Description
The documnetation about retail management discusses Indian Retail, Indian Malls, FEASIBILTY STUDY, CATCHMENT AREA ANALYSIS , MARKET POTENTIAL, MALL LOCATION SELECTION, DESIGN AND ARCHITECTURE OF A MALL.
Mall Development Process
Contents
Contents................................................................................................................ 2 INTRODUCTION......................................................................................................4 Indian Retail....................................................................................................... 6 Indian Malls........................................................................................................ 6 FEASIBILTY STUDY...............................................................................................12 CATCHMENT AREA ANALYSIS...............................................................................18 MARKET POTENTIAL.............................................................................................24 Bibliography........................................................................................................ 42
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Figures:
Sr. No. 1 Description The Mall of Dubai Page No. 5
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INTRODUCTION
Malls are typically known to be indoor shopping centres,though some have outdoor areas with the shops having their own indoor space. The idea came from old covered marketplaces that were popular between the 10th and 15th centuries, and are even still around today. In 1785, the first purposely-built shopping centre was created, but it was not until 1916 that a shopping mall as we consider them today was built in the United States. During the 1950s, large indoor shopping malls began to spring up in major cities across the world, with famous ones being built in UK and France. There a few different types of shopping malls that should be noted. The average shopping mall is less than 400,000 square feet, with those between 400,000 and 800,000 square feet being known as regional shopping malls. Because they are larger, they can accommodate higher end stores that may need more space for their stores. Super-regional malls are those that are over 800,000 square feet. These are the premier shopping mall for the surrounding areas and suburbs. Strip malls are strictly suburban and usually consist of large parking lots surrounded by single story shops. Outlet malls are special shopping malls where manufacturers sell their products directly through their own stores. The first shopping malls were composed mainly of independent shops with some food vendors scattered throughout. It wasn't long before food courts were added to give consumers a central place to eat. This also offered more choices of food. Other additions that were made to shopping malls through the 20th century included the addition of department stores. These were added when large finances were needed to keep bigger shopping running. From 1986 to 2004, the West Edmonton Mall in Alberta, Canada was considered the largest shopping center in the world. In less than four years it became the fourth largest, which shows the rapid growth of shopping malls during recent years. The largest mall in the world is the recently opened Mall of Arabia in Dubai, which will be 929,000 square meters in size. The second and third largest shopping malls are all located in China and Malaysia respectfully.
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A building boom has enormous shopping malls popping up in China, Malaysia and the Philippines, with India expected to jump into the fold soon. Based on gross leasable area, or the amount of space devoted to revenue-producing operations like stores, amusements and food, the continent is home to nine of the world's 10 largest malls, six of which have been built since 2004. That's added some 27 million square feet of shopping space to cities like Beijing and Guangzhou in China and Kuala Lumpur in Malaysia.
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Indian Retail
Traditionally, the retail industry in India comprised of large, medium and small grocery stores and drug stores which could be categorized as unorganized retailing. Most of the organized retailing in India had recently started and was mainly concentrated in metropolitan cities. Indian retail market is the fifth largest retail destination globally. The share of retail trade in the country's gross domestic product (GDP) was between 8–10 per cent in 2007. Foreign direct investment (FDI) inflows between April 2000 and April 2010, in single-brand retail trading, stood at US$ 194.69 million, according to the Department of Industrial Policy and Promotion (DIPP). As a democratic country with high growth rates, consumer spending has risen sharply as the youth population has seen a significant increase in its disposable income. Consumer spending rose an impressive 75 per cent in the past four years alone. Organised retail, which accounts for almost 5 per cent of the market, is expected to grow at a CAGR of 40 per cent from US$ 20 billion in 2007 to US$ 107 billion by 2013. Retailers have bought or will buy around 316 million. Sq. Ft.
Indian Malls
Malls are fast becoming sought-after entertainment hotspots. From a situation where there were no malls about a decade ago, to 25 malls in 2003 and 211 malls in 2006 and it is expected to reach 500 malls in 2010. The partial foreign direct investment (FDI) relaxation in 2006 allowed 51% ownership in joint Ventures by single-brand companies in the retail market. This triggered high international single brand Retailer interest in the Indian retail market. This prompts the Indian retail industry to undoubtedly move on a high growth curve. However, at this juncture, retailing is still faced with one major challenge: systematic mall management. Currently, there are very few designated mall management companies in India. However, big retail chains such as Future Group and some large developers have set up their own mall management divisions that operate as their subsidiary companies.Pantaloon group is planning to go in for development of malls and its management. Kishore Biyani-led
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Pantaloon group is on the verge of sealing a 50:50 joint venture (JV) with a leading foreign mall management company to set up its own professional mall management company. The foreign partner will bring mall management expertise including event management, promotion, leasing, marketing and public relations. The Pantaloon group will provide malls and its expertise in developing and leasing retail space. Its plan calls for building over 70 malls with a retailing space of around 40 million square feet in 29 cities, at 19 states in the coming five years, under brand name of Kshitij Retail Destinations (KRDs). Kshitij Mall Management Company will manage the planned KRD chains to be set up by Pantaloon Retail India Ltd. North and South India lead in terms of percentage growth of mall count and square foot space, says the Malls of India report, which also presents extensive details of operational malls and developments currently in various stages of planning, constructing and leasing. North & South in the Lead Pointing out that the country's North & South have been leading the Malls revolution and continue to be in the lead, the Report says that the number of operational malls in North zone will increase from the present 79 in September 2009 to 150 by Q1, 2011. Thus, the percentage increase in this zone in number of malls will be 49 per cent by 2011 from the existing 79 malls in 2009. The total mall space in the Northern region as on September 2009 is reflected as 24.7 million square feet from the 79 operational malls, which is projected to increase to 49.05 million square feet by 2011, according to F &R Research. Within the South zone, Bangalore and Chennai are listed as the most prolific cities, in terms of square feet mall space, with 44 per cent and 32 per cent of the total 7.2 million square feet existing mall space, respectively. According to the Image F&R projection, the number of operational malls in the South zone will increase from 21 operational malls in September 2009 to 72 by Q1, 2011. The highlight of the development in South is that the total existing mall space of 7.2 million square feet is projected to be more than doubling to touch 18.43 million square feet by 2011. West Zone & East Zone In the West, Mumbai has been dominating mall development activity and continues to do so, accounting for almost 66 per cent of the total 56 existing shopping malls. The report says that the number of operational malls in West zone will increase from the present 56 as on
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September 09 to 87 by Q1, 2011. In West Zone, about 31 more malls will be added by 2011 where the total available mall space is 16.36 million square feet. This will be increasing by 33.9 percent by 2011. Like Mumbai in the West, it is Kolkata in the East which dominates the scenario. Out of 16 operational malls in East zone, Kolkata is dominating with 10 quality retail spaces, and will continue to dominate future mall developments, accounting for over 51 per cent of the 6.14 million square feet additional mall space. And in a broader sense, East zone appears to be tagging along too, albeit at a comfortable pace. The number of operational malls will be more than doubling from the present strength of 16 as on September 2009 to 37 by Q1, 2011. Total mall space in Eastern zone will be increasing from the existing 4 million square feet by 60 per cent by Q1, 2011. It has been almost one decade of presence of shopping centres in India, as the first centre appeared in late 90s - Ansal Plaza, New Delhi and since then the expansion really accelerated in 2002 – 2003. In the year 2008 – the year of economic slowdown, the development was less than expected and it is evident due to the fact that:
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34 centres were opened (whereas 74 were planned for opening at the beginning of 2008). 8, 50, 000 square meter GLA (whereas 1,800,000 square meter was expected).
Besides the economic downturn, the problem also comes from the developers and retailers. In order to understand them better, a detailed study of the same is given below: A. Developers - The Greed for More On one hand, it is good to see Indian developers investing and providing excellent infrastructure to the country which certainly enhances the overall image but on the other hand it is disappointing to see the blunders done by them for their own properties. A developer can accord to both Residential and Commercials at one time but when it comes to Shopping Centres (SC); they should not fire at their own feet.
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The following attributes will give a brief idea of the mistakes done by the developers in past: 1. Poor site selection:
Selecting a location without even analyzing about the primary catchment area is a mistake commonly seen. There are many instances in the country wherein erecting a mall at National Highways has been a failure. 2. Vertical expansion:
This country has seen a lot of vacant malls with multiple floors. The ideal case is to have a shopping centre with lesser number of floors no matter even if the size of the shopping centre is small. 3. Commercialization Issue:
Poor commercialization is like a house built on sand - it will fall down any day. The first objective should be to position anchor stores in their respective position and second is to attract the vanilla brands by using anchors as a tool. It is also important to note here that with a good floor plan and bad commercialization, things could still work but poor floor plan along with good commercialization may lead to irreversible changes. 4. Lack of professional advice:
It is always better to take professional assistance before the commencement of project rather than after its completion, which undeniably reduces the scope of improvement as well as increases costs more. 5. Design issues:
It is rightly said that easy plans normally work, the more complicated you make, the more difficult it becomes. There are many instances like: the strange floor plans proving to be a hurdle for the shoppers, no sitting arrangements, unplanned tenant mix – not making a mall a destination, low quality local stores or kiosk and so on that is diluting the overall image of the project. B. Retailers – Irrational decisions
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The slowdown of 2008 has been a great lesson to the Indian Retail companies; they call it lately as correction. Before the year 2008, the expansions had been enormous but now the buzz is “expanding but cautiously.” After reading the factors listed below, one can certainly say the retailers have burnt their fingers themselves: 1. Juvenile expansion: Before the downturn in 2008, the retailers used to expand frantically almost in every SC without giving much importance to factors like location, catchment analysis, long term vision, presence of the actual buyers, reputation of the developer and much more. These lead to problem of surfeit for which the retailers are still in distress. 2. Sky –scraping commercials: During this massive expansion, the retailers were at ease to pay high fixed rentals which resulted in high fixed operating cost. Equivalently, the slowdown had a direct impact on the turnover which landed retailers in a miserable condition.This resulted either in closing down of unprofitable stores or re-negotiations with the developers to reduce the rentals.Thus, the term Revenue Sharing was introduced; convincing people of the fact it is a Win - Win model. 3. Brand visibility was more important than store profitability: The expansion (prior to year 2008) accelerated in the most imprudent manner considering the fact that brand visibility* is more important than store profitability leading to calamity for many.
*For retailers, the numbers of stores are directly proportionately to brand visibility whereas store profitability is the result of high turnover and low operating cost.
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Poor store visibility: In order to enhance brand visibility; more and more outlets were opened which lead to poor project (mall) and location (store) selection. This yielded in low turnover and wastage of enormous capital expenditure on every store. The selected locations were so poor that even with the best marketing and information tools; no one was aware about the existence of these stores. Hence, it was a Win–Lose situation wherein; the developer was successful enough in leasing out his space but not the retailer.
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The Road Ahead: The coming year will have a lot of consolidation. The existing smaller or vacant malls will either be converted into commercials or will be acquired by the larger players. The commercialization strategy will improve as the developers have seen enough and have learned to reject the worst and select the best. The tagline “everybody is welcome” will no longer be entertained and the landlords will be more selective in case of tenant mix and assigning locations. To assimilate the above, complete and professional asset management services are required to assist the developers and to create a good balance between the customers, retailers and the owners. It is possible by correct succession of steps beginning from thorough market research till the designing of the property. Considering the fact that Indian real estate market has high potential and long way to go; the current phase demands improvisation through professional consultancy and other allied services. It is the time to see how owners employ the best use of these services in future. And if all this is incorporated, one can hope that Indian Malls can once again be on a path of glory.
