wide range of similar merchandise, price range and focused consumer are the key considerations for a brand to take position in a theme-based mall. Given the higher rate of in-store conversion of footfalls (50-65% in a specialty mall) against an average of 15-25% in general malls, there is a marked benefit for retailers to opt for specialty formats. According to the Retailers Association of India, specialty malls should make up nearly 10% of total malls in India in the near future. With growing retail competition, differentiation is important. These malls provide an opportunity to transform the fundamental shopping format to a unique selling proposition. While they are traditionally associated with exclusivity and high-priced merchandise, the target segment remains fairly defined. Retailing in specialty malls is likely to benefit from the rising
disposable income of buyers since they provide the end consumer greater freedom of choice in price and variety. Theme malls are in operation in many cities, including tier II and III ones. Specialty malls in the automotive, furniture, and consumer electronics sector are at various stages of planning, implementation and operation in different parts of the country. It has also been noted that prosperous northern cities like Jalandhar, Ludhiana, and Patiala are gaining importance among retailers for specialty malls catering to niche customers for automobiles and jewellery. The Magic Formula The common factors for the success of a mall remain the same, which are trade and tenant mix, customer experience and infrastructure. In the product-based specialty mall, infrastructure is vital. In automobile malls, for instance, the movement of automobiles across the mall, service areas, workspace for the car improvement shop, would be a jewellery mall in Gurgaon essential. Along with this, an entertainment area with a theatre, bookstore and cafeteria would be helpful to provide a complete enjoyable experience. In a specialty mall, the range of goods plays a critical role in attracting customers. The concept of specialty "Luxury malls" is also evolving in Delhi, Mumbai and Bangalore. The success of these malls would be in getting the premium tenant mix, quality dining services and premium real estate. Well-researched market analysis and a lucrative catchment area can assist in the popularity of these specialty malls. But it must also be noted that a specialty mall takes away the flexibility of changing the tenant mix and hence requires a detailed study of the space demand and infrastructure requirement. The success of specialty malls is entirely dependent on the catchment areas, diversity with the product category and brands, the demand of the product/brands in the city and overall experience in the mall by the niche segment of customers. The entry of organized players into retail development and mall management would help address issues like project execution and operational efficiency. The concept of theme-based retailing is likely to gain more momentum as players transcend the learning curve. The ramping up of operations with big investments by both domestic and foreign participants in retail is likely to facilitate greater diversification, leading to the growth of specialty malls.
The retail sector in India is the country's second largest employer after agriculture. The increase in the disposable incomes has led to the retail boom in India. Bigger corporate houses, including large real estate developers, have now entered the retail sector. This is a sign of the modernization of Indian retailing which has led to the rapid growth in the number of specialty malls and theme malls. Emergence of specialty retailing Though organized retailing is still at a nascent stage - accounting for only around 2% of the $180 billion retail market in India - it is likely to touch 10% by the end of this decade. Mainly, four product categories have led this organized retailing wave: Foods, lifestyle products, Apparel, Consumer durables and electronics. In recent times, several theme malls such as Gold Souk (jewellery malls), Wedding Mall, Electronic Mall, Auto Mall, etc which cater to specific needs and occasions have been launched. Jewellery Mall Gold Souk is a jewellery mall of approximately 1.8-lakh square feet and is India's first mall dedicated to jewellery retailing. Designed by Oliver Vidal of US-based Swanke Hayden & Associates and built at a cost of around Rs. 400 million, the Souk in Gurgaon will be followed by nine more in the country over the next three years. Each Souk will require an estimated investment of Rs.1 billion. In the next phase, Aerens Group will develop Gold Souks in Mumbai, Hyderabad Bangalore, Ahmedabad and Kolkata. Said G. S. Pillai, President, Aerens Gold Souk International, "With so many malls coming up, it is specialized malls that will succeed. Specialty malls are the place where the consumer will go shopping since there will be more choice and variety under one roof. Since the concept is in its infancy, most people are not aware of the advantages. It's only a matter of time before consumer preference shifts towards specialty malls." Wedding Mall The Rs 70-crore mall being set up by the real estate developer, Omaxe, is India's first Wedding Mall in Gurgaon. It will cater to all wedding related needs of people, right from designing and printing of invitation cards to buying honeymoon packages. Omaxe is building a fully AC 1, 75, 000 sq ft marriage mall, which will have two banquet halls. The tenants will be a mix of leading brands, both Indian and International, and wedding-related
service providers, including makers of bridal wear, clothing, jewellery, cosmetics, entertainment, decor, floral, footwear, white goods, accessories, wedding planners and travel agencies. The Omaxe marriage mall will take away the hassle of numerous visits to the market. The focus will be on maximizing the customer’s comfort and provide complimentary products under a common roof. Auto Mall Coming up along the National Highway 8 is Senior Builders' Auto Mall exclusively for products related to automobiles. Leading players After establishing a presence in the lifestyle retailing business through Westside, the Tata group's retailing arm Trent is making a foray into food retailing. Consumer goods giant Hindustan Lever has joined the retailing bandwagon by starting Kwality Walls parlours for selling ice cream brands. 'Plugin Sales' is the new consumer electronics retailing venture of Raymonds. Raymonds has 60 per cent stake in a newly set up company with the rest held by a team of professionals - senior executives of consumer durable companies who conceived the idea. The $3-billion Starbucks Corporation, the world's largest premium specialty coffee pub, is also planning to enter the Indian market. Earlier it tried unsuccessfully to pick up a stake in Barista. Shoprite, Africa's largest grocery retail supermarket group, too plans to set up base in India. Also, some specialty players like Loft for footwear retailing, Vijay Sales for consumer durable retailing, Fabindia (clothing / accessories) and even local players (e.g. Bombay Selection and Mehrasons in Delhi) have been able to draw consumers from the high streets to new swanky malls. Many top developers are now toying with the idea of developing specialty malls. Specialty malls are already a success in the West, whereas the concept is in its infancy in India. One could venture so far as to say specialty and theme based retailing will drive the growth of organized retailing in India. The golden days of the booming Indian economy have witnessed a parallel and correlated phenomenon' the rise of malls across the country. In the last decade, malls have been sprouting across the country, reflecting a gradual shift from unorganized retail to more organized formats.
