The making of the next gen mall

Virtually Venice Malls hope to lure customers with the promise of fun experiences, and pet causes, not just shopping, as The Grand Venice Mall in Greater Noida

Select Citywalk show

Malls are no longer just shopping destinations; they are transforming into community hubs

Earlier, innovation for us was to put a big decorative piece in the centre of the mall to catch the visitor’s eye. Today we try and surprise them with emotion,” says Yogeshwar Sharma, CEO of Select City Walk, which is celebrating its 10th anniversary this month.

From heavy discounts for shoppers to surprise gifts to curated culinary experiences (there’s a waffle fest on) and fitness events, Select, acknowledged to be one of the most successful malls in the country, is laying out an extravagant experience for visitors this month.

Sharma, however, is the first to admit that the ten-year journey has come with its share of challenges, and that it’s now time to re-imagine things to keep pace with the customer’s changing habits. To give a simple example, Select Group’s chairman Arjun Sharma points out how millennials rarely drive and prefer to Uber it, so in the future parking spaces may have to be shrunk and used for something else. That’s just one of the examples he gives of how closely societal trends can affect a mall.

The growing clout of e-commerce poses another big challenge to mall developers. Amazon killing off malls is a very real threat. “I would say the fear of e-commerce is one of the factors that has led mall developers to explore new categories such as food or gaming where there is not much competition online,” says Vivek Kaul, Head - Retail Services, India, CBRE South Asia.

This explains the rise of food-driven destinations such as Sangam Courtyard in Delhi and DLF Cyber Hub in Gurgaon.

Or take the new The Grand Venice Mall in Greater Noida, an opulent Italian-themed mall, created by the Bhasin group with an investment of ₹800 crore that has taken eight years to build. Satinder Singh Bhasin, managing director, The Grand Venice, says the Romanesque mall, spread across 13 lakh sq ft is a mega tourist destination. Here shopping seems almost incidental, even though it boasts the largest lifestyle store in Delhi NCR, spread across 50,000 sq ft. There are water canals on which visitors can enjoy gondola rides, there is a recreation of the Leaning Tower of Pisa and Foundain d’Trevi, gigantic Roman sculptures, massive gaming zones, the largest food court in NCR, and an aquarium spread over one lakh sq ft. On the anvil are a zip line ride, bumper cars, and several other attractions.

It’s less than 20 years since Ansal Plaza, the country’s first mall opened in 1999. Until 2002 there were just three malls in India. According to real estate services firm JLL India’s data, there are over 700. Vivek Kaul of CBRE estimates the success rate is barely 30 per cent. Several early malls built look jaded and outdated. Ansal Plaza, in fact, has just emerged from oblivion after a vast makeover. Now it is positioning itself as a gaming and food destination with a hip nightclub and such.

Mall developers admit that they used to spray and pray earlier. But today, a lot of science is going into the management. With institutional money flowing in – US private equity fund Blackstone is set to become India’s biggest retail landlord, having acquired several malls – huge change is brewing. Here are some trends shaping the next gen mall:

Evolving social spaces: Malls are no longer about just shopping, food and movies. They are becoming event-driven community centres, a whole new lifestyle zone that mimics societal trends. “We are becoming a microcosm of society,” says Yogeshwar Sharma, pointing out how Select is getting involved in everything from pet adoption to driving cancer awareness to celebrating Kargil Diwas. There’s an attempt to create an emotional bond with customers. “We also try to create places and moments where the visitor is tempted to take selfies and post,” he says. Similarly, at VR Bengaluru, which incidentally does not even want to be called a mall, there are large Channapatna skittles and a bright red “I love BLR” sign that cry out to be selfie backdrops. Says Kaul of CBRE, “In many Indian cities, families really have limited places that are safe and clean to go for outings – so the mall becomes the default option. Developers are now capitalising on this.”

New concepts, formats: At VR Bengaluru, the retail arcade co-exists with a hotel, a fitness studio, a gigantic co-working space and a terrace party zone. Or look at the way several malls such as Sangam Courtyard are boldly eschewing retail to focus solely on food. Entertainment, food and retail, “all three are becoming fungible asset class,” says Pankaj Renjhen, Managing Director, Retail Services, JLL India. They can drive traffic on their own strengths. He says no longer are mall developers boxed into a formula. Today the concept depends on the size available, the location and need. He points to the Bandra Kurla Complex where ORC (office retail complexes) are prevalent. There are shops and restaurants below and offices on top. Elsewhere it could be a hotel or a service apartment. The format has become dynamic and is changing. “By offering a huge gaming zone, I am increasing my catchment,” says Bhasin.

Experience creators: Today, virtually every mall has become very heavily event-oriented. From musical evenings to open air film nights, VR Bengaluru screens retro movies on its rooftop. From art to textile to gourmet food exhibitions, a lot is going on. Even the store experiences are changing with pop-ups, kiosks, stalls all being encouraged so that the customer gets a mix of experiences.

Technology, an enabler: VR Bengaluru has a food delivery app, The Food Box App, through which its hotel guests and those using co-working zones can order food from the restaurants at the retail arcade. Or take the way the Wave Group which runs malls in Noida has positioned itself as a digital-first organisation. It is using digital pretty effectively for remarketing, social media targeting and personalisation.

Professional mall management: Institutional investment is changing the game. According to JLL, $1.57 billion has been pumped into retail by private equity players between 2015 and September 2017. Through Nexus Malls, its India subsidiary, Blackstone is taking major stakes in malls and has invested in Seawoods Grand Central, Ahmedabad One, Mall of Amritsar, Elante Mall, Treasure Island Next, Treasure Island Indore and Westend. Then there is the joint venture of Xander group’s Virtuous Retail (VR) and APG Asset Management which too is on acquisition spree and has picked up a mall in Chandigarh’s Mohali. Canada Pension Plan Investment Board has joined hands with Phoenix Mills in Mumbai.

According to CBRE’s Kaul, any mall in the country has a potential to upgrade its revenue earning capacity by at least 20 per cent. With PE funds and mall management services coming in, that may happen. JLL’s Renjhen says several services such as facilities management are already being outsourced. But soon will come a day when even the asset management will be outsourced.

In America where malls are having a big meltdown, requiems are being written for big retail. Here, malls are certainly not dying, there’s just a lot more change in store for them!

Published on November 16, 2017

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