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FEASIBILTY STUDY
Until recently, street markets and bazaars were the top performers in the Indian retail space, and they contributed immensely to sales. Traditional market platforms now have to imitate malls by creating a better overall shopping experience for potential customers by offering a mix of diverse products - including food and beverage as well as entertainment outlets preferably under one roof, like malls do. A consumer is attracted to a mall because of the availability of world-class ambience and services, exposure to a multitude of brands, tempting promotional offers and significant periodic discounts. The superior ease of shopping in air-conditioned, aesthetic comfort as well as access to a variety of food options are added incentives to mall visitors. The design element of mall is reliant upon many factors and not just the land parcel available. The initial decisions about positioning, branding and the look and feel of the mall weigh heavily on the demand for services. We need to discover and understand this demand before we proceed. This is achieved through feasibility studies. One of the first actions to be taken when considering constructing a building with the intent to conduct a business is to analyze the feasibility. Without the correct analysis reports and data you cannot make the decision to proceed. Opening a successful new retail store is not unlike many other new business ventures in that the level of success achieved is usually directly proportionate to the level of research undertaken prior to making the commitment to sign the lease. A mall is dependent on the success of its occupiers, which translates to the financial feasibility of the tenant in the mall. Generally, there are two types of consumers visiting malls - focused and impulse buyers. The time spent by focused buyers in malls is relatively lower compared with impulse buyers who also enjoy window shopping. There is little that retailers can do to attract focused buyers, as they usually know what they require and from where. However, right tenant mix and optimum retailer placement after a diligent zoning exercise can help retailers attract both types of consumers, especially the impulse buyers.
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The feasibility study is a project analysis outlining informative and precise information in relation to many areas including: • • • • • • • • • • Master plan location Building site location Catchment analysis, demographics and customer- demand analysis. Competitor overview Future growth Financial analysis and viability Development vision Market overview Trade and Tenant Mix. Development configuration
The objective of the feasibility study is to discover information to enable the developer: • • • • • To define the vision of a successful retail concept for their sites To leverage the macro and micro retail real estate market opportunities To arrive at an optimal trade and tenant mix for the retail developments To determine the market-linked assumptions and conclude financial indicators To give recommendations on the design, services and facilities, lease and operating model based on market practises and international best practices A micro-look at feasibility study would include:
Stage 1
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1. Advisory and Strategy Formulation It includes a concise assessment of the location and site, research and study the macro and micro market dynamics and project future demand. 2. Location Analysis The accessibility and visibility of the site would have its implication on the development and the marketability. A SWOT analysis will assist in determining the development on a particular site. When first considering any new retail store, it pays to think about how your clients, or your potential clients, view your business. Does your business model best suit a CBD location, suburban location, shopping mall, arcade or high street location? Does your business rely on passing traffic or can it survive and prosper as a destination in its own right? In order to best answer these questions, consider the typical profile of the regular clientele that visit each type of location and compare it with the typical profile of the shopper who is most likely to buy your products. For example, if you have developed a retail offer that appeals to the mass market, a high traffic shopping centre or City mall may best fit your retail model. Alternately, if you are looking to attract a very specific niche market, your ideal store location may be influenced by other considerations such as proximity to other retailers who sell complementary products to your target shopper. When considering a specific site, it also pays great dividends to contact the previous tenant and chat with them frankly about their experiences in the location that you are now considering. The ideal shop size will depend on a wide range of variables including your product type and category, the location, volume of passing traffic, occupancy costs, lease terms, setup costs, store frontage, visibility, trading hours, sales projections, margins, staff levels, merchandising plan and stocking rates. Single level stores are invariably more cost effective to operate, require less staffing and have less blind spots. 3. Market Synopsis and Competition Scan
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Identify and analyse select competing developments in the surrounding city, especially the projects in the immediate vicinity. 4. Assessing Demand Primary estimation of the demand will assist in determining the development mix. 5. Benchmarking Details of Retail developments of similar nature and derive key factors for their success and/ or failure.
6. Pricing Based on the retail category, market conditions and expected future trends, the achievable rental values will be presented. 7. Financial Analysis Conduct a brief financial analysis to ascertain the optimal development mix to maximize the projected revenue. 8. Tenant and Trade Mix for the Retail Development The long-term sustainability for any project shall be the result of the tenant and trade mix of the scheme. A perfect mix results in bringing success to the overall development by generating higher complementing footfalls and generating higher revenues out of the scheme. Tenant mix is the combination of store types and price levels of retail and service businesses in shopping malls. Tenant mix also refers to the combination of business establishments occupying space in a shopping mall to form an assemblage that produces optimum sales, rents, service to the community and functional ability of the shopping mall venture. A mall typically includes different percentages of the following types of tenants: • Major stores
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• • • • • • • • • • • • • •
Antique/ Carpets/ Furniture Banks and Exchanges Books/ Cards Children’s Fashion Electronics Entertainment Fashion Jewellery Hair/ Beauty Salons Health Clubs Ladies’ fashion Leather/ Luggage Lingerie Men’s fashion Food courts etc.
There are three types of tenants: 1. Anchor Tenants A tenant, which occupies a large space, draws maximum footfall and highest turnover is called anchor tenant. It also attracts other retailers to locate in the mall. 2. Service Tenants Tenants, who provide services more than products like Food court, Multiplexes, Entertainment etc. are called service tenants. 3. Vanilla Tenants These are other than anchor and service tenants.
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Formulating the right tenant mix based on zoning not only helps attract and retain shoppers by offering them multiple choices and satisfying multiple needs, but also facilitates the smooth movement of shoppers within the mall, avoiding clusters and bottlenecks. This helps influence shoppers' mall preference and frequency of visits. It also helps in building a distinct image in the minds of shoppers, which is critical considering the robust upcoming supply of malls. This brings us to the end of first stage of the development analysis, where the scale of the development and project positioning of the scheme are ascertained.
Stage 2 – Post Feasibility
1. Zoning and Tenant Allocations Post the decision of finalizing the quantum of development and derivation of the product positioning, it is crucial to prepare a wish-list of the retailers who would bring more rentals to the development. This wish-list allocated in an appropriate manner: • Ensures circulation within the scheme which shall ensure higher rentals for the scheme. • Secondly, it shall increase the footfalls throughout the scheme instead of limiting it to a few hot spots within the scheme. • • It shall increase the lease ability of the overall scheme. Planning at this stage makes the project go the distance, since there are no surprises that come up during the execution of the project. 2. Retail Planning Beyond the layout and the planning of the scheme by the architects, there are the marketing and leasing issues with each and every development. This is most important in retail schemes since visibility, pedestrian and signage, etc., are important for the retailers who shall lease the space from the developer. The unique concepts generated in the earlier phase to enhance the catchment area, has to be integrated in this phase with the overall retail plan created by the architects. This is a continuous
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process, where interaction between the developer and the architects shall together bring the project to a stage where it is ready for the leasing activity. Various business models adopted by retailers/ developers are: Business Model Contract Model Key aspects Fixed fee Benefits for Mall Benefits for Developer Management Fixed cash outflows. Risk minimization Higher inflows if mall is a success Mall
Revenue sharing model Partial revenue sharing model
Percentage of Risk minimization sales
Share of revenues if mall is a success which leads to higher income
Fixed fee + Risk minimization Minimum payment percentage of (fixed fee less than guaranteed and also sales that in the case of portion of revenues in contract) case of success
CATCHMENT AREA ANALYSIS
The area /zone of the city from which the customers come into for shopping from a particular store, catchment analysis pre launch would ideally decide the product mix and formats of the stores, catchment analysis done after a time gap of launch would also give a correct picture of what is happening and where to concentrate marketing energies to get more walk ins. The total catchment area, of a store is a useful piece of information to have before deciding a store location and post store opening marketing energies focus. The catchment analysis is usually done to study the profile of consumers likely to visit in terms of income profile, current shopping destinations and the likely visit to the new store, based on that make some sort of business predictions and also useful in the " yes " or " no " decision.
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Generally it could be considered that major retailers like department stores, furniture warehouses would be destination sites. These sites could attract people from greater distances because the items are not common purchases, are expensive or provide the opportunity where a number of purchases can be made from the one location. For these destination sites it is possible for consumers to travel more distance. Similarly a small neighborhood store, or a small departmental store, would have a catchment spread of not more than 1.5 km. For retailers that offer the same or very similar products as the competition, unless there is a very strong pricing difference a customer may not be prepared to travel pass the competition. Catchment analysis is useful like any other market research in showing retailers the opportunity and the direction to be taken. Retail Analysis is an inherently complex and dynamic issue because of interactions that occur between different retail centres. If all retail centres were alike, offering exactly the same shops and services with regards to price and quality then it could be assumed that the population within the catchment would spend all of its money in the nearest centre. However, different centres are not the same and people’s mobility means that they will often travel to their preferred destination instead of their closest one. Changes in population, access and retailing also alter relative attractiveness. An important element of the study is therefore to provide a robust assessment of the current catchment area of the city, taking into account different types of retailing such as food and non-food, with the latter disaggregated into bulky and non-bulky goods. Factors that influence consumers’ decisions on where to shop include: • Presence and strength of ‘anchor’ traders • Volume, quality and mix of retail provision • Additional services and facilities • Leisure provision • Accessibility • Parking
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• Shopping Environment Catchment Analysis is important due to following factors: • • Prime consideration of customer’s store choice, based on nearness to home/work, linked with other domestic work Strategic importance for sustainable competitive advantage. Merchnadise, price, assortments can be changed but not location of a store. Competitors can’t easily copy as they are precluded from locating there. • • • • Entry of more and more companies in organized retail making difficult to find suitable location within budget Forms an important P of place for a long time for adequate assurance for a success It also influences the merchandise mix and interior layout of store. Even with emergence of web location of store form an important step of retail strategy Besides demographic factors, economic and infrastructural, cultural and competitive environment prevailing catchment area also needs to be analyzed land area Population age distribution household size and type marital status family size and type owner occupied housing rental status Religion language spoken Schools income types poverty status departure time for work Occupation working women fertility rates vehicle owners telephone subscribers TV ownership etc.
Above variables help location decision and also product line potential e.g. toys shop location for children, economic factor i.e. unemployment will affect purchasing power in that area, per capita income data helps in projecting demands for various merchandise. Economic stability of area can be estimated from household incomes and expenditure patterns, buying power index and effective buying incomes are calculated to arrive at fairly accurate analysis of catchment area.
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Retailing in a number of cities in India, till date, has been location specific. People shop in the retail pockets of the area where they reside. According to us, this is unlikely to change, even with malls springing up and providing a comfortable shopping environment to the consumer. However, there is a noticeable change in that the shops in the retail pockets are improving their façade and offering a better shopping environment so as to not to lose their clientele to the swanky malls. We believe that the success of a mall will depend on it being surrounded by a primary and secondary catchment area with good potential. As of now, expecting people to travel to reach destinations for shopping and entertainment seems a little far-fetched what with the infrastructure not being up to the mark. The shape of organised retailing in India has undergone a sea change over the last few years and a more radical change is expected in the near future. Retailers are making a push to get to the developments, which have the first entrant advantage in a location, and are trying to get the best rental deals for longer time periods. They understand that location and viable lease rentals are two very important ingredients for their success. On the other hand, developers are rushing in to make sure that they are among the first entrants in a catchment area with good retail potential as that strategy has spelt success in the past. Also, they are keen to have the right tenant mix in their developments in order to attract repeat visits by clients. It is clear that the one winner in this retail rush is going to be the consumer. In order to give the maximum benefits to the consumer and at the same time be profitable, malls have to scrutinize their surroundings well before even taking a decision to set up a mall in a particular area. This is where catchment analysis plays a vital role. If a company doesn’t know who its shoppers are, how can company give them what they want? If company doesn’t know where they come from, how can company communicate with them? Finding answers to these questions is vital but catchment analysis is very helpful in that. A company or retail store will be able to optimize its activities if and only if company knows its market in depth. Its market penetration, its success and its potential depend on geographical factors, hard to grasp, hard to fully understand, but catchment analysis is very helpful.