Indian customers show an increasing propensity to spend, and now expect the conveniences available in developed countries to be there in India as well. The surging confidence in the Indian economy promised significant growth in consumer demand, and the high levels of optimism drove real estate developers and retailers alike to invest heavily in malls. With malls coming up by the dozen in metros and tier-1 cities, the growth has been rapid and uncontrolled. A case in point would be MG Road in Gurgaon, which plays host to about eight malls over a two-kilometre stretch. The duplication of offerings at these malls tends to confuse customers, and footfalls are shared across them. Retailers need to have multiple outlets, in order to ensure that they are present in the malls people choose to go to. Therefore, there may be two franchisees of the same leading pizza chain just across the road from each other. Some of the malls are practically empty 'white elephants' for the developers. This overcrowding clearly goes against business sense for both the developers and the tenants. Most major cities in India are reaching a scenario similar to that in Gurgaon, the supply of retail space is increasing incommensurately with the demand from the customers. It is fast turning into a competitive market of malls, akin to competition in any B2C business. Gone are the days when a developer would build a mall with all the space rented out on prebookings, and customers would automatically flood in from the first day. Following the gloomy economic scenario and with somewhat limited consumer spending expected in the near-medium term, it is time for both developers and retailers to understand that this is no longer a supply-driven market and shift to a customer-centric approach. Developers need to focus their energies on understanding the needs of the customer. They must work with the tenants right from the conceptualization stage to provide customers what they want, thus making them want to visit repeatedly. Developers would do well to adopt an attitude similar to that of the hospitality industry. Soft strategies and customer relationship management are essential to convert a mall from a plain vanilla mall to a favored destination for customers. The critical question to answer here is: What makes a customer come to a mall? The drivers can be classified as a need to purchase goods, the desire for a superior shopping experience and a place for social experiences with entertainment and dining facilities. Differentiation is the key and malls are transforming from generic models into innovative spaces for specific target audiences.
The Niche Customer behaviour varies in accordance with the products purchased. Premium and superpremium products such as suits and jewellery are generally purchased after significant planning due to the high monetary or sentimental value these products hold for the consumer. A customer would be willing to travel the extra mile to choose the perfect product, and is likely to prefer a destination where he can compare a variety of offerings before making his choice. Niche malls with a specific focus, such as the Gold Souk in Dubai with over 300 jewellers situated within the mall, are specifically designed with this aim in mind and attract serious buyers. Random walk-ins are less likely, and the conversion ratio of customers is likely to be high. Such malls would typically be smaller in size, but highly profitable both for the developer and the tenants. For products that require relatively less decision making, and are more likely to be impulse purchases, customers expect a more complete experience, along with some entertainment and refreshments. These malls should focus on attracting large audiences and look to convert footfalls into purchases by strategically and creatively conceptualizing the layout in order to convert the high footfalls into purchases, while ensuring a satisfying shopping experience. It has been a recent trend to integrate hypermarkets and supermarkets inside malls as anchor stores. While this is likely to continue, it makes sense for large tenants like Future Group and RPG to continue with both independent and mall-based formats, with the focus of the former being on residential areas and the latter on the up market areas. Malls as Entertainment Zones Over the last few years, customers have been visiting malls focusing more on entertainment than on shopping. Customers regard malls as some of the best locations for social interactions, be it with friends or family. Movies are the largest avenues of entertainment and a significant number of footfalls are driven by the multiplexes. As seen across cities, multiplexes are fast replacing standalone movie halls with their integrated offerings of movies, dining, partying and shopping. The multiplex culture is likely to continue to be one of the largest crowd-pullers at malls. Restaurants have also been attracting good business due to their presence alongside movies
and shopping, and are likely to continue in the same manner. However, unlike multiplexes, standalone restaurants are also expected to survive outside the mall-based model. With new trends like food tourism catching up fast, there are interesting niche models possible 'a cluster of restaurants serving different cuisines integrated in a single building, for example' a more elaborate dine-in version of the food courts, on the lines of Dilli Haat.
