The Hindu Business Line : Known by the companies it keeps

For mall developers in the country, these are dream statistics: A Rs 3.50 lakh crore retail market expected to grow at 7-8 per cent per annum and a 150-million strong shopper base. For the shopper, the excitement is even bigger: 60 million sq ft of mall space by end 2008 and about 400 malls expected to come up by 2010. It’s obvious from the visitor numbers that India has indeed started shopping in the malls. But new worries are creeping in: a tenant mix that could go wrong and stagnation in the shopping experience.

Malls that are two-three years old have already started rethinking extending their lease agreements and are roping in architects for a revamp while repositioning themselves to sustain the crowds in the mall. The location, the catchment area and the profile of the shoppers are the most important elements for a mall developer when deciding the tenant mix, says R. Kannan, President of Ramms India, a Bangalore-based retail consultancy firm.

For instance, upper-mid segment Indian stores such as Westside and Shoppers’ Stop rubbing shoulders with premium foreign fashion brands such as Louis Vuitton and Gucci could also prove to be disastrous, even though both could attract some customers that have similar profiles.

“The right tenant mix is the key to a mall’s success,” says B. G. Uday, Managing Director, Euroamer Garuda Resorts India, that has promoted the Garuda Mall in Bangalore. In fact, tenant mix is an alternative term for brand mix, and an area where one simply cannot afford to go wrong. You cannot have strangers sitting next to each other, is his strategy for picking tenants.

‘Complementary’ is the key word while choosing the tenants of a floor. In Garuda Mall, for instance, a jewellery brand is located next to a sari store. Space on the same floor has also been leased to a crystal store, an art jewellery outlet and a designer handbag store.

This leasing rationale goes back to the convenience element that malls boasted of when they first came up: Everything that a particular segment wants should be on offer here and everything on offer here should be for a particular segment. Mall developers, therefore, first identify their anchor tenants and build their tenant mix around it. Malls are built around the three concepts of zoning, comparative buying levels and adjacency.

It’s in the design stage that one thinks of visibility of brands and circulation of traffic, says Neeraj Duggal, Vice-President - Retail Development, Prestige Estates Projects (P) Ltd. “Anchors are the footfall generators for the entire mall and they are chosen very carefully,” he says. At Forum Mall, Bangalore, Prestige’s premium mall, averaging 40,000 visitors on weekdays and 60,000 on weekends, a department store and a lifestyle store have been identified as anchor brands. The mall follows a slightly different approach here: the anchors, instead of being located on a single floor, have been split into two-three floors so that each floor gets the benefit of the traffic that the anchor pulls in.

Zoning is the science of positioning the right tenant at the right place. At Forum Mall, for instance, men’s fashion stores are located at the ground level because of their short span of shopping interest. “Women don’t mind travelling up to the second or third floor if they like the brand,” explains Duggal. It’s also true that high-fashion brand stores prefer to be on the ground floor and are ready to pay higher rentals.

Mall developers also have to carefully place neighbouring tenants because comparative buying works well in certain categories and flops in some others. In men’s fashion, complementary products work better and in electronics, they do not. Experience has shown that adjacency factor does not work well when apparel and F&B are placed next to each other, says Duggal. So, the exercise works this way: make a wish list of your tenants, get your anchor tenants and start building the tenant mix.

But it doesn’t stop there. Disposable incomes are getting higher, the average shopper is getting younger and retailers are facing another new-age challenge: loyalty. “With neighbourhood malls coming up, my concern would be to sustain shoppers’ interest in shopping at Garuda. The only way to make them come again and again would be through new attractions like a change in tenant mix, periodic revamp of the mall and organising promotional events,” says Uday. Garuda Mall, three years old, with 118 tenants, will soon go in for a facelift and perhaps a change in the tenant mix. The anchors, of course, would continue to stay and some stagnant retailers would exit.

Neeraj Duggal says that except for anchor tenants, others should be on a lease not exceeding five years. Forum, which has about 75 tenants, also depends on kiosks dotting the mall floors to bring in freshness every few months. It’s very critical that a mall developer decides on its audience and delivers to it, emphasises Kannan. But take the case of Prestige’s Eva Mall in Bangalore, the experiment of a mall concept that couldn’t cut much ice with a niche audience. Promoted as a mall exclusively for women and children, the mall has had to change its positioning to a neutral brand mall now. “It was an experiment and we realised where we had gone wrong,” says Duggal. The concept of a niche mall was ahead of its time and there was not enough of a market for it. Eva Mall also did not have a strong anchor tenant to pull only the women into the mall.

With a five-year history of mall shopping habits in the country, developers have already realised that the tradition is here to stay. “A mall is a habit, but to keep a loyal customer base it has to change its offerings and be dynamic,” says Uday.

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