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In the catchment analysis, first part is the area mapping of that local market and through that finds the locations of the competitors, customers and traffic between them. Through that we quantify the sizes and potentials of that local catchment areas and market of that area as whole. With the help of catchment analysis, company knows the best location for business, target and potential customers
Type of catchment area There are four type of catchment that is following Unitary Catchment It is hub of the catchment area around the outlet, from where maximum number of people comes to the retail stores for shopping. Secondary Catchment This area is called secondary catchment area which is around 5 km far away retail stores from where some people come to the shop for shopping. Tertiary Catchment The area from where only some selected or loyal customers come to the retail stores that is more than 10 km far from outlet. Outer Catchment Outer catchment area is totally outer area from where very less number of people sometimes visits to the outlet. Let us assume that there is a mall located at Powai.
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The catchment area of the mall is divided in three main parts as stated above. Primary area consists of people residing in the nearby area of Powai. The people who stay in the buildings nearby, the schools in the given area, offices, commercial properties etc. will all come under the Primary catchment area encircled in the Orange color. Similarly, Secondary catchment area and Tertiary catchment area denote the areas around from where the mall can expect to get walk ins. This analysis is done as per postal code or segregation is done area wise. This way, Catchment analysis will help in scanning the environment effectively and understanding the type of consumers and their needs. On the basis of these needs and the types or customers, the allocation of retailers, marketing activities are carried out.
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MARKET POTENTIAL
As the competition in the segment is rising at a very rapid pace, retailers or to be specific mall developers are forced to focus on their core competencies. Research plays a very important role in defining the right target market for the mall developers. The research is done to basically analyse the market potential and other factors to understand the need of the customer which needs to be focused The new concept is to understand the shopping needs of customers in their focus 'catchment' areas. Then, the process of building a mall begins to keeping in mind the retail options and consumer needs at the same time. There are aggressive expansion plans from retailer’s perspective to gain subsequent amount of market share.There is more focus on maximising the profit and minimising the cost using different aspects. Present retail in India There is a growth in retail industry in India.The growth rate has been quite significant, but still it is not able to match other Asian countries, but the fact remains that India will soon be in the race of becoming a major retail centre. One of the major reason for the same is it being a developing economy the market has huge potential in terms of maturity limits whereas in the developed markets the maturity level is either reached or is about to be. Also one of the helping fact is the high level of variety in terms of geography and religion makes it a very suitable place to do business in retail even for retailers in niche market because of high population. According to the Global Retail Development Index, India is positioned as the foremost destination for Retail investment and business development. Young population of india with high purchasing power is one of the alluring factors for the companies ready to invest in Indian retail. Because of all the above mentioned reasons there is a tremendous increase in the demand for retail in India.Tier I cities are already sustaining retail growth. Now, there is a paradigm shift from metros to rural areas where the penetration of malls is very less.
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Retail in India - The Future Indian Retail market is currently estimated at Rs. 704 crores which only accounts for 3 % of the total retail market. Most of the Indian retail is unorganised so as it will become organised the worth of the Indian retail industry will increase substantially, there is an estimate that the Indian retail will penetrate in smaller towns and cities as the sector is suppose to increase with the increase in demand roughly to 50 to 60%. Another factor supporting this is availability of land at a cheaper cost in smaller towns with high amount of spending pattern which is rapidly increasing in India. There is also a tremendous growth in the real estate industry which is helping the retail industry to spread in corners of the country which were initially not accessible. Retail space demand of 40 million sq. ft is estimated in next 4 years for Indian market. Also there is a culture shift happening in India which is caused by western influence where multiplex are taking over the normal format of entertainment. Future of the Indian Retail is bright due to the factors which we will discuss below:
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Increase in the average income of an Indian along with strengthen of purchasing power Improved quality of infrastructure in India Liberal policies making way for a wide range of companies to enter Indian market. Indian population has learnt to become a good consumer and all national and international brands are benefiting with this new awareness. The internet revolution is one more factor which is allowing foreign brands to understand Indian consumers and influence them before entering the market. Due to the reach of media in the remotest of the markets, consumers are now aware of the global products and it helps brands to build themselves faster in a new region
• • •
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MALL LOCATION SELECTION PARAMETERS
Success or failure of business especially in retail can determine the success or failure of the same. Site selection is an important decision when it comes to most of the business. Location plays an important role in the success of a retail outlet. Business people tend to invest most part of their investment in location as it plays a vital role. Volume and quantity of the business on a location decides the price of the location. For mall it is even more important al location is most important criteria in deciding the success or the failure of the business. 1. Customers look as to how near is the store from their vicinity 2. Location is one of the factors which cannot be copied by the competitors very easily; other things like pricing, strategy to some extent can be copied but not location. 3. Location in an area where the prices are rising makes it difficult for the competitors to enter the same location within their budget limit. 4. One of the important strategy is based on one of the four P’s i.e. Place 5. Layout of the store is decided by the location. 6. Location has a significant impact on the merchandise mix as well 7. Nowadays, there is a new concept in the market that is developing i.e. web location. Let’s look at some analysis and strategies:
1. Location analysis –there are certain things which are useful for location which are:
i. ii. iii.
The time which customer takes to reach the store Availability of space for parking There one more thing which is to be taken into account, the location can be selected keeping in mind the competitors presence as that would attract even more footfall.
iv.
Site selection should also be made taking into account the average transaction value within a viable drive or walk time Location also creates a perception of the mall on the customer, where mall located in expensive areas can give a perception of premium malls
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v.
vi.
Another parameter which affects this parameter is the option which is available of buying or leasing the location
2. Trade area analysis- it is possible to calculate the sale prospects for a particular location.
Malls are made for solution of the customers with need, want and desire. Generally malls target the location which would have maximum foot fall of the target group of the people this can be done with a proper research. The analysis of the same can be distributed as demographic analysis and population characteristics, age gender income education family characteristics, which help determine the target markets for retailer. Economic and infrastructural, cultural and competitive environment prevailing trade area is also important factors apart from demographic analysis. i. ii. iii. iv. v. vi. vii. Population of the area The size and household of type Most common language spoken in the area The type and size of family Distribution of age The area of a possible land Type of income of the people
Location decision can be taken taking into account the above parameters, which will make it easier for the decision making for the retailer. There is one more aspect which is aken into account which is the Economic stability of area which can be actually estimated by studying various behaviours of the people residing in that. The market potential of a given area can be arrived at using the following factors. • People in the target group of the retailer in that area • Ability of the people in the area to pay for certain products • There can be various statistical tolls such as population analysis which can be used for the same • Rate of increase in capita per income of the people in the particular area
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3. Location strategy : The third strategy is location strategy, which will be useful in final selection of the area where the mall will be established i. It is very important for the retailer to know the level of saturation of competitors in the area so as to know the possible penetration and possible sales ii. The retailer should also differentiate based on the target group whether urban or rural iii. There should be a proper study of road and maintenance of the locality by the retailer iv. Retailers should also know percentage of people in the vicinity who travel outside their regular retailers
v. It will be very useful for the retailer to know if there are any functions or community
centres in the area. There should be other factors as well apart from the factors mentioned above which are very useful in mall layout store ambience design, merchandising, personnel, store features, visual merchandising etc to make more sense. Types of locations: 1. Part of business district A place where the following properties are observed i. ii. iii. iv. Centrally located Rate of the land is enormous peak land rates There is sign of major and intensive development in the area There is no issue with the transport The above mentioned points serve as advantage to the retailers to reduce cost and increase profit with minimum further investment. But the locations like these also have a problem as i. ii. The rents are high There is parking problem for the customers
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2. Isolated store.-
This type of store location is generally away from the main city area, there will less amount of traffic and there will also be less number of competitors. One of the major advantages of this type of location selection is that the rate of rent in these areas is very low also the company can have ample parking space. The disadvantage of this kind of location is the willingness of the customer to come to the locationalso the cost for the customer travel increases which makes it difficult for the retailers to retain customers 3. Part of shopping centreWhere an establishment is done with proper planning, development, as well as provide very good parking space for the customers it is considered to be mall or strip centre. There are 8 basic types of shopping centres which are discussed below, i.
ii.
Neighbourhood Community Regional Super High end fashions Category dominant Theme based Factory Outlets
iii. iv.
v. vi.
vii. viii.
Steps involved in choosing location1. There should be a detailed analysis as to which market to choose and accordingly which location to select 2. There should be a proper study of demand and supply in the location for which help of research can be viable 3. Screening down of the options should take place 4. The study of market 5. There should be evaluation of market based potential, which should be based on the following parameters
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a) Demographics b) Household characteristic c) Study of competition d) Compatibility e) Rules f) There should be analysis of the trade area 6. There should be weight age given to each of the parameter while screening 7. Particular site should be selected with best things in mind
8. Identify alternate sites and select one based on
a) Amount of traffic and pedestrian b) Accessibility to the market via transport c) Number of existing stores d) Availability of amenities e) Decision regarding buying or leasing the property 9. Deal should be set
10. Buying/ leasing of the site
Ownership or Leasing? This is one of the most important questions which a retailer has to answer before starting any operation at any location. There are pros and cons for both the alternatives, let’s look at them one by one and see how they affect the decision of the retailers. Ownership : Ownership of the retail outlet or the mall has the following advantage:
• • •
Value of the retail outlet along with the creditability increases There is help in deduction with reference to tax If the retailer wants to improve the infrastructure it will add to his capital instead of landlord’s capital Land is always an appreciating asset There is an option of immediate liquidity
• •
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These were some of the points which were in favour of purchase of the property Now let’s look at some disadvantages of owning a property
• •
High amount of capital blocked initially There is always a chance of natural disaster in which case the loss will be totally of the retailer. Other financial functions might get affected as high amount of capital is blocked In case of bankruptcy the property will be diluted and the amount will be paid to the people owing
• •
Leasing : Leasing is almost the opposite of buying a property. The retailer pays a amount for a particular period of time in which he can use the premise, where as the ownership does not change hands. Let’s look at some advantages and disadvantages which are not mentioned above: Advantages: 1. Can exit at any point of time after leasing period 2. No risk of property damage due to various reason Disadvantage:
1. One of the major disadvantages which a company can face is if the business of the
company is settled and the lease ends, where the landlord is asking for a humongous amount of money for re leasing, than the retailer can find himself in a soup.
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DESIGN AND ARCHITECTURE OF A MALL
During the late 60’s and 70’s, the design of shopping centres resulted in some very basic pragmatic layouts and often-unimaginative exterior presentation. Features of these centres included: 1. 2. 3. 4. 5. Large car parks No links to the local community Large box shapes Often poor regard for the surrounding environment The capture and content mentality
As the 70’s progressed we found a few centres starting to question the design and layout that had become regarded as “typical” After this we found that the approach to shopping centre design changed rapidly with greater amounts of style being created. However one could see that the customer had begun to demand better-designed environments to shop in an of course recreate in. Recreation time had been recognized as “a commodity” and hence, the retail sector had started to provide recreational opportunities such as: 1. 2. 3. 4. Cinemas Cafes Lifestyle retail Entertainment in various forms
Then the 90’s came along with growing movement and new urbanism and smart growth, a search for authenticity and even greater focus on entertainment and eating. The market is also now demanding an environment whether the basic aspects of daily life can be accommodated in a way that is convenient and enjoyable. The establishment of mixed used areas where people can work, rest and play have become the focus of both the new areas and urban rural renewal projects.