The close integration of entertainment and shopping is a trend that is likely to catch up in the near future, at a minimal additional cost. For example, men would love to watch a cricket match on a television while their partners shop around. Multiplexes could achieve a brisk sale of cobranded movie paraphernalia, perfumes endorsed by movie stars, limited-edition collectibles and the like. Developer-Tenant Relationships In the initial years of mall development, developers thrived on the success of the model, with curious customers flowing in to experience this new retail format. Tenants were more than willing to pay the high rentals charged by developers for space in malls and capitalize on the footfalls the mall generated. Over time, as more malls were set up and the mall concept was wellentrenched, tenants gradually started gaining a foothold in partnership structuring. Today, with the excess of mall space in the major cities and inter-mall competition, market rationalization is taking place. With falling real estate prices and the increasing scale of operations of retail chains, the bargaining power is in the hands of the tenants. Developers had to stall several mall projects in the major cities due to the increasing inventory of existing space that remains unoccupied. In the National Capital Region (NCR), the major developers have shelved plans or converted unoccupied spaces into commercial office spaces. Clearly, this is a period of consolidation and the realignment of real estate to market conditions is long overdue. Newer formats of arrangements will undoubtedly emerge in the relationships between developers and tenants. It is likely that the developers will shift their focus to ensuring the profitability of tenants, by entering into innovative risk-reward sharing arrangements. Revenue-sharing mechanisms and performance-based rental schemes are likely to become popular. This ensures that both the developer and tenant work towards the common goal of maximizing profits. In
addition, freebies and deal sweeteners such as lower maintenance charges are gaining ground. After tapping the potential of the major metros, both real estate developers and retailers are gradually shifting focus to tier-I and tier-II cities. Here, they have the opportunity to start building afresh and incorporate the knowledge gained from previous experiences. The positioning of upcoming malls is likely to be more inclined towards the mass market, but a few niche specialty malls are likely to emerge. Overall, we can expect a paradigm shift from a developer-tenant relationship towards a more mutual single focus relationship right from the conceptualization stages. The image of malls should shift from that of a commercial retail space as it is now 'with confused and distributed operational responsibilities' to a living, dynamic organism. This shift in viewpoint and structure would enable the resolution of the problems inherent with malls as they exist today.
Green Malls With technological advances and widespread support for ecologically friendly and energy-saving buildings, it is only natural that malls would also experiment with the ëgreen mallí concept. Green malls would be built using eco-friendly techniques and materials, with the objective of energy conservation, climate control, rainwater preservation, water reuse, solar energy harvesting, etc.
From a developer's perspective, the cost of construction for a green mall is expected to be 5 per cent higher than that of conventional malls, which would translate into higher rentals for the tenants. On the other hand, customers are not likely to be willing to bear the extra burden, as a green mall offers them no special advantages. Tenants would benefit in the long run by bearing the costs of the technology in terms of energy and water saving, but in the current scenario, they are likely to focus on protecting their struggling business and minimize the rental payouts. Hence, in the short term, we do not expect any significant progress on the green mall front. However, once the economy recovers and the ecological movement strengthens further, most developers will opt for the green mall concept.
Malls of the future will be environmentally friendly and will have zones specifically made for the entertainment of customers. These malls will provide a better shopping experience for their customers than the malls of today. What the Future Holds Indian retail enjoys the status of one of the ten major retail markets in the world. Thus, the fears that malls may be replaced by retail outlets like Wal-Mart and Big Bazaar may prove to be unfounded. Indian malls won't be relegated to a less important role in retailing. What is on the cards though, is a significant transformation in the look and feel of malls. Entertainment, niche positioning and customer-centric designs will dominate mall development. Malls in India will continue to develop beyond retail-becoming the prime spots for entertainment, socializing and leisure.
Chapter 3: Technology driven Malls
Introduction Technology usage in retail is going to change the operations of mall drastically in near future. The mobile phones and internet is going to be used extensively to simplify all kinds of activities
inside mall. These activities will lead to provide greater satisfaction and completely new experience to customers. Advent of the Smartphone and other mobile devices will change the malls operations drastically. It will certainly revolutionize the malls for that matter. Mobile Concierge: It’s one of the greatest innovations which is coming in technology in malls.
Various mobile devices, like iPhone, Kindle, Apple’s iPad tablet computer, promise to change the way we shop. Mobile devices and online shopping will superimpose physical and digital shopping to create different experience in shopping. The SmartPhones and mobile devices will be the key medium in future for satisfying shopping habits. Mobile devices and smartphones will be used extensively to:
1) locate properties in retail
2) Surfing through retail inventories
3) Pre-ordering store and mall services 4) Payments
The picture today Today, Smartphone owners can already use applications that enhance mall shopping experiences. A few examples include Point Inside, which provides up-to-date layouts of nearby malls; One Touch Concierge, which makes it possible to order mall services ranging from restaurant reservations to package delivery at participating properties; and Shop Savvy, which allows consumers to compare product prices at various shopping malls. Today shopping mall’s text messages campaign is solely target to inform customers about their promotional offers. But in near future the text messaging campaign will be more sophisticated and reliable in terms of promotions. The campaign will consist of analyzing buying behavior of shoppers and thereby understanding shopping needs of particular shoppers. The long databases will be maintained for that and will be used in text messaging campaign.
Mr. X, buys a new pair of shoes at Shopper stop every 18 months. Mr. X is willing to opt to participate in its promotions program. Mr. X buys shoes only when the need strikes him. In a scenario which is predicted in near future, Shopper stop or the branded shoe shop in shopper stop might be able to estimate when Mr. X’s shoes are wearing down and send offers related to offers in that particular brand. Mr. X might then complete the transaction online through his mobile device, or locating a nearby Shopper Stop that carries his preferred brand of shoes in his size. In case of a more interactive campaign, if sensor-embedded advertisements detected Mr. X’s mobile device at the mall, Shopper stop could text him while he was on site. Moreover, if associates at a Shopper stop know that Mr., X is coming by for shoes, they can gear their sales strategy based on Mr. X’s purchase record. He sometimes buys a belt or two with his pair of shoes, he explains, so that would be the kind of product that might turn into an impulse purchase. The salespeople might then be able to further narrow down the list of items to tempt Mr. X with by checking the amount of store credit on his account and the average price of belts he’s bought in the past.
