The Hindu Business Line : Malls’ day yet to come

As of now, these complexes attract the window shopper, impulse buyer and the cinema-goer rather than real customers, feel leading retailers. But malls can ‘arrive’ if they get their act together.

— K. Bhagya Prakash

Footfalls are not always those of shoppers.

R. Balaji

Malls are not yet venues for `serious shopping but are more a haunt of the window shopper, impulse purchaser and the cinema goer. That most cities in India are yet to see a well managed mall is partly to blame.

Except for a handful of malls most do not offer customers the experience and delight they promise. In some regions such as the NCR they have been ‘over built’— another reason malls are not doing well.

These were among the sentiments expressed by a group of leading retailers participating in a panel discussion on consumption trends, organised by the international property consultants Jones Lang LaSalle Meghraj at a launch of their report on Leading High Streets of India last week.

But the malls’ day is coming if not sooner definitely a few years down the line… if they can pull their act together, was the general feeling among the participants.

And that does not take much — follow traditional wisdom and know that ‘customer is king,’ they said.

Among them were retailers from a wide section of products and commodities, including Mr B.A. Srinivasa, Director, Vivek Ltd, the leading chain of white goods retailer; Mr S.B.P. Pattabhi Rama Rao, President, Australian Foods India Pvt Ltd, a company marketing the leading brand of Australian cookies — Cookie Man; Mr T.S. Ashwin, Managing Director, Odyssey, a chain of bookstores; and Mr Nathella Prapanna Kumar, a leading jeweller and a popular name in the city over the last several decades.

Moderating the group was Mr Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj.

Momentary demotivation

Inflation not withstanding, the sale of white goods was growing at about 15 per cent year on year and computers and other IT products at about 25-30 per cent. says Mr Srinivasa, dismissing inflation as a ‘momentary demotivation.’

As for malls as a location for white goods store — “Malls are okay for window shopping, impulse purchases and garments,” he says.

Viveks has an outlet in a leading mall on the arterial Anna Salai where footfalls are high but the chain’s leading outlet is the one in Mylapore — one of the oldest residential areas in Chennai which is now a mix of residential and commercial segments. Buyers still like to pick out the exact piece of their choice and not have it delivered from a central warehouse.

Mr Rao felt that there was more to the slowdown than a passing phase, there has been a definite drop in footfalls since April and it is severe in the ‘overbuilt markets of the NCR’ and also in Ahmedabad.

The South, though, is on an upswing but there has not been an increase in the number of malls in Chennai, Bangalore and Hyderabad.

But one positive outcome of the slowdown in offtake of space is that the landlords, the mall owners, are willing to talk to those taking up small areas, such as Cookie Man’s, that can manage with as little as 300 sq.ft. Malls are starting to work better — they can no longer get away with being ‘mousetraps,’ he said.

Rental models

Mr Gibson G. Vedamani, CEO, Retailers Association of India, is confident that by year-end retailers are not likely to report a serious drop in sales. But outlets may take a business decision to change locations because they need to be efficient. Malls are just beginning to get their act together, though some of the early players did not get their business model or location right.

Mr T.S. Ashwin, Managing Director, Odyssey, a store that is present in all formats – malls, neighbourhood shops and high streets — reports a noticeable drop in sales in the mall outlets. But there were no issues in their shops on the high streets.

He has a bone to pick with mall developers, their rental models are never transparent, he says. But a high street option is always a more transparent deal. Also, he complains, he has a two-page long list of outlets proposed in malls but the mall space is yet to be delivered — the money is stuck and the plans are delayed. But in a high street, even a built-to-suit project is ready in less than a year.

Mr Ramesh Nair, Managing Director, Chennai Region – JLLM, says in Chennai, particularly, there is slow supply of mall space. The delay in approvals is partly to blame. Paper work can take up to two years. The suburbs are also growing at a slower pace than expected.

If the reactions to a mall as a location are mixed for these people, Mr Kumar, the jeweller is clear — no more malls for their jewel shops. Jewellery buying is ‘serious business’ and malls simply do not have the proper ambience for it, he says. He was among the earliest to get into a mall on Anna Salai but four years later he exited and never thought of setting up shop in a mall, Mr Kumar said. The Nathella chain of shops prefers its own locations, not even rented ones. “Mall footfalls have a different mindset,” he said.

Some happy stories too

But there are happy stories in malls, points out Mr Rao, and these are the top few that have got their location, management, and their rent right. These are malls that are run by experienced mall operators who know their business and not the security guards — that is when shops run after the care takers begging them to turn on the air-conditioning, he commented.

Cookie Man is careful to go with the established names in malls. The emphasis in a successful mall is on customer experience — providing adequate car parking, ambience, ensuring customer delight and where the “the customer is treated like a king,” Mr Rao said.

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