CURRENT PLANNING FRAMEWORK:
These days, shopping centre designers know that their proposal will be subject to intensive scrutiny by a vast range of professionals, politicians and the public. Hence they have begun to take the issue of mall design very seriously, which includes: 1. Safety and security
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2. 3.
Functional requirements Identity in the layout and design
4. Every development has convenient and prominent pedestrian entrances, in terms of design, signage, lighting and gradient. 5. Expansion of ground-level blank walls along street frontages and entrances to car parks are avoided. 6. A feeling of security through nearby buildings and active uses of cafes and front verandahs, which are oriented to the street. 7. In activity centres parking is placed at the rear of the buildings or internal to the block. 8. Parking for people with disabilities is provided adjacent to key facilities – it must be enforced. 9. Buildings and their pedestrian entrances are oriented to the street.
10. Building setbacks are minimized to provide natural surveillance of footpaths, bus stops and taxi rank, while still allowing sunlight access and minimizing wind tunnel effects.
DESIGN ISSUES FOR SHOPPING CENTRES
1. The design process:
Before discussing the design process it is considered appropriate to emphasize 2 financial aspects of shopping centre design that sets it apart from other forms of development.
The first is that shopping centre owners/developers are in the vast majority of circumstances, committed to a financial return over a long period. Unlike some other forms of development, the sopping centre developer’s involvement does not end up on the completion and sale of the building. Given this long-term commitment, there is greater interest in ensuring profitability on an ingoing basis. This interest in the current environment encourages high quality design.
The other financial factor is financial viability. Shopping centres are affected by changes in the market including competition. Competition is an integral part of the retail environment & the risk from competition is acknowledged in feasibility analysis. However, changes to the retail hierarchy brought about by poor planning decisions is a risk that cannot be predicted. Given the significant amounts of capital that is required to develop & redevelop shopping
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centres, the developer needs to be confident and there is no unforeseen threat to achieving an appropriate return on their investment.
The starting point for the design of a shopping centre is to establish ‘a first cut’ tenancy mix. As Jean Solal, a French specialist in retail layout and a writer on shopping centres, said, “A good tenant mix is the blood line of the shopping centre industry.”
Solal goes on to say, that the development process should not be started by the architect, but by the establishment of a merchandising concept. This tenant mix will drive a range of issues in the brief and will provide a self-regulating effect on the changing phase of shopping centres.
Key steps are the identification of: ? Demographics ? Tenant mix ? Size ? Requirement of the shoppers ? The physical concept ? The construction ? The leasing The users will determine the character of shopping centres, and these users continue to be educated about lifestyle. The character of a shopping centre is often a response to customer needs, climate, design trends, and planning trends. Competition will always be the driver and the mother of innovative design outcomes for retail. The key design elements are considered to be: 1. ? ? ? ? ? Planning Convenience Security Customer orientation Lines of visibility Efficient planning & strong anchoring of malls
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? ? ? ? ? ?
Comfort Dynamics Promenade Location of amenities Meeting place Flexibility of environment
2. ? ? ? ? ? ? ? ? ? ? ?
Specialist Retail Environment External appearance Internal and external style Point of difference in competitive market Clarity of presentation Lines of visibility Lighting Environmental graphics Color Dynamics of space Excitement of the space Flexibility of the environment
3. ? ? ?
Tenancy Mix Focus retailing Community use and a community focus Retail mix
4. ? ?
Entertainment Leisure Internal and external style
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? ? ? ? ?
Passive and active entertainment Environmental graphics Excitement Promenade Meeting place
5. ? ? ? ?
Visual & Impact Care of the environment Environmental graphics Lines of visibility Internal and external style
6. ? ? ? ? ? ? ? ? ?
People Spaces Convenience Security Customer-orientation Lines of visibility Efficient planning and strong anchoring of malls Comfort dynamics Promenade Location of amenities Meeting place
7. ? ? ? ?
Connectivity to fabric of Community Street patterns Pedestrian connection Part of the fabric community The functional requirement for shopping centres which include:
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o o o
The need for ‘big boxes’ in which to contain large format retailing. Convenient parking to meet the needs of customers Provision of easily accessible and loading docks
2. Large Format Retailing
The need for shopping centres, to provide large unrestricted spaces for major tenants is a significant element in the design of a centre. The constraints of the large format include: ? ? Planned dimensions are usually rectangular or square Height internally usually requires an external height of approximately 6 meters
? Cinema boxes are the highest of the large format users requiring between 9 to 12 meters ? The y have requirement for strong visual identification usually with signage and sometimes with external color Major tenants have usually very rigid requirement in terms of space they require. This is because duplication of the same or similar configuration over many stores creates efficiencies that are of great value to the retailers. Not withstanding the above, recent developments are reducing the impacts of the buildings required to accommodate large format tenants through innovative and good design. In the majority of cases, it is simply not viable to provide car parking ground. In is also not practical in most cases, as customers demand parking with easy access to the shops and as such parking levels match retail levels. Due to the functional nature of car parking structures above the ground, creates a design issue. In the past, large simple concrete structures would meet the functional needs with little attention given to the external appearance. In many cases only amelioration was done to provide thick screen planting. Whilst in some cases, this illusion provides a reasonable outcome.
3. Loading Docks
Loading docks are an integral feature of shopping centres that create specific issues such as noise, odor visual appearance, light spill and hours of use. As with parking, regulatory authorities often require a particular ratio of loading docks in relation to the size of centres. However theses requirements are always increased to accommodate retailer’s specific needs and the desire to recycle garbage and packaging. Loading docks can be designed in such a way as to be screened from external view lines & often have a service yard enclosure, which helps to disguise them.
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4.
Sustainability
The issue of sustainability has great relevance to retail environments. Many centres are designed to collect good natural light within the internal space to create a feeling of outdoor environment. The recurrent cost of retail centre can be greatly reduced by energy efficient design and management practices. Passive solar design and the provision of cross ventilation are provided where appropriate, however, due to the size and functional requirements of shopping centres and the need to provide a climatically stable environment for customers, such measures are often difficult to incorporate into the design. Construction, operational and management measures, which are energy - efficient, are playing a much greater role in conserving resources. Such measures include ? High shading coefficient and high thermal resistance leasing material is used to minimize heat transmission ? ? ? ? ? ? Tri - phosphor lamps are used instead of conventional fluorescent tubes Metal halide lamps to replace tungsten halogen Circuit management of the lighting zones Photo cell control for external lighting Automatic on/off when the ambient illuminating level is required Power factor correction system
? Building services (including air conditioning) which are fully programmable and can be updated to suit any changes to the building and maintain high energy efficiency There is also widespread commitment to recycling and reuse of materials. In addition to the issue of energy efficiency, shopping centres assist in creating sustainable neighborhoods. By providing for a wide range of needs locally, there is less need for residence to travel greater distances, thereby reducing the length and number of vehicle trips.
5.
Security
Security is a significant issue for both shopping centre owners and customers. Buildings are designed to minimize the potential for criminal activity with measures such as providing good sight lines, removing spaces that can be used for hiding and shortening ‘dead’ spaces such as walkways to toilets. As there is a limited scope of building design to address security issues, the chief measures used are surveillance and security personnel.
6.
Community Enhancement
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Shopping centres have many strong community benefits. They accommodate retail ‘chain’ stores, which provide an efficient way of distributing goods, & allow these goods to be sold at lower prices. They also accommodate specialty shops, which is in response to the demand of the local community and is often owned by local people. Shopping centres provide safe, pleasant meeting place for the community often providing focus for social activities. Many shopping centres now include entertainment and leisure facilities. Others are going a step further, aiming to be the focus or the business centre in which they are located by creating ‘Town Square’ or ‘high street’ environments.
7.
Public/Private Space
The issue of the blurring of the public and private domain is growing in importance as a result of the societal changes and the shopping centre designers’ response to these changes. Key aspects of this blurring include: ? The public domain for commercial uses such as outdoor dinning and market retailing ? The greater permeability being provided by shopping centres and required by authorities ? Greater integration with surrounding public domain
? The provision of true ‘ open space’ within shopping centres, that is outdoor, unencumbered recreation spaces. Most large shopping centres have always provided semi – public space to allow for the circulation of customers. These places are generally required to be publically accessible, but usually only during operating hours. Due to the nature of these spaces in some cases, consent authorities have excluded such areas from floor space calculation. These spaces are becoming more public in terms of level of accessibility provided and the actual nature of the space, often as the requirement of the consent authority. Often what is being provided is high quality public domain, which comes at no cost to the public. Whilst there is some benefit in providing such environments for shopping centre owners, to further encourage the creation of such areas, the consideration of some credit to the owner would be beneficial. This would also create some equality in the present public/private domain situation where public spaces are leased to private users for substantial fees.
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ARCHITECTS:
Once the feasibility study is complete its time to consider the architects selection process. Once you have shortlisted the preferred architects, they will forward proposals with a company profile and head designers C.V’s Once the company has been chosen and the process commences, with preferences and guidance’s from the developer, the initial three stages are as follows: 1. Stage One – Preliminary Concept Design ? ? Summary of project vision General site – plan shoeing building configuration and site – layout
? Site circulation diagrams showing access and ingress, vehicular flows car park plans, retailer servicing, etc. ? Shopping centre layouts configuration, vertical and horizontal circulation, indicative position of retail units and common areas. ? Key building sections with the indication of key levels (ceiling and floor level and building heights) ? ? Summary of gross and net development floor area by category Indicative façade drawings
2.
Stage Two: Schematic Design ? Using the approved concept design to proceed with the schematic design
? Develop the schematic design in consideration of the current concept design, the client’s requirement, planning parameters and other necessary consultants design. ? Present the design to the client and the relevant authorities for approval before proceeding with further steps ? The schematic design architectural drawings shall include: o Typical overall floor plans o Basement floor plan (including the calculation of car parking facilities) o Rendered site – plan showing indicative landscape concepts in 1: 500 or suitable scale o Elevation in 1:200 or 1:250 scale (including proposed building façade)
40
o Schematic architectural details showing design intent o Rendered architectural perspective showing design intent o Design data calculations o Material boards proposed for exterior finishes o Outline architectural specifications o Outline finish schedules for both exterior and interior o Design brief ? Attend and co-ordinate with client and/or consultant team meetings
? Co-ordinate with authority approval: consultant to prepare and provide necessary drawings for authority submissions ? ? Amend the drawings if required by the government. Co-ordinate with quantity surveyors for cost plan
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3. Stage Three: Detail Design ? Co-ordinate with other consultants (e.g. C&S, M&E ID & other specialist consultants) to incorporate their design into the architectural design ? Further develop the schematic design to the level of design development drawings. The architectural detail design drawings are similar to the schematic design drawings stated above but they shall be coordinated with the C&S & M&E engineering requirements and include more details as follows: o This is where your tenancy mix and zoning come alive. o Once these drawings are complete its time to construct
Bibliography
• •
http://www.forbes.com/2008/01/17/retail-malls-shopping-biz-commercecx_tvr_0118malls.html http://www.indiaretailing.com/news.aspx?topic=1&Id=4155
Book : • Mall Management – Azhar kazmi
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doc_267593566.doc
The documnetation about retail management discusses Indian Retail, Indian Malls, FEASIBILTY STUDY, CATCHMENT AREA ANALYSIS , MARKET POTENTIAL, MALL LOCATION SELECTION, DESIGN AND ARCHITECTURE OF A MALL.