Thinking ahead In future technology will ease the activities in malls. For example shoppers will be able to purchase amusement part tickets online in advance, they will be able to book parking space through their mobile phones. Even in situations like if some parents lost their children, they can communicate with the mall staff through mobile phone having dedicated help service in that particular mall software which is pre-loaded in their phone. During 2009 Mall of America in America had started using Twitter account to notify their shoppers about parking conditions, directions to mall, various offers and sales assistance. Mall of America’s marketing team also hopes that eventually Smartphone apps will help them drive traffic to their stores. For example, when customers focus their Smartphone camera on a poster in the mall’s common area announcing the arrival of a new tenant, it will immediately take them to the retailer’s Web site, so they gain a sense of what that store is all about, says Bridget Jewell, a public relations coordinator with the Mall of America. Few marketers are also hoping that because of technology driven mall shopping in future, the shopping will become better planned
Some smartphone-oriented personalized sales techniques are already in the early stages of development. For e.g., in November, IKEA launched an augmented reality application that allows shoppers to take photos of various furniture within the collection and superimpose them on photos of their rooms at home to see how well the items fit in. A recent iPhone application contest organized by Mobclix and apparel retailer Gap Inc. yielded an application that allows shoppers to browse through Gap’s current merchandise selection and superimpose the clothes on a photo of themselves to get a sense of how they would look and whether various items would create a cohesive outfit. The application helps shoppers cut the amount of time they spend browsing in the store. It also helps shoppers locate nearby Gap stores and browse the merchandise on iPhones, giving them the option of forwarding photos of items they like to their friends and even providing a selection of background music to simulate a reallife Gap shopping experience. Virtual Trial Rooms:
Researchers are looking forward to develop a software in which through web cam one can take photo and then try different cloths on the digital image. One can also send these photos to twitter and facebook to have peer opinion before buying. These kinds of Virtual dressing rooms will certainly add value in shopping and thereby enhancing overall experience. New configurations Shopping malls should also eventually be able to use face recognition technology to market products to every shopper directly. In the not so distant future it might be possible for Shopping malls to install LCD screens in their storefronts that will recognize customers through a signal on their mobile device and beam a digital image of that customer wearing items from the Gap’s latest line. It will be much like a scene in Steven Spielberg’s 2002 blockbuster Minority Report. In the film, Tom Cruise, when walking through a futuristic mall concourse, is bombarded with holographic advertisements addressing him by name. In a later scene, he walks into a Gap that asks about a recent purchase. In fact, Spielberg tapped high-level consultants in envisioning the technology that would appear in the film. So the fact that some of the technology is coming to reality shouldn’t be a total shock.
LCD screens with motion sensors combining video-streaming and face recognition are already available from companies like Microsoft. During the 2010 Consumer Electronics Show, Intel introduced 7.5-feet-tall multi-touch, multi-user digital signage screens that allow shoppers to take virtual store tours, access sales information and even share their finds with family and friends through social media and mobile devices.
Mobile marketing specialists predict that one day Smartphone users will be able to pay for their purchases directly from their mobile device, rather than having to exchange cash or enter credit card information into the retailer’s system. Today concept of ‘Mobile Money’ is already in place in India. Here one can top up the required amount in phone and then can purchase things by transferring mobile money through SMS or Bluetooth.
New role of Malls Mall owners and developers might have to rethink many aspects of their business, from leasing strategy to rent collection to layout arrangements. This is because now a days the malls are acting not only as point of sale but also a place to watch movies, to play games, to have food and to have a good time with family and friends. So all these activities need to be coupled with shopping will require larger land area. The challenge for mall owners would be to provide offerings to keep shoppers coming back for enhanced mall experience. One way for mall property owners to combat their fatigue would be to rotate tenants on a much more frequent basis —and allow space for emerging vendors to showcase their wares. The monthly rotations would best be suited to local merchants who have a unique product offering. In the future, the concept of the pop-up store might evolve into that of a pop-up mall.
The end result of all the recent technological innovations, coupled with ongoing focus on New Urbanism, means that enclosed regional malls will continue to become obsolete. Going forward, the shopping centre industry will continue to redevelop those properties into mixed-use centres, creating vibrant, social spaces that will keep people coming back to physical stores for a long time.
Chapter 4: Business Opportunities with Malls
Malls: Future filled with opportunities Shopping malls have taken India by storm. The popularity of lifestyle malls has increased so much that it is driving growth which is in turn creating new opportunities and posing some challenges in the way that leases are negotiated and structured..
Lifestyle malls when they first emerged, they targeted mainly high-end and urban shoppers with their locations and upscale ambience. But now, the popularity is driving more tosuburban locations where real estate is at a cheaper price. Also, in order to accommodate the push for a smarter growth, different uses are being incorporated into these developments, such as office and hospitality, to offer people the opportunity to socialize. Lifestyle malls are the future. With intense planning at the preliminary stages of development and careful attention to lease negotiation, these malls will continue to blossom and provide people with a fun place to shop, play, work and also make a home if they so choose. A mall also offers loads of business opportunities. The entrance of the mall is the starting point where you are greeted with bright, colorful outdoor hoardings, and then attendants assisting with the parking. At various entry points, guards frisk visitors for security assurance, thus ensuring a threat-free environment. Kiosks are also placed at various locations displaying and promoting the latest products. Escalators and lifts provide comfort, while the housekeeping team ensures that the ambience is absolutely perfect. Is there an opportunity window? A mall from the first day itself becomes a quarry of opportunities for lot of businesses. There are many opportunities in every mall apart from the shops, restaurants, and entertainment hubs. These include mall management, facility management, and design houses which specialize in mall interiors, hoardings to advertise products or services, etc.
