Notwithstanding the present economic scenario, India Shopping Centre Forum at Mumbai revealed that shopping centres will thrive after certain corrective measures
Retrospection is key to better all human affairs — more so in the case of economic activities, which utilise scarce resources like capital, labour, minerals, metals, etc. The two-day seventh edition of India Shopping Centre Forum (ISCF) 2014 at Mumbai, organised by Images group, precisely did this. There were 13 sessions, including two master classes attended by those connected with the business of shopping — real estate developers, investors, retailers, tenants, mall management agencies, etc – who discussed and exchanged tangible ideas for development of shopping centres keeping customer service in view.
In the period 2005-2008, India was perceived as land of opportunities and witnessed interest in all segments of real estate development — particularly shopping centres or malls. Several projects were planned in different cities, put on drawing boards, executed and inaugurated. Sunil Mantri, Mantri Realty, gave the example of Gurgaon in NCR where 80 malls were planned. Sunil Biyani of Future Group said; “Retailers and developers must work together to determine which market can effectively consume how many malls. There are developers who make mistakes while designing, selecting the right location, etc, but the biggest threat today is oversupply of malls in a particular area. Six malls in one market do not work.” Over the years, a number of shopping centres did not do well. Almost all the sessions of the ISCF-2014 delved on all relevant aspects and reasons for this.
Location is key
The location and catchment area of a mall is of prime importance. The locale should be easily accessible via wide roads and public transport system. Further, it should cater to the needs of the surrounding populace — whether it is office-goers or residents. All speakers emphasised on this and said prior research and data gathering, though expensive, pays in the long run. This is very relevant for India where land is intrinsically expensive, they noted. The lack of study and data was evident from the fact that of the present mall space, 17 per cent is designated as vacant.
Choice of retailers
Study also determines the mall size and also the choice of retailers and tenants. Said Pushpa Bector of DLF Mall, “A mall should be catchment specific and identify with the consumers to make it part of the destination process.” Shilpa Malik, Starcentres, pointed that an “ideal mall should be relevant for the customers not for six months or a year but throughout its being, entertaining them, at an affordable price range.”
Design of a mall
The design of a shopping centre with proper zoning and adequate infrastructure contributes to its success. On the criticality of designing, Pranay Sinha, Founder, Starcentres, commented: “Dead spaces have to be minimised. It is wise to build small with possibility of expansion than to build large and then have unleased retail space.” Added Shilpa, “Design should be the biggest driver. It is an undervalued factor in our country — a generic problem, particularly in malls.” Designs should ensure planned visits by consumers and should be flexible to suit changes in the retailing business. The mall must have wide roads around it to be able to bear the traffic, comfortable parking, green area to rest, public utilities, security and other amenities. Lack of these or poor maintenance of the same result in lesser footfalls.
Demand for FDI
There was unanimity among the participants that lack of capital and its prohibitive cost had contributed to failure of many malls and declining interest in building them. Financial institutions charge high interests for the shopping centres as collateral security does not bail them out in case of bad debts. There was a vociferous demand for foreign direct investment and granting infrastructure status to shopping centres to enable easy financing. Nikhil Chaturvedi of Provogue and Prozone Realty said, “Bankers do not know what to do with a shopping centre.” Emphasising on interweaving residential project with shopping centres, he added, “Lenders would rather loan to projects that have residential aspect to them because they are assured that their loan would not sink.”
Simultaneously, builders and investors were cautioned that retail space business has a long-term gestation period. “Shopping centre is a long term business and if the investor is ready to wait, it is the most rewarding and successful one,” stated Sunil Biyani.
Lack of interaction between developers and retailers before and after the completion of a mall was pointed out by several panellists. The former were required to ensure footfall increase through marketing, events, promotion, proper maintenance of facilities, etc. while the latter were asked to share their sales figures and details to help mall management to know conversion of visitors into buyers. It was pointed out that revenue-sharing along with minimum guarantee money was a good model.
There was emphasis on use of specialists and experts to help in mall management by providing modern, well researched and globally accepted services. Similarly, the role of technology was also highlighted. Said Vinod Sharma, Deki Electronics, “Our industry lacks in terms of information and statistics control. We have to look at developing technologies which can register the footfalls in our malls.” This, he said, will help in better planning and services.
Despite the pitfalls and problems discussed, the general impression among the participants was that shopping centres have come to stay. Expecting organised retail to grow exponentially, Yogeshwar Sharma, Select Citywalk, commented, “I have complete faith in the way mall industry will develop in future.” Shahie Kumar, Phoenix Marketcity, added, “Shopping centres will have to become social space for the entire family to enjoy.”
On the conclusion of the first day’s session of ISCF-2014 at Mumbai, the 7th Annual Images Shopping Centre Awards were given to 23 winners. Select Citywalk, Delhi, won Most Admired Socially Responsible Shopping Centre of the Year, North, and Most Admired Shopping Centre of the Year: Metros (North) while Viviana Mall, Thane, won Most Admired Shopping Centre Design and Most Admired Shopping Centre Manager. DLF Promenade, Delhi, won Most Admired Shopping Centre Marketing & Promotions, North.
(The writer was in Mumbai on the invitation of India Shopping Centre Forum-2014 to attend the event)