Mall Development Process
Contents
Contents................................................................................................................ 2 INTRODUCTION......................................................................................................4 Indian Retail....................................................................................................... 6 Indian Malls........................................................................................................ 6 FEASIBILTY STUDY...............................................................................................12 CATCHMENT AREA ANALYSIS...............................................................................18 MARKET POTENTIAL.............................................................................................24 Bibliography........................................................................................................ 42
2
Figures:
Sr. No. 1 Description The Mall of Dubai Page No. 5
3
INTRODUCTION
Malls are typically known to be indoor shopping centres,though some have outdoor areas with the shops having their own indoor space. The idea came from old covered marketplaces that were popular between the 10th and 15th centuries, and are even still around today. In 1785, the first purposely-built shopping centre was created, but it was not until 1916 that a shopping mall as we consider them today was built in the United States. During the 1950s, large indoor shopping malls began to spring up in major cities across the world, with famous ones being built in UK and France. There a few different types of shopping malls that should be noted. The average shopping mall is less than 400,000 square feet, with those between 400,000 and 800,000 square feet being known as regional shopping malls. Because they are larger, they can accommodate higher end stores that may need more space for their stores. Super-regional malls are those that are over 800,000 square feet. These are the premier shopping mall for the surrounding areas and suburbs. Strip malls are strictly suburban and usually consist of large parking lots surrounded by single story shops. Outlet malls are special shopping malls where manufacturers sell their products directly through their own stores. The first shopping malls were composed mainly of independent shops with some food vendors scattered throughout. It wasn't long before food courts were added to give consumers a central place to eat. This also offered more choices of food. Other additions that were made to shopping malls through the 20th century included the addition of department stores. These were added when large finances were needed to keep bigger shopping running. From 1986 to 2004, the West Edmonton Mall in Alberta, Canada was considered the largest shopping center in the world. In less than four years it became the fourth largest, which shows the rapid growth of shopping malls during recent years. The largest mall in the world is the recently opened Mall of Arabia in Dubai, which will be 929,000 square meters in size. The second and third largest shopping malls are all located in China and Malaysia respectfully.
4
A building boom has enormous shopping malls popping up in China, Malaysia and the Philippines, with India expected to jump into the fold soon. Based on gross leasable area, or the amount of space devoted to revenue-producing operations like stores, amusements and food, the continent is home to nine of the world's 10 largest malls, six of which have been built since 2004. That's added some 27 million square feet of shopping space to cities like Beijing and Guangzhou in China and Kuala Lumpur in Malaysia.
5
Indian Retail
Traditionally, the retail industry in India comprised of large, medium and small grocery stores and drug stores which could be categorized as unorganized retailing. Most of the organized retailing in India had recently started and was mainly concentrated in metropolitan cities. Indian retail market is the fifth largest retail destination globally. The share of retail trade in the country's gross domestic product (GDP) was between 8–10 per cent in 2007. Foreign direct investment (FDI) inflows between April 2000 and April 2010, in single-brand retail trading, stood at US$ 194.69 million, according to the Department of Industrial Policy and Promotion (DIPP). As a democratic country with high growth rates, consumer spending has risen sharply as the youth population has seen a significant increase in its disposable income. Consumer spending rose an impressive 75 per cent in the past four years alone. Organised retail, which accounts for almost 5 per cent of the market, is expected to grow at a CAGR of 40 per cent from US$ 20 billion in 2007 to US$ 107 billion by 2013. Retailers have bought or will buy around 316 million. Sq. Ft.
Indian Malls
Malls are fast becoming sought-after entertainment hotspots. From a situation where there were no malls about a decade ago, to 25 malls in 2003 and 211 malls in 2006 and it is expected to reach 500 malls in 2010. The partial foreign direct investment (FDI) relaxation in 2006 allowed 51% ownership in joint Ventures by single-brand companies in the retail market. This triggered high international single brand Retailer interest in the Indian retail market. This prompts the Indian retail industry to undoubtedly move on a high growth curve. However, at this juncture, retailing is still faced with one major challenge: systematic mall management. Currently, there are very few designated mall management companies in India. However, big retail chains such as Future Group and some large developers have set up their own mall management divisions that operate as their subsidiary companies.Pantaloon group is planning to go in for development of malls and its management. Kishore Biyani-led
6
Pantaloon group is on the verge of sealing a 50:50 joint venture (JV) with a leading foreign mall management company to set up its own professional mall management company. The foreign partner will bring mall management expertise including event management, promotion, leasing, marketing and public relations. The Pantaloon group will provide malls and its expertise in developing and leasing retail space. Its plan calls for building over 70 malls with a retailing space of around 40 million square feet in 29 cities, at 19 states in the coming five years, under brand name of Kshitij Retail Destinations (KRDs). Kshitij Mall Management Company will manage the planned KRD chains to be set up by Pantaloon Retail India Ltd. North and South India lead in terms of percentage growth of mall count and square foot space, says the Malls of India report, which also presents extensive details of operational malls and developments currently in various stages of planning, constructing and leasing. North & South in the Lead Pointing out that the country's North & South have been leading the Malls revolution and continue to be in the lead, the Report says that the number of operational malls in North zone will increase from the present 79 in September 2009 to 150 by Q1, 2011. Thus, the percentage increase in this zone in number of malls will be 49 per cent by 2011 from the existing 79 malls in 2009. The total mall space in the Northern region as on September 2009 is reflected as 24.7 million square feet from the 79 operational malls, which is projected to increase to 49.05 million square feet by 2011, according to F &R Research. Within the South zone, Bangalore and Chennai are listed as the most prolific cities, in terms of square feet mall space, with 44 per cent and 32 per cent of the total 7.2 million square feet existing mall space, respectively. According to the Image F&R projection, the number of operational malls in the South zone will increase from 21 operational malls in September 2009 to 72 by Q1, 2011. The highlight of the development in South is that the total existing mall space of 7.2 million square feet is projected to be more than doubling to touch 18.43 million square feet by 2011. West Zone & East Zone In the West, Mumbai has been dominating mall development activity and continues to do so, accounting for almost 66 per cent of the total 56 existing shopping malls. The report says that the number of operational malls in West zone will increase from the present 56 as on
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September 09 to 87 by Q1, 2011. In West Zone, about 31 more malls will be added by 2011 where the total available mall space is 16.36 million square feet. This will be increasing by 33.9 percent by 2011. Like Mumbai in the West, it is Kolkata in the East which dominates the scenario. Out of 16 operational malls in East zone, Kolkata is dominating with 10 quality retail spaces, and will continue to dominate future mall developments, accounting for over 51 per cent of the 6.14 million square feet additional mall space. And in a broader sense, East zone appears to be tagging along too, albeit at a comfortable pace. The number of operational malls will be more than doubling from the present strength of 16 as on September 2009 to 37 by Q1, 2011. Total mall space in Eastern zone will be increasing from the existing 4 million square feet by 60 per cent by Q1, 2011. It has been almost one decade of presence of shopping centres in India, as the first centre appeared in late 90s - Ansal Plaza, New Delhi and since then the expansion really accelerated in 2002 – 2003. In the year 2008 – the year of economic slowdown, the development was less than expected and it is evident due to the fact that:
• •
34 centres were opened (whereas 74 were planned for opening at the beginning of 2008). 8, 50, 000 square meter GLA (whereas 1,800,000 square meter was expected).
Besides the economic downturn, the problem also comes from the developers and retailers. In order to understand them better, a detailed study of the same is given below: A. Developers - The Greed for More On one hand, it is good to see Indian developers investing and providing excellent infrastructure to the country which certainly enhances the overall image but on the other hand it is disappointing to see the blunders done by them for their own properties. A developer can accord to both Residential and Commercials at one time but when it comes to Shopping Centres (SC); they should not fire at their own feet.
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The following attributes will give a brief idea of the mistakes done by the developers in past: 1. Poor site selection:
Selecting a location without even analyzing about the primary catchment area is a mistake commonly seen. There are many instances in the country wherein erecting a mall at National Highways has been a failure. 2. Vertical expansion:
This country has seen a lot of vacant malls with multiple floors. The ideal case is to have a shopping centre with lesser number of floors no matter even if the size of the shopping centre is small. 3. Commercialization Issue:
Poor commercialization is like a house built on sand - it will fall down any day. The first objective should be to position anchor stores in their respective position and second is to attract the vanilla brands by using anchors as a tool. It is also important to note here that with a good floor plan and bad commercialization, things could still work but poor floor plan along with good commercialization may lead to irreversible changes. 4. Lack of professional advice:
It is always better to take professional assistance before the commencement of project rather than after its completion, which undeniably reduces the scope of improvement as well as increases costs more. 5. Design issues:
It is rightly said that easy plans normally work, the more complicated you make, the more difficult it becomes. There are many instances like: the strange floor plans proving to be a hurdle for the shoppers, no sitting arrangements, unplanned tenant mix – not making a mall a destination, low quality local stores or kiosk and so on that is diluting the overall image of the project. B. Retailers – Irrational decisions
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The slowdown of 2008 has been a great lesson to the Indian Retail companies; they call it lately as correction. Before the year 2008, the expansions had been enormous but now the buzz is “expanding but cautiously.” After reading the factors listed below, one can certainly say the retailers have burnt their fingers themselves: 1. Juvenile expansion: Before the downturn in 2008, the retailers used to expand frantically almost in every SC without giving much importance to factors like location, catchment analysis, long term vision, presence of the actual buyers, reputation of the developer and much more. These lead to problem of surfeit for which the retailers are still in distress. 2. Sky –scraping commercials: During this massive expansion, the retailers were at ease to pay high fixed rentals which resulted in high fixed operating cost. Equivalently, the slowdown had a direct impact on the turnover which landed retailers in a miserable condition.This resulted either in closing down of unprofitable stores or re-negotiations with the developers to reduce the rentals.Thus, the term Revenue Sharing was introduced; convincing people of the fact it is a Win - Win model. 3. Brand visibility was more important than store profitability: The expansion (prior to year 2008) accelerated in the most imprudent manner considering the fact that brand visibility* is more important than store profitability leading to calamity for many.
*For retailers, the numbers of stores are directly proportionately to brand visibility whereas store profitability is the result of high turnover and low operating cost.
4.
Poor store visibility: In order to enhance brand visibility; more and more outlets were opened which lead to poor project (mall) and location (store) selection. This yielded in low turnover and wastage of enormous capital expenditure on every store. The selected locations were so poor that even with the best marketing and information tools; no one was aware about the existence of these stores. Hence, it was a Win–Lose situation wherein; the developer was successful enough in leasing out his space but not the retailer.
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The Road Ahead: The coming year will have a lot of consolidation. The existing smaller or vacant malls will either be converted into commercials or will be acquired by the larger players. The commercialization strategy will improve as the developers have seen enough and have learned to reject the worst and select the best. The tagline “everybody is welcome” will no longer be entertained and the landlords will be more selective in case of tenant mix and assigning locations. To assimilate the above, complete and professional asset management services are required to assist the developers and to create a good balance between the customers, retailers and the owners. It is possible by correct succession of steps beginning from thorough market research till the designing of the property. Considering the fact that Indian real estate market has high potential and long way to go; the current phase demands improvisation through professional consultancy and other allied services. It is the time to see how owners employ the best use of these services in future. And if all this is incorporated, one can hope that Indian Malls can once again be on a path of glory.