Management of Malls There are various activities involved in managing a mall. The company has to take care of the entire operations of a mall, including procurement of various equipment and maintenance. Thus, all the Facilities Maintenance Operations like leasing out shops and advertising space to interested parties, procuring the necessary equipments, to maintaining the mall. Generally, a mall management company usually outsources many of these functions to facility management companies that deal in specific services. Thus, Mall management encompasses various activities
like operations, facilities management, marketing, area maintenance, leasing and all the other functions. Revenue Generators A mall management company has many avenues throught which they can get their revenue. It generally is involved in the pre-launch, launch and post-launch promotion of the mall. Thus good revenue can be generated through kiosks, hoardings, various other events. The biggest advantage in this opportunity is the fact that there is no single mall management company that is into catering to malls other than their own. So if we take this revenue model into account, then the income from mall management could range anywhere between Rs 5 crores and Rs 50 crores annually, and from just one mall! Challenges The biggest challenge in this industry is to find the right kind of target group. The right kind of tenant mix ensures the right footfall for the mall, and sustainability of the mall. Thus, while leasing out space to people, it is imperative to keep in mind the brand image that you want to create in the consumer’s mind. Facility Management Mall management companies usually outsource many operations like parking, security, housekeeping, and cash management. Services like fire detection and suppression, power management, access control, water management plumbing along with soft services like cleaning and pest control, physical and security surveillance, concierge services, and administration services are also provided. Some other services include conducting research for malls to find out their requirements before actually starting to service them. Advertising opportunities The BTL advertising activities have grabbed a 31% share in the overall advertising market from what used to be a space dominated 100% by ATL advertising. Companies are realizing the importance of promoting their products in a way in which people can actually touch the product and get a feel of it.
Specialty Leasing Retail Merchandising Units can be offered in a mall along with floating Retail/Kiosks, and Temporary In-Line Stores which gives a great opportunity for test marketing the product and if some changes and improvements need to be done. It’s a great way to keep current update on the latest industry trends.
Chapter 5: Future of Malls in Rural India
Rural India: Untapped Potential India is witnessing a retail boom. Variety of factors such as healthy growing economy, increasing employment, rising disposable income coupled with the increasing propensity to spend have transformed India into a giant consumer market. Traversing across the metros, the retail boom is now infiltrating down to tier 3 and tier 4 cities and even farther towards rural and backward areas
of the Country. It is estimated that substantial purchase capacity is locked in these areas and the potential is yet to be tapped. India’s rural markets offer a sea of an opportunity for the Retail sector. The urban-rural split in consumer spending stands at 9:11, with rural India accounting for 55 per cent of private retail consumption. Indeed the market can be tapped with focused attention and strategy. According to National Council of Applied Economic Research (NCAER) reports, rural India is home to 720 million consumers across 627,000 villages. Seventeen per cent of these villages account for 50 per cent of the rural population as well as 60 per cent of rural wealth. This implies that reaching out to just 100,000 plus villages will ensure access to most of the rural opportunity. The urban market undoubtedly continues to grow but with most of the retail initiatives concentrated in the metropolitan and Tier-I and Tier-II cities, these markets are fast getting saturated. Realizing this, most of the big retail companies have started targeting the Tier-III cities and the rural towns to spur their growth. The ‘bottom of the pyramid’ market is for sure now looking attractive for companies wanting to explore new turf. Existing Rural Mall Initiatives Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV) have already set up rural retail hubs, Choupal Sagars (ITC) has done the same and so have Reliance Fresh, and others like the Naya Yug Bazaar, Kisan Sansars (Tata). The group's two companies, Tata Chemicals and Rallis India, ran separate rural initiatives till 2003. Tata Chemicals ran a chain called Tata Kisan Kendra, which offered farmers a host of products and services ranging from agriinputs to financing to advisory services. Rallis, on the other hand, was partnering ICICI Bank and Hindustan Lever in offering deals to farmers that covered operations from the pre-harvest to post-harvest stage. In 2004, the two operations were merged and Tata Kisan Sansar, a network of onestop shops providing everything from inputs to know-how to loans, was launched. Today, the Tata Kisan Sansar has 421 franchisee-run centres in three states and reaches out to over 3.6 million farmers. Like the Tatas, the $2.6 billion Mahindra group has successfully established a synergy between its current businesses and the planned rural forays. Its flagship, Mahindra & Mahindra Ltd is India's largest farm equipment company. Its subsidiary, Mahindra Shubhlabh Services, has operations in 11 states, and leverages the strong Mahindra brand, the 700,000-strong Mahindra
