Portfolio

Malls go for local flavour

Balaji R. | Updated on March 19, 2011 Published on March 19, 2011

Be in sync with the local environment to stay relevant. — K. Ramesh Babu   -  Business Line

Malls and large retailing centres may be the emerging face of retail but they are looking to the traditional retailers and the tried-and-tested methods to anchor them. Also, there is the realisation that malls need to ‘localise' their content to maintain their relevance.

If the big names in retailing garments, silk sarees and coffee or the familiar provision store down the street, can thrive in the face of change, may be there is something to be learnt from them. Could that be why one of the leading mall developers in the country, and among the few considered successful, opted for a leading, regional player, RmKV as its anchor client?

RmKV, according to a leading retailer who participated in a panel discussion on the role of traditional retailers in malls, is to anchor a mall in Coimbatore and another in Chennai, the Forum Mall at Vadapalani, in Chennai.

Mr S. Raghunandan, CEO-Retail, Prestige Group, which is setting up the Forum Mall said mall developers typically have one of three options – to go for a food and grocery store, fashion outlet or cinema. Traditional retailers have evolved a successful model by building a store around a brand or a market, and not around a format as some modern players have done. The traditional retailers are entrepreneurs and not a company or a franchise which makes them better suited to cater to the changing market needs.

Prestige had worked six months to get a particular traditional brand into its mall, he said.

Mismatch

He recalls when a team had gone around the malls in various cities a few years earlier, the team had noticed a mismatch between the malls and the surroundings. In localities dominated by women in saris or salwars, the malls were filled with outlets offering western wear. Also, all malls tended to look alike and were downright boring. Prestige consciously veered towards working with traditional retailers. Malls are now in the first decade of growth, may be in the next 10 years they could afford to look at fully western offerings.

The discussion was in the context of the proliferation of malls but low success rates. Of about 100 malls that have come up in the last decade, those that are considered successful are less than a handful, said the participants.

The event was organised by Marg Ltd to launch the Marg Junction Mall on OMR, a 1.83 million sq.ft mixed use development with a 6.5 lakh sq.ft mall. Chennai, with three malls in operation, has been slow as compared with the other metros – there are more than 50 malls in the National Capital Region, 30 in Mumbai and 16 in Bangalore .

Risk of irrelevance

Mr Phil McArthur, Senior Vice President - India, Ivanhoe Cambridge Advisory, a Canadian fund focussed on investing in malls, pointed out that most global brand chains started life as a single store including Levis and McDonalds. But when malls mimic western trends and they run the risk of becoming ‘irrelevant.'

Ivanhoe is part of a group which owns over 85 malls in 15 countries and is among the largest owners of malls and shopping centres globally. One day it hopes to partner with a local player for a mall. Its focus is on the southern metros.

Mr McArthur gives this word of advice, go to the top of the building and take a look all round, look at the kind of life in the surrounding areas, that is going to be the mall's catchment to which it has to cater, Mr McArthur.

But malls often take the easy route, depend on property consultants and sign up brands that are adapted to mall environment rather than try to convince the brands that need to come to the malls. Traditional retailers need to be made aware of the potential in malls. They are not keen on taking up space in the malls, primarily because of the rules and routine they may need to adopt in the mall. Mall developers need to understand why traditional retailers are reluctant to set up outlets in malls.

Also, he cautioned against the rush that is happening in setting up malls in small towns and cities, it is yet a metro phenomenon and has not evolved sufficiently. Low land prices alone cannot be an excuse for setting up malls in small cities.

Growing niche

While things are looking up after an extended lull in the retail space, mall developers have to fight the temptation to hike lease rates as international brands again start planning to take up space, he said.

Mr Kumar Nitesh, Head – Retail, Bata India, said when malls do not relate to the market, people start going to the malls for the ambience but do their shopping in the high streets or with the traditional retailer who has built the relationship over the years. But the mall market is a definitely growing niche which has its specific needs. Bata distinguishes between these two segments.

Feedback to >blproperty@thehindu.co.in

Published on March 19, 2011

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