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FEASIBILTY STUDY
Until recently, street markets and bazaars were the top performers in the Indian retail space, and they contributed immensely to sales. Traditional market platforms now have to imitate malls by creating a better overall shopping experience for potential customers by offering a mix of diverse products - including food and beverage as well as entertainment outlets preferably under one roof, like malls do. A consumer is attracted to a mall because of the availability of world-class ambience and services, exposure to a multitude of brands, tempting promotional offers and significant periodic discounts. The superior ease of shopping in air-conditioned, aesthetic comfort as well as access to a variety of food options are added incentives to mall visitors. The design element of mall is reliant upon many factors and not just the land parcel available. The initial decisions about positioning, branding and the look and feel of the mall weigh heavily on the demand for services. We need to discover and understand this demand before we proceed. This is achieved through feasibility studies. One of the first actions to be taken when considering constructing a building with the intent to conduct a business is to analyze the feasibility. Without the correct analysis reports and data you cannot make the decision to proceed. Opening a successful new retail store is not unlike many other new business ventures in that the level of success achieved is usually directly proportionate to the level of research undertaken prior to making the commitment to sign the lease. A mall is dependent on the success of its occupiers, which translates to the financial feasibility of the tenant in the mall. Generally, there are two types of consumers visiting malls - focused and impulse buyers. The time spent by focused buyers in malls is relatively lower compared with impulse buyers who also enjoy window shopping. There is little that retailers can do to attract focused buyers, as they usually know what they require and from where. However, right tenant mix and optimum retailer placement after a diligent zoning exercise can help retailers attract both types of consumers, especially the impulse buyers.
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The feasibility study is a project analysis outlining informative and precise information in relation to many areas including: • • • • • • • • • • Master plan location Building site location Catchment analysis, demographics and customer- demand analysis. Competitor overview Future growth Financial analysis and viability Development vision Market overview Trade and Tenant Mix. Development configuration
The objective of the feasibility study is to discover information to enable the developer: • • • • • To define the vision of a successful retail concept for their sites To leverage the macro and micro retail real estate market opportunities To arrive at an optimal trade and tenant mix for the retail developments To determine the market-linked assumptions and conclude financial indicators To give recommendations on the design, services and facilities, lease and operating model based on market practises and international best practices A micro-look at feasibility study would include:
Stage 1
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1. Advisory and Strategy Formulation It includes a concise assessment of the location and site, research and study the macro and micro market dynamics and project future demand. 2. Location Analysis The accessibility and visibility of the site would have its implication on the development and the marketability. A SWOT analysis will assist in determining the development on a particular site. When first considering any new retail store, it pays to think about how your clients, or your potential clients, view your business. Does your business model best suit a CBD location, suburban location, shopping mall, arcade or high street location? Does your business rely on passing traffic or can it survive and prosper as a destination in its own right? In order to best answer these questions, consider the typical profile of the regular clientele that visit each type of location and compare it with the typical profile of the shopper who is most likely to buy your products. For example, if you have developed a retail offer that appeals to the mass market, a high traffic shopping centre or City mall may best fit your retail model. Alternately, if you are looking to attract a very specific niche market, your ideal store location may be influenced by other considerations such as proximity to other retailers who sell complementary products to your target shopper. When considering a specific site, it also pays great dividends to contact the previous tenant and chat with them frankly about their experiences in the location that you are now considering. The ideal shop size will depend on a wide range of variables including your product type and category, the location, volume of passing traffic, occupancy costs, lease terms, setup costs, store frontage, visibility, trading hours, sales projections, margins, staff levels, merchandising plan and stocking rates. Single level stores are invariably more cost effective to operate, require less staffing and have less blind spots. 3. Market Synopsis and Competition Scan
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Identify and analyse select competing developments in the surrounding city, especially the projects in the immediate vicinity. 4. Assessing Demand Primary estimation of the demand will assist in determining the development mix. 5. Benchmarking Details of Retail developments of similar nature and derive key factors for their success and/ or failure.
6. Pricing Based on the retail category, market conditions and expected future trends, the achievable rental values will be presented. 7. Financial Analysis Conduct a brief financial analysis to ascertain the optimal development mix to maximize the projected revenue. 8. Tenant and Trade Mix for the Retail Development The long-term sustainability for any project shall be the result of the tenant and trade mix of the scheme. A perfect mix results in bringing success to the overall development by generating higher complementing footfalls and generating higher revenues out of the scheme. Tenant mix is the combination of store types and price levels of retail and service businesses in shopping malls. Tenant mix also refers to the combination of business establishments occupying space in a shopping mall to form an assemblage that produces optimum sales, rents, service to the community and functional ability of the shopping mall venture. A mall typically includes different percentages of the following types of tenants: • Major stores
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• • • • • • • • • • • • • •
Antique/ Carpets/ Furniture Banks and Exchanges Books/ Cards Children’s Fashion Electronics Entertainment Fashion Jewellery Hair/ Beauty Salons Health Clubs Ladies’ fashion Leather/ Luggage Lingerie Men’s fashion Food courts etc.
There are three types of tenants: 1. Anchor Tenants A tenant, which occupies a large space, draws maximum footfall and highest turnover is called anchor tenant. It also attracts other retailers to locate in the mall. 2. Service Tenants Tenants, who provide services more than products like Food court, Multiplexes, Entertainment etc. are called service tenants. 3. Vanilla Tenants These are other than anchor and service tenants.
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Formulating the right tenant mix based on zoning not only helps attract and retain shoppers by offering them multiple choices and satisfying multiple needs, but also facilitates the smooth movement of shoppers within the mall, avoiding clusters and bottlenecks. This helps influence shoppers' mall preference and frequency of visits. It also helps in building a distinct image in the minds of shoppers, which is critical considering the robust upcoming supply of malls. This brings us to the end of first stage of the development analysis, where the scale of the development and project positioning of the scheme are ascertained.
Stage 2 – Post Feasibility
1. Zoning and Tenant Allocations Post the decision of finalizing the quantum of development and derivation of the product positioning, it is crucial to prepare a wish-list of the retailers who would bring more rentals to the development. This wish-list allocated in an appropriate manner: • Ensures circulation within the scheme which shall ensure higher rentals for the scheme. • Secondly, it shall increase the footfalls throughout the scheme instead of limiting it to a few hot spots within the scheme. • • It shall increase the lease ability of the overall scheme. Planning at this stage makes the project go the distance, since there are no surprises that come up during the execution of the project. 2. Retail Planning Beyond the layout and the planning of the scheme by the architects, there are the marketing and leasing issues with each and every development. This is most important in retail schemes since visibility, pedestrian and signage, etc., are important for the retailers who shall lease the space from the developer. The unique concepts generated in the earlier phase to enhance the catchment area, has to be integrated in this phase with the overall retail plan created by the architects. This is a continuous
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process, where interaction between the developer and the architects shall together bring the project to a stage where it is ready for the leasing activity. Various business models adopted by retailers/ developers are: Business Model Contract Model Key aspects Fixed fee Benefits for Mall Benefits for Developer Management Fixed cash outflows. Risk minimization Higher inflows if mall is a success Mall
Revenue sharing model Partial revenue sharing model
Percentage of Risk minimization sales
Share of revenues if mall is a success which leads to higher income
Fixed fee + Risk minimization Minimum payment percentage of (fixed fee less than guaranteed and also sales that in the case of portion of revenues in contract) case of success
CATCHMENT AREA ANALYSIS
The area /zone of the city from which the customers come into for shopping from a particular store, catchment analysis pre launch would ideally decide the product mix and formats of the stores, catchment analysis done after a time gap of launch would also give a correct picture of what is happening and where to concentrate marketing energies to get more walk ins. The total catchment area, of a store is a useful piece of information to have before deciding a store location and post store opening marketing energies focus. The catchment analysis is usually done to study the profile of consumers likely to visit in terms of income profile, current shopping destinations and the likely visit to the new store, based on that make some sort of business predictions and also useful in the " yes " or " no " decision.
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Generally it could be considered that major retailers like department stores, furniture warehouses would be destination sites. These sites could attract people from greater distances because the items are not common purchases, are expensive or provide the opportunity where a number of purchases can be made from the one location. For these destination sites it is possible for consumers to travel more distance. Similarly a small neighborhood store, or a small departmental store, would have a catchment spread of not more than 1.5 km. For retailers that offer the same or very similar products as the competition, unless there is a very strong pricing difference a customer may not be prepared to travel pass the competition. Catchment analysis is useful like any other market research in showing retailers the opportunity and the direction to be taken. Retail Analysis is an inherently complex and dynamic issue because of interactions that occur between different retail centres. If all retail centres were alike, offering exactly the same shops and services with regards to price and quality then it could be assumed that the population within the catchment would spend all of its money in the nearest centre. However, different centres are not the same and people’s mobility means that they will often travel to their preferred destination instead of their closest one. Changes in population, access and retailing also alter relative attractiveness. An important element of the study is therefore to provide a robust assessment of the current catchment area of the city, taking into account different types of retailing such as food and non-food, with the latter disaggregated into bulky and non-bulky goods. Factors that influence consumers’ decisions on where to shop include: • Presence and strength of ‘anchor’ traders • Volume, quality and mix of retail provision • Additional services and facilities • Leisure provision • Accessibility • Parking
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• Shopping Environment Catchment Analysis is important due to following factors: • • Prime consideration of customer’s store choice, based on nearness to home/work, linked with other domestic work Strategic importance for sustainable competitive advantage. Merchnadise, price, assortments can be changed but not location of a store. Competitors can’t easily copy as they are precluded from locating there. • • • • Entry of more and more companies in organized retail making difficult to find suitable location within budget Forms an important P of place for a long time for adequate assurance for a success It also influences the merchandise mix and interior layout of store. Even with emergence of web location of store form an important step of retail strategy Besides demographic factors, economic and infrastructural, cultural and competitive environment prevailing catchment area also needs to be analyzed land area Population age distribution household size and type marital status family size and type owner occupied housing rental status Religion language spoken Schools income types poverty status departure time for work Occupation working women fertility rates vehicle owners telephone subscribers TV ownership etc.
Above variables help location decision and also product line potential e.g. toys shop location for children, economic factor i.e. unemployment will affect purchasing power in that area, per capita income data helps in projecting demands for various merchandise. Economic stability of area can be estimated from household incomes and expenditure patterns, buying power index and effective buying incomes are calculated to arrive at fairly accurate analysis of catchment area.
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Retailing in a number of cities in India, till date, has been location specific. People shop in the retail pockets of the area where they reside. According to us, this is unlikely to change, even with malls springing up and providing a comfortable shopping environment to the consumer. However, there is a noticeable change in that the shops in the retail pockets are improving their façade and offering a better shopping environment so as to not to lose their clientele to the swanky malls. We believe that the success of a mall will depend on it being surrounded by a primary and secondary catchment area with good potential. As of now, expecting people to travel to reach destinations for shopping and entertainment seems a little far-fetched what with the infrastructure not being up to the mark. The shape of organised retailing in India has undergone a sea change over the last few years and a more radical change is expected in the near future. Retailers are making a push to get to the developments, which have the first entrant advantage in a location, and are trying to get the best rental deals for longer time periods. They understand that location and viable lease rentals are two very important ingredients for their success. On the other hand, developers are rushing in to make sure that they are among the first entrants in a catchment area with good retail potential as that strategy has spelt success in the past. Also, they are keen to have the right tenant mix in their developments in order to attract repeat visits by clients. It is clear that the one winner in this retail rush is going to be the consumer. In order to give the maximum benefits to the consumer and at the same time be profitable, malls have to scrutinize their surroundings well before even taking a decision to set up a mall in a particular area. This is where catchment analysis plays a vital role. If a company doesn’t know who its shoppers are, how can company give them what they want? If company doesn’t know where they come from, how can company communicate with them? Finding answers to these questions is vital but catchment analysis is very helpful in that. A company or retail store will be able to optimize its activities if and only if company knows its market in depth. Its market penetration, its success and its potential depend on geographical factors, hard to grasp, hard to fully understand, but catchment analysis is very helpful.