tractor customer base and the 400-plus dealer network, to provide a complete range of products and services to improve farm productivity and establish market linkages to the commodity market chain. Cases of Rural One Stop Shops The various retailers who have ventured in rural retailing are discussed in detail as under: Case 1: Hariyali Kisaan Bazaar DSCL backed by years of experience in the agribusiness, has implemented a one of a kind rural retailing initiative, the Hariyali Kisaan Bazaar rural departmental stores, to provide single-point solution to the diverse needs of the contemporary Indian farmer. Each store covers an area of 3-4 acres and is managed by a team of 7-8 people whom the Company trains continuously. The total number of Hariyali outlets stood at 101 as of 30th Sep, 2007, which DSCL plans to expand to 250-300 outlets by the end of FY 2008-09. Hariyali Kisaan Bazaar offers the rural household all farming and consumer products and related services along with financial services under one roof. These include wide choice and multi-brands of agriinputs, FMCG, consumer durables, apparels, footwear, toys, general merchandise, insurance etc. The outlets also provide the farmer, the expert advice of agronomists and the technological support in shifting from subsistence farming to technology led commercial farming. The company also launched credit services during its second quarter 2007-08, in association with HDFC bank, providing loans for various purposes. The company also stepped up its bulk procurement activity and trading activity under review to include various grains (maize, wheat), pulses (chana), oilseeds (mustard), menthe oil, coriander etc. Case 2: Aadhaar Godrej Aadhaar is an agriculture services cum retail initiative of Godrej Agrovet Ltd. It is a comprehensive solution provider to the Indian farmers and provides professional guidance with an objective to improve productivity, get higher returns and improved cost benefit ratio. The services on offer are crop advisory services, soil & water testing services; buy back of output, crop finance, supply of agri inputs and animal feeds, transfer of information (weather, price, and demand supply), door delivery of products etc. The venture has now diversified into offering a number of other product categories like – durables, FMCG, apparels, footwear etc, thus catering
to the complete requirement of the rural household. A number of corporates are already in the process of partnering Aadhaar for various projects for furthering the initiative. Presently there are 49 Aadhaar Centers across the country in the States of Maharashtra. GAVL also opened its second petro format Aadhaar Express in Kashti, Maharashtra. GAVL revamped its Warden Road “Nature’s Basket” outlet by positioning it as “Authentic World Food”. This store has introduced new product categories like wine, cheese, cold-cuts, processed foods in addition to its existing portfolio of fresh fruits, vegetables & herbs and specialty foods. Case 3: E-Choupal and choupal Sagar E-Choupal ITC’s e-Choupal is an example of how a commercial venture can provide a channel for knowledge and opportunity, bringing global resources and practices to Indian villages as well as higher incomes for farmers, and helping create the conditions for many other enterprises to cater to the rural market. E-Choupal is an entirely new channel for procuring the purchase of the farmers. Today they operate through 6,500 choupals in 9 states. In e-Chaupal they started with two channels known as Sanchalak and Sanyojak. Sanchalak: Sanchalak is the person in whose house the ITC sets up the e-Choupal. E-Choupal consists of a computer; linked to the Internet via phone lines or, increasingly, by a VSAT connection. Each Sanchalak serves an average of 600 farmers in 10 surrounding villages within about a five kilometer radius. Samyojak: Samyojak is the cooperating commission agents. They look for the logistical support and are responsible for cash disbursement to the local farms for their produce. They basically facilitate the purchase of the products for ITC from farmers. They take care of 40 Choupals and the average distance a farmer has to travel to reach Samyojak to sell his produce is 25-35 kilometers. Choupal Sagar Following the runaway success of its e-Choupals, the tobacco-to-hotels-to-foods major ITC’s rural foray, which kick-started a silent revolution amongst the harried soya farmers of MP in June 2000, the company has now moved on to the second phase. And the result is Choupal Sagar, the first of which was unveiled at Sehore near Bhopal in August 2004. A rural hypermarket or a rural mall, Choupal Sagar provides multiple services under one roof, like selling produces and buying quality products for farm and household consumption. Choupal Sagar are built near
Samyojak, so that when farmers come to sell their produce to samyojak and receive cash money then they can shop in Choupal Sagars. Till now there are 19 Choupal Sagars. All of these stores are located in the rural areas of Madhya Pradesh, Uttar Pradesh and Maharashtra. Case 4: Kisan Seva Kendra Kisan Seva Kendra is a low cost business model by Indian Oil corporation of a retail outlet offering fuel and other non fuel value added services with penetration in rural markets generating high returns. KSK a one stop center of service (seva) for the farmers at his doorstep making available Pesticides, Seeds, Children stationary, grocery, personal care, etc. It currently has approx. 100 operational stores. Thus, taking forward such examples, the envisaged rural malls would be base on an amalgamated model of supermarket and discount store and would offer substantial savings over the goods as compare to the local conveniences stores. The proposed facility would be a geographic concentration of shopping and warehousing space, eating joint, facilitation cell and other amenities of specific and generic use. The rural malls would offer one-stop shop solutions and a unique integrated shopping experience to the rural population and would specifically address the needs and utilizing tendency of these. Malls as two way supply chain The rural malls would act as a two way supply chain. Apart from selling goods to the farmers, they would also double up as selling market and would assist the farmer by selling their agriculture production at a competitive market price thus providing true value of their produce. Employing a direct to customer business model, these rural malls would buy all the goods, directly from the manufacturers. The elimination of intermediary distribution channel would lead to significant saving of trade margins which could be passed on to the customers as discount. Availability of discounted goods would be the unique selling proposition of these malls which would assist in creating a loyal customer base. With several states in the country permitting retailers to purchase produce directly from farmers, the farmers too are adapting to the new opportunity to cultivate assigned crops and take special care of the same. This gets them instant credit at higher prices than what they received from the erstwhile traders/middlemen. Corporate retailers like ITC, Godrej, Reliance, AV Birla and many
others have already established the farm linkages. Indian farmers are finally making good money, after centuries of social and economic exploitation. Thus not only will the companies benefit from the rural opportunity for the malls but farmers will also benefit from linkages with such retails formats.