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In the catchment analysis, first part is the area mapping of that local market and through that finds the locations of the competitors, customers and traffic between them. Through that we quantify the sizes and potentials of that local catchment areas and market of that area as whole. With the help of catchment analysis, company knows the best location for business, target and potential customers
Type of catchment area There are four type of catchment that is following Unitary Catchment It is hub of the catchment area around the outlet, from where maximum number of people comes to the retail stores for shopping. Secondary Catchment This area is called secondary catchment area which is around 5 km far away retail stores from where some people come to the shop for shopping. Tertiary Catchment The area from where only some selected or loyal customers come to the retail stores that is more than 10 km far from outlet. Outer Catchment Outer catchment area is totally outer area from where very less number of people sometimes visits to the outlet. Let us assume that there is a mall located at Powai.
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The catchment area of the mall is divided in three main parts as stated above. Primary area consists of people residing in the nearby area of Powai. The people who stay in the buildings nearby, the schools in the given area, offices, commercial properties etc. will all come under the Primary catchment area encircled in the Orange color. Similarly, Secondary catchment area and Tertiary catchment area denote the areas around from where the mall can expect to get walk ins. This analysis is done as per postal code or segregation is done area wise. This way, Catchment analysis will help in scanning the environment effectively and understanding the type of consumers and their needs. On the basis of these needs and the types or customers, the allocation of retailers, marketing activities are carried out.
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MARKET POTENTIAL
As the competition in the segment is rising at a very rapid pace, retailers or to be specific mall developers are forced to focus on their core competencies. Research plays a very important role in defining the right target market for the mall developers. The research is done to basically analyse the market potential and other factors to understand the need of the customer which needs to be focused The new concept is to understand the shopping needs of customers in their focus 'catchment' areas. Then, the process of building a mall begins to keeping in mind the retail options and consumer needs at the same time. There are aggressive expansion plans from retailer’s perspective to gain subsequent amount of market share.There is more focus on maximising the profit and minimising the cost using different aspects. Present retail in India There is a growth in retail industry in India.The growth rate has been quite significant, but still it is not able to match other Asian countries, but the fact remains that India will soon be in the race of becoming a major retail centre. One of the major reason for the same is it being a developing economy the market has huge potential in terms of maturity limits whereas in the developed markets the maturity level is either reached or is about to be. Also one of the helping fact is the high level of variety in terms of geography and religion makes it a very suitable place to do business in retail even for retailers in niche market because of high population. According to the Global Retail Development Index, India is positioned as the foremost destination for Retail investment and business development. Young population of india with high purchasing power is one of the alluring factors for the companies ready to invest in Indian retail. Because of all the above mentioned reasons there is a tremendous increase in the demand for retail in India.Tier I cities are already sustaining retail growth. Now, there is a paradigm shift from metros to rural areas where the penetration of malls is very less.
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Retail in India - The Future Indian Retail market is currently estimated at Rs. 704 crores which only accounts for 3 % of the total retail market. Most of the Indian retail is unorganised so as it will become organised the worth of the Indian retail industry will increase substantially, there is an estimate that the Indian retail will penetrate in smaller towns and cities as the sector is suppose to increase with the increase in demand roughly to 50 to 60%. Another factor supporting this is availability of land at a cheaper cost in smaller towns with high amount of spending pattern which is rapidly increasing in India. There is also a tremendous growth in the real estate industry which is helping the retail industry to spread in corners of the country which were initially not accessible. Retail space demand of 40 million sq. ft is estimated in next 4 years for Indian market. Also there is a culture shift happening in India which is caused by western influence where multiplex are taking over the normal format of entertainment. Future of the Indian Retail is bright due to the factors which we will discuss below:
•
Increase in the average income of an Indian along with strengthen of purchasing power Improved quality of infrastructure in India Liberal policies making way for a wide range of companies to enter Indian market. Indian population has learnt to become a good consumer and all national and international brands are benefiting with this new awareness. The internet revolution is one more factor which is allowing foreign brands to understand Indian consumers and influence them before entering the market. Due to the reach of media in the remotest of the markets, consumers are now aware of the global products and it helps brands to build themselves faster in a new region
• • •
•
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MALL LOCATION SELECTION PARAMETERS
Success or failure of business especially in retail can determine the success or failure of the same. Site selection is an important decision when it comes to most of the business. Location plays an important role in the success of a retail outlet. Business people tend to invest most part of their investment in location as it plays a vital role. Volume and quantity of the business on a location decides the price of the location. For mall it is even more important al location is most important criteria in deciding the success or the failure of the business. 1. Customers look as to how near is the store from their vicinity 2. Location is one of the factors which cannot be copied by the competitors very easily; other things like pricing, strategy to some extent can be copied but not location. 3. Location in an area where the prices are rising makes it difficult for the competitors to enter the same location within their budget limit. 4. One of the important strategy is based on one of the four P’s i.e. Place 5. Layout of the store is decided by the location. 6. Location has a significant impact on the merchandise mix as well 7. Nowadays, there is a new concept in the market that is developing i.e. web location. Let’s look at some analysis and strategies:
1. Location analysis –there are certain things which are useful for location which are:
i. ii. iii.
The time which customer takes to reach the store Availability of space for parking There one more thing which is to be taken into account, the location can be selected keeping in mind the competitors presence as that would attract even more footfall.
iv.
Site selection should also be made taking into account the average transaction value within a viable drive or walk time Location also creates a perception of the mall on the customer, where mall located in expensive areas can give a perception of premium malls
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v.
vi.
Another parameter which affects this parameter is the option which is available of buying or leasing the location
2. Trade area analysis- it is possible to calculate the sale prospects for a particular location.
Malls are made for solution of the customers with need, want and desire. Generally malls target the location which would have maximum foot fall of the target group of the people this can be done with a proper research. The analysis of the same can be distributed as demographic analysis and population characteristics, age gender income education family characteristics, which help determine the target markets for retailer. Economic and infrastructural, cultural and competitive environment prevailing trade area is also important factors apart from demographic analysis. i. ii. iii. iv. v. vi. vii. Population of the area The size and household of type Most common language spoken in the area The type and size of family Distribution of age The area of a possible land Type of income of the people
Location decision can be taken taking into account the above parameters, which will make it easier for the decision making for the retailer. There is one more aspect which is aken into account which is the Economic stability of area which can be actually estimated by studying various behaviours of the people residing in that. The market potential of a given area can be arrived at using the following factors. • People in the target group of the retailer in that area • Ability of the people in the area to pay for certain products • There can be various statistical tolls such as population analysis which can be used for the same • Rate of increase in capita per income of the people in the particular area
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3. Location strategy : The third strategy is location strategy, which will be useful in final selection of the area where the mall will be established i. It is very important for the retailer to know the level of saturation of competitors in the area so as to know the possible penetration and possible sales ii. The retailer should also differentiate based on the target group whether urban or rural iii. There should be a proper study of road and maintenance of the locality by the retailer iv. Retailers should also know percentage of people in the vicinity who travel outside their regular retailers
v. It will be very useful for the retailer to know if there are any functions or community
centres in the area. There should be other factors as well apart from the factors mentioned above which are very useful in mall layout store ambience design, merchandising, personnel, store features, visual merchandising etc to make more sense. Types of locations: 1. Part of business district A place where the following properties are observed i. ii. iii. iv. Centrally located Rate of the land is enormous peak land rates There is sign of major and intensive development in the area There is no issue with the transport The above mentioned points serve as advantage to the retailers to reduce cost and increase profit with minimum further investment. But the locations like these also have a problem as i. ii. The rents are high There is parking problem for the customers
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2. Isolated store.-
This type of store location is generally away from the main city area, there will less amount of traffic and there will also be less number of competitors. One of the major advantages of this type of location selection is that the rate of rent in these areas is very low also the company can have ample parking space. The disadvantage of this kind of location is the willingness of the customer to come to the locationalso the cost for the customer travel increases which makes it difficult for the retailers to retain customers 3. Part of shopping centreWhere an establishment is done with proper planning, development, as well as provide very good parking space for the customers it is considered to be mall or strip centre. There are 8 basic types of shopping centres which are discussed below, i.
ii.
Neighbourhood Community Regional Super High end fashions Category dominant Theme based Factory Outlets
iii. iv.
v. vi.
vii. viii.
Steps involved in choosing location1. There should be a detailed analysis as to which market to choose and accordingly which location to select 2. There should be a proper study of demand and supply in the location for which help of research can be viable 3. Screening down of the options should take place 4. The study of market 5. There should be evaluation of market based potential, which should be based on the following parameters
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a) Demographics b) Household characteristic c) Study of competition d) Compatibility e) Rules f) There should be analysis of the trade area 6. There should be weight age given to each of the parameter while screening 7. Particular site should be selected with best things in mind
8. Identify alternate sites and select one based on
a) Amount of traffic and pedestrian b) Accessibility to the market via transport c) Number of existing stores d) Availability of amenities e) Decision regarding buying or leasing the property 9. Deal should be set
10. Buying/ leasing of the site
Ownership or Leasing? This is one of the most important questions which a retailer has to answer before starting any operation at any location. There are pros and cons for both the alternatives, let’s look at them one by one and see how they affect the decision of the retailers. Ownership : Ownership of the retail outlet or the mall has the following advantage:
• • •
Value of the retail outlet along with the creditability increases There is help in deduction with reference to tax If the retailer wants to improve the infrastructure it will add to his capital instead of landlord’s capital Land is always an appreciating asset There is an option of immediate liquidity
• •
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These were some of the points which were in favour of purchase of the property Now let’s look at some disadvantages of owning a property
• •
High amount of capital blocked initially There is always a chance of natural disaster in which case the loss will be totally of the retailer. Other financial functions might get affected as high amount of capital is blocked In case of bankruptcy the property will be diluted and the amount will be paid to the people owing
• •
Leasing : Leasing is almost the opposite of buying a property. The retailer pays a amount for a particular period of time in which he can use the premise, where as the ownership does not change hands. Let’s look at some advantages and disadvantages which are not mentioned above: Advantages: 1. Can exit at any point of time after leasing period 2. No risk of property damage due to various reason Disadvantage:
1. One of the major disadvantages which a company can face is if the business of the
company is settled and the lease ends, where the landlord is asking for a humongous amount of money for re leasing, than the retailer can find himself in a soup.
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DESIGN AND ARCHITECTURE OF A MALL
During the late 60’s and 70’s, the design of shopping centres resulted in some very basic pragmatic layouts and often-unimaginative exterior presentation. Features of these centres included: 1. 2. 3. 4. 5. Large car parks No links to the local community Large box shapes Often poor regard for the surrounding environment The capture and content mentality
As the 70’s progressed we found a few centres starting to question the design and layout that had become regarded as “typical” After this we found that the approach to shopping centre design changed rapidly with greater amounts of style being created. However one could see that the customer had begun to demand better-designed environments to shop in an of course recreate in. Recreation time had been recognized as “a commodity” and hence, the retail sector had started to provide recreational opportunities such as: 1. 2. 3. 4. Cinemas Cafes Lifestyle retail Entertainment in various forms
Then the 90’s came along with growing movement and new urbanism and smart growth, a search for authenticity and even greater focus on entertainment and eating. The market is also now demanding an environment whether the basic aspects of daily life can be accommodated in a way that is convenient and enjoyable. The establishment of mixed used areas where people can work, rest and play have become the focus of both the new areas and urban rural renewal projects.