Chapter 6: Future of Malls across Globe
Future of Malls across the globe When it comes to contrasting the trends in shopping malls in India against those across the globe and especially USA, we can note few key things: 1. Rural against Back to City: Opportunity for Indian malls lies in the Tier-III cities and the rural towns, as metros start getting saturated. As against this, USA malls are likely to experience back to city trend from the current out of the suburb locations. 2. Concept malls and One stop shops: India is witnessing growth of one stop shop malls whereas USA in particular is now moving away from preferring such mall concepts and preferring malls to be more like community centres which are integrated with non-retail functions. Against this, concept and theme based malls will get popular in both India. Malls as community centres
The retail center of the future will be designed to resemble a community, not just a place to shop. That means environments that place as much emphasis on recreation as they do on consumption. The developments point to a future in which retail sector blends with various other functions. The shopping center of 2020 might not look visually like an old-fashioned Main Street, but it will function like one. Consumers will be able to visit a post office, keep appointments with doctors, relax for a while, go for a movie, or enjoy a meal with their neighbours at a concert. With an unappeasable demand for new shopping avenues, developers saw little need for nonretail amenities and focused on finding great locations, lining up the best tenants and creating attractive spaces for consumers to move from store to store. They did succeed from coast to coast: The regional mall was the ideal product for America in the late 20th century — a land of upwardly mobile, mostly white, suburbanites living farther from the urban base. The 21st century America is starting to take on a different look. The changes affect what kind of consumers retailers will target and how they will want to reach them. The baby boomers, a huge demographic group that grew up with the mall industry, are now retiring. Their spending habits are expected to change. This will pose a tough challenge for the department stores they patronize — and which remain the most important anchors at regional malls. The department stores are having the fear of being type casted by the Baby Boomers generation. Role of Ethnic and racial diversity Ethnicity and diversity in race will also play an important role. Hispanic, Asian and African American populations are growing faster and accumulating significant buying power. The spending power of Hispanic-Americans will reach $930 billion by 2007, a 320% gain from 1990 — compared to an expected 131 percent gain for all American consumers. This Hispanic buying power, along with that of Asians and African Americans, is focused in and around certain cities. The way these consumers would shop will play an important role in retail development. Hispanic families, mostly take their whole family along when they go for shopping. Thus, a retail development that offers entertainment, dining and community events along with shopping will draw more such families. There would be more retailers specializing in ethnic clients in the local market.” Back-to-City movement
The back-to-the city movement is a clear trend poised to continue into the 21st Century, according to the Urban Land Institute. Inner cities will account for at least 40% of the total increase in U.S. purchasing power between 2000 and 2045. Nationally, the increase in city housing permit activity from 1999 to 2000 exceeded the average annual increase in city housing permits from 1990 to 1998 by 35 percent. By contrast, suburban housing permit rose 21 percent. The district of Washington, D.C., has seen a surge of retail development that reflects not only the gentrification of formerly blighted areas but also the rising affluence of the city's African American and Hispanic residents. In addition, developers recognize that the outlying suburban areas — where they have concentrated their energies for the past two decades — are reaching retail saturation. Fate of enclosed regional malls – Specialization is the key The standard-issue enclosed mall would not be able to stand the test of time. The current consumer finds the all products-under-one-roof concept inconvenient. Consumers do not have the time nor the inclination for an expedition anymore. So a mall of the future might be a stealth mall; one which is disguised as not being a mall. Retail may be developed on smaller sites Malls over time have begun to look very similar to one another. They have a similar occupant mix and are designed in more or less the same way. The offering needs to be constantly reinvented to adjust to the changing wants of consumers. The enclosed regional mall may continue to enjoy low vacancies, increasing rents and steady lease renewals. Productivity has not changed much for these malls and is unlikely to change in the future. Transition malls most likely will experience a transformation within 10 years into alternative retail formats such as power centers or non-retail uses. Many malls will attempt an upscale shift in merchandise mix to attain stronghold or downscale by bringing in more discount-store anchors and in-line tenants. Consumers will flock to centers that may deal only in home furnishings, apparel or footwear. If you know what you want, you know where to go. This would be the only way in which the malls ultimately would survive.
The future is to be local and not global. It will be integrated with hotels and housing. The mall will be much more focused on what the customer wants and where it is. There would be more programming and the broader edges of entertainment and sports would be explored. In fact, specialization is already happening. In the Georgetown section of Washington, D.C., the new Cady's Alley development has differentiated itself from the multitude other centers in the metro area with 130,100 sq. ft of retail focused mostly on furniture, floor coverings, accessories, and bed n bath products. The project has drawn rave reviews — and rents of almost $60 a square foot. In West Palm Beach, the struggling urban progress called CityPlace is about to be recast in the same mold.
Chapter 7: CASE STUDY
“Dreams- The Mall”- A fairytale or a nightmare Dreams the Mall at Bhandup is located in close proximity to the Bhandup Railway Station. It has a frontage of approximately 1,400 square feet on LBS Marg. The estimated built up area for the entire project is approximately 1.11 million square feet. The project involves construction of a retail mall with multiplex, food court, amusement park and parking space for 650 cars at the basement level. The project was completed in March 2008. The mall is huge and much bigger compared to the R-mall and the nirmal lifestyles mall nearby. The mall however has not done well since opening in March 2008. The competition: Dreams mall faces stiff competition from two malls located at close proximity to it. Nirmal lifestyles: A mall completely different from ‘dreams’ in positioning. Located on the LBS marg Mulund west, Nirmal lifestyles boasts of almost all the big brands in the retail sector. The mall has brands like Reebok, Puma, Adidas, Café Coffee day, Fab India etc. Major food chains like Mcdonald’s, Pizza Hut, Rajdhani are also located inside the mall. The mall has captured the imagination of the middle class as well as the upper middle class with the presence of PVR cinemas multiplex. The Dreams mall has suffered due to the better positioning and advertising of the mall. The brands have also stayed away from the Dreams mall due to the fear of over clustering in the same area. The location of Lifestyles is near an upper middle class residential area whereas the Dreams mall does not have that advantage. Nirmal lifestyles can also be considered to have the first mover advantage. R-Mall: The first mall in Mulund west R-Mall is characterized by the presence of the Big Bazaar a retail store for the middle income group. The huge popularity of Big Bazaar has given a huge boost to the mall and it continues to reap rich benefits from it. There are various brands ranging from apparels to shoes and food chains. A three storyed mall is not as big as the dreams
mall but again has gained a huge first mover advantage. The target for the mall has been the middle income group and has been able to position itself perfectly. Dreams Mall The location of ‘Dreams’ the mall is strategic. It is located not very far away from the new prince of suburbs, Mulund and is also very close to the Bhandup railway station. The area available for shops is also very large and the infrastructure of the mall looks great. The mall has four main entrances covering its huge area. The entrances span from the railway station to the road that links Mulund and Bhandup. The premises of the mall are well kept and so are the interiors. The scope for the business inside the mall looks good and with majority of businesses entering malls the future may be promising. Kulraj Broadway, the multiplex is located in this mall, with multiplexes drawing in huge crowds to the malls the initial offerings from the mall seem commendable. The mall has 3 floors and the insides are well supported by lifts and escalators. The placing of shops or plots for shops are also well organized. The mall can be compared in size and structure to some of the biggest malls on India or internationally. The various positives mentioned above have not worked in favor of the mall. The mall having opened up in March 2008 is still about 95% unoccupied. The big brands have stayed away from the mall and it has hurt the footfalls in the mall. The reasons for the failure of the mall thus far can be cited as follows: 1) Electric Meters from authorized energy distributor are not provided 2) Drinking Water facilities for drinking water to shop owners, staff, visitors are not upto the mark 3) Maintenance costs of shops are too high 4) Footfall is not there in Mall and besides these no Anchor Shops or any branded supermarkets such as Big Bazaar, V Mart, More, Lifestyle, Shopper's Stop, D-mart, Apna Bazaar are ready to come & start their super-market in this mall for the reasons best known to them. 5) 95% shops are closed 6) Out of total buyers, 85% buyers are investors who never open their shops 7) There is extra-over surplus supply of shops i.e. 1300 shops in small suburb of Bhandup
in only this Mall 8) Society of shop keepers is not formed 9) The Re-Sellers are selling their shops below their actual costing i.e. ranging Rs.5,000 to Rs.5500 per square feet 10) Nobody has obtained appreciation on shop property investment in Dreams Mall at Bhandup 11) There is no scope that known brands & multi-nationals come in said Mall to open their outlets 12) Every shop keeper is suffering losses in their businesses 13) Most of the buyers are being cheated by salespersons of Builders by vague/false assurance of MOU with Brands/MNCs for lease 14) Shops are available on resale below market value or residential flats of same locality 15) Main entrance from station Road side is not got opened by clearing encroachments by Builders 19) It is next to possible that mall will be fully opened in next five year's period 20) The Builder of the mall does not have a great reputation
Future of Dreams Mall:
The mall owners need to rework their strategies and the positioning of the mall. The infrastructure will have to be updated and brought to the standard of the better malls in the city. The basic benchmark has to be some of the successful malls operating in the vicinity. The mall owners need to invite or persuade the bigger brands to step inside the mall so as to attract the customers. They need to either innovate or cleverly follow the market leaders. The mall owners need to also think of co-optition that is they may enter into a coalition with one of the successful malls. Promotional offers at multiplexes and the existent shops can be another method of pulling the crowds towards the mall.
The mall owners must understand that though malls offer great opportunity in the current scenario but in the future there might be a cluster or saturation of the market. The mall owners must either INNOVATE or PERISH in this era of strong competition
References
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http://retailtrafficmag.com/features/mall_of_the_future_02022010/index2.html Theme for a mall - The Times of Indiahttp://timesofindia.indiatimes.com/delhi/Themefor-a-mall/articleshow/969987.cms#ixzz0ztQp2Na9
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http://business.outlookindia.com/inner.aspx? articleid=327&subcatgid=42&editionid=14&catgid=12
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http://www.retailing360.com/article/15/20100709201007131516456957d0d0abc/Mallsof-the-Future.html
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http://retailtrafficmag.com/mag/retail_future/http://retailtrafficmag.com/features/mall_of_the_future_02022010/index1.htmlhttp://www.shoppingmalls-india.blogspot.com/http://www.dare.co.in/opportunities/services/there-is-more-to-a-mall.htmhttp://home.flash.net/~factoids/fact2/r0305b.htmhttp://retailtrafficmag.com/features/mall_of_the_future_02022010/index2.htmlhttp://retailtrafficmag.com/features/mall_of_the_future_02022010/index2.htmlhttp://www.apollopharmacy.in/newsdetails6a82.htmlhttp://www.thehindubusinessline.com/2006/01/10/stories/2006011001220800.htmhttp://www.indianrealtynews.com/real-estate-developers/omaxe-to-set-up-chain-ofwedding-malls.html
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