CURRENT PLANNING FRAMEWORK:
These days, shopping centre designers know that their proposal will be subject to intensive scrutiny by a vast range of professionals, politicians and the public. Hence they have begun to take the issue of mall design very seriously, which includes: 1. Safety and security
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2. 3.
Functional requirements Identity in the layout and design
4. Every development has convenient and prominent pedestrian entrances, in terms of design, signage, lighting and gradient. 5. Expansion of ground-level blank walls along street frontages and entrances to car parks are avoided. 6. A feeling of security through nearby buildings and active uses of cafes and front verandahs, which are oriented to the street. 7. In activity centres parking is placed at the rear of the buildings or internal to the block. 8. Parking for people with disabilities is provided adjacent to key facilities – it must be enforced. 9. Buildings and their pedestrian entrances are oriented to the street.
10. Building setbacks are minimized to provide natural surveillance of footpaths, bus stops and taxi rank, while still allowing sunlight access and minimizing wind tunnel effects.
DESIGN ISSUES FOR SHOPPING CENTRES
1. The design process:
Before discussing the design process it is considered appropriate to emphasize 2 financial aspects of shopping centre design that sets it apart from other forms of development.
The first is that shopping centre owners/developers are in the vast majority of circumstances, committed to a financial return over a long period. Unlike some other forms of development, the sopping centre developer’s involvement does not end up on the completion and sale of the building. Given this long-term commitment, there is greater interest in ensuring profitability on an ingoing basis. This interest in the current environment encourages high quality design.
The other financial factor is financial viability. Shopping centres are affected by changes in the market including competition. Competition is an integral part of the retail environment & the risk from competition is acknowledged in feasibility analysis. However, changes to the retail hierarchy brought about by poor planning decisions is a risk that cannot be predicted. Given the significant amounts of capital that is required to develop & redevelop shopping
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centres, the developer needs to be confident and there is no unforeseen threat to achieving an appropriate return on their investment.
The starting point for the design of a shopping centre is to establish ‘a first cut’ tenancy mix. As Jean Solal, a French specialist in retail layout and a writer on shopping centres, said, “A good tenant mix is the blood line of the shopping centre industry.”
Solal goes on to say, that the development process should not be started by the architect, but by the establishment of a merchandising concept. This tenant mix will drive a range of issues in the brief and will provide a self-regulating effect on the changing phase of shopping centres.
Key steps are the identification of: ? Demographics ? Tenant mix ? Size ? Requirement of the shoppers ? The physical concept ? The construction ? The leasing The users will determine the character of shopping centres, and these users continue to be educated about lifestyle. The character of a shopping centre is often a response to customer needs, climate, design trends, and planning trends. Competition will always be the driver and the mother of innovative design outcomes for retail. The key design elements are considered to be: 1. ? ? ? ? ? Planning Convenience Security Customer orientation Lines of visibility Efficient planning & strong anchoring of malls
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? ? ? ? ? ?
Comfort Dynamics Promenade Location of amenities Meeting place Flexibility of environment
2. ? ? ? ? ? ? ? ? ? ? ?
Specialist Retail Environment External appearance Internal and external style Point of difference in competitive market Clarity of presentation Lines of visibility Lighting Environmental graphics Color Dynamics of space Excitement of the space Flexibility of the environment
3. ? ? ?
Tenancy Mix Focus retailing Community use and a community focus Retail mix
4. ? ?
Entertainment Leisure Internal and external style
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? ? ? ? ?
Passive and active entertainment Environmental graphics Excitement Promenade Meeting place
5. ? ? ? ?
Visual & Impact Care of the environment Environmental graphics Lines of visibility Internal and external style
6. ? ? ? ? ? ? ? ? ?
People Spaces Convenience Security Customer-orientation Lines of visibility Efficient planning and strong anchoring of malls Comfort dynamics Promenade Location of amenities Meeting place
7. ? ? ? ?
Connectivity to fabric of Community Street patterns Pedestrian connection Part of the fabric community The functional requirement for shopping centres which include:
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o o o
The need for ‘big boxes’ in which to contain large format retailing. Convenient parking to meet the needs of customers Provision of easily accessible and loading docks
2. Large Format Retailing
The need for shopping centres, to provide large unrestricted spaces for major tenants is a significant element in the design of a centre. The constraints of the large format include: ? ? Planned dimensions are usually rectangular or square Height internally usually requires an external height of approximately 6 meters
? Cinema boxes are the highest of the large format users requiring between 9 to 12 meters ? The y have requirement for strong visual identification usually with signage and sometimes with external color Major tenants have usually very rigid requirement in terms of space they require. This is because duplication of the same or similar configuration over many stores creates efficiencies that are of great value to the retailers. Not withstanding the above, recent developments are reducing the impacts of the buildings required to accommodate large format tenants through innovative and good design. In the majority of cases, it is simply not viable to provide car parking ground. In is also not practical in most cases, as customers demand parking with easy access to the shops and as such parking levels match retail levels. Due to the functional nature of car parking structures above the ground, creates a design issue. In the past, large simple concrete structures would meet the functional needs with little attention given to the external appearance. In many cases only amelioration was done to provide thick screen planting. Whilst in some cases, this illusion provides a reasonable outcome.
3. Loading Docks
Loading docks are an integral feature of shopping centres that create specific issues such as noise, odor visual appearance, light spill and hours of use. As with parking, regulatory authorities often require a particular ratio of loading docks in relation to the size of centres. However theses requirements are always increased to accommodate retailer’s specific needs and the desire to recycle garbage and packaging. Loading docks can be designed in such a way as to be screened from external view lines & often have a service yard enclosure, which helps to disguise them.
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4.
Sustainability
The issue of sustainability has great relevance to retail environments. Many centres are designed to collect good natural light within the internal space to create a feeling of outdoor environment. The recurrent cost of retail centre can be greatly reduced by energy efficient design and management practices. Passive solar design and the provision of cross ventilation are provided where appropriate, however, due to the size and functional requirements of shopping centres and the need to provide a climatically stable environment for customers, such measures are often difficult to incorporate into the design. Construction, operational and management measures, which are energy - efficient, are playing a much greater role in conserving resources. Such measures include ? High shading coefficient and high thermal resistance leasing material is used to minimize heat transmission ? ? ? ? ? ? Tri - phosphor lamps are used instead of conventional fluorescent tubes Metal halide lamps to replace tungsten halogen Circuit management of the lighting zones Photo cell control for external lighting Automatic on/off when the ambient illuminating level is required Power factor correction system
? Building services (including air conditioning) which are fully programmable and can be updated to suit any changes to the building and maintain high energy efficiency There is also widespread commitment to recycling and reuse of materials. In addition to the issue of energy efficiency, shopping centres assist in creating sustainable neighborhoods. By providing for a wide range of needs locally, there is less need for residence to travel greater distances, thereby reducing the length and number of vehicle trips.
5.
Security
Security is a significant issue for both shopping centre owners and customers. Buildings are designed to minimize the potential for criminal activity with measures such as providing good sight lines, removing spaces that can be used for hiding and shortening ‘dead’ spaces such as walkways to toilets. As there is a limited scope of building design to address security issues, the chief measures used are surveillance and security personnel.
6.
Community Enhancement
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Shopping centres have many strong community benefits. They accommodate retail ‘chain’ stores, which provide an efficient way of distributing goods, & allow these goods to be sold at lower prices. They also accommodate specialty shops, which is in response to the demand of the local community and is often owned by local people. Shopping centres provide safe, pleasant meeting place for the community often providing focus for social activities. Many shopping centres now include entertainment and leisure facilities. Others are going a step further, aiming to be the focus or the business centre in which they are located by creating ‘Town Square’ or ‘high street’ environments.
7.
Public/Private Space
The issue of the blurring of the public and private domain is growing in importance as a result of the societal changes and the shopping centre designers’ response to these changes. Key aspects of this blurring include: ? The public domain for commercial uses such as outdoor dinning and market retailing ? The greater permeability being provided by shopping centres and required by authorities ? Greater integration with surrounding public domain
? The provision of true ‘ open space’ within shopping centres, that is outdoor, unencumbered recreation spaces. Most large shopping centres have always provided semi – public space to allow for the circulation of customers. These places are generally required to be publically accessible, but usually only during operating hours. Due to the nature of these spaces in some cases, consent authorities have excluded such areas from floor space calculation. These spaces are becoming more public in terms of level of accessibility provided and the actual nature of the space, often as the requirement of the consent authority. Often what is being provided is high quality public domain, which comes at no cost to the public. Whilst there is some benefit in providing such environments for shopping centre owners, to further encourage the creation of such areas, the consideration of some credit to the owner would be beneficial. This would also create some equality in the present public/private domain situation where public spaces are leased to private users for substantial fees.
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ARCHITECTS:
Once the feasibility study is complete its time to consider the architects selection process. Once you have shortlisted the preferred architects, they will forward proposals with a company profile and head designers C.V’s Once the company has been chosen and the process commences, with preferences and guidance’s from the developer, the initial three stages are as follows: 1. Stage One – Preliminary Concept Design ? ? Summary of project vision General site – plan shoeing building configuration and site – layout
? Site circulation diagrams showing access and ingress, vehicular flows car park plans, retailer servicing, etc. ? Shopping centre layouts configuration, vertical and horizontal circulation, indicative position of retail units and common areas. ? Key building sections with the indication of key levels (ceiling and floor level and building heights) ? ? Summary of gross and net development floor area by category Indicative façade drawings
2.
Stage Two: Schematic Design ? Using the approved concept design to proceed with the schematic design
? Develop the schematic design in consideration of the current concept design, the client’s requirement, planning parameters and other necessary consultants design. ? Present the design to the client and the relevant authorities for approval before proceeding with further steps ? The schematic design architectural drawings shall include: o Typical overall floor plans o Basement floor plan (including the calculation of car parking facilities) o Rendered site – plan showing indicative landscape concepts in 1: 500 or suitable scale o Elevation in 1:200 or 1:250 scale (including proposed building façade)
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o Schematic architectural details showing design intent o Rendered architectural perspective showing design intent o Design data calculations o Material boards proposed for exterior finishes o Outline architectural specifications o Outline finish schedules for both exterior and interior o Design brief ? Attend and co-ordinate with client and/or consultant team meetings
? Co-ordinate with authority approval: consultant to prepare and provide necessary drawings for authority submissions ? ? Amend the drawings if required by the government. Co-ordinate with quantity surveyors for cost plan
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3. Stage Three: Detail Design ? Co-ordinate with other consultants (e.g. C&S, M&E ID & other specialist consultants) to incorporate their design into the architectural design ? Further develop the schematic design to the level of design development drawings. The architectural detail design drawings are similar to the schematic design drawings stated above but they shall be coordinated with the C&S & M&E engineering requirements and include more details as follows: o This is where your tenancy mix and zoning come alive. o Once these drawings are complete its time to construct
Bibliography
• •
http://www.forbes.com/2008/01/17/retail-malls-shopping-biz-commercecx_tvr_0118malls.html http://www.indiaretailing.com/news.aspx?topic=1&Id=4155
Book : • Mall Management – Azhar kazmi
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