Future of Retail Malls in India
The Shopping mall culture
in India is relatively new. It started
from 2005 and now almost all major towns in India with a population of one lac
or above have atleast one Mall. Their
number now stands around one thousand or so.
Gradually, the numbers are increasing. Some of the prominent and iconic malls of India
are Select City, Delhi, Ambience Mall,
Gurgaon, Elante Chandigarh, Lullu Mall, Kochi, Sarath City Capital Mall, Hyderabad,
HiLite Mall, Kozikode, Phoenix Marketcity Mall, Bangalore, Phoenix
Marketcity Mall, Chennai, Mantri Square Mall, Bangalore, The Forum, Bangalore.
Phoenix Market city Mall, Mumbai, Great India Place, Noida, Pacific Mall, Delhi
and so on.
The shopping Malls provide large employment
directly and indirectly. In Malls, the customers enjoy more an experience rather than
mere shopping. Average customer spends
minimum 3 hours in a Mall. Besides,
normally visitors in a Mall environment are mostly in groups like family or
friends. So they have multiple options
of entertainment viz coffee shops, pubs, restaurant, cinema and of course
shopping itself. And as such the
popularity of the good shopping complexes have grown leaps and bounds. In case of extreme hot or extreme cold
weather the shopping malls become ideal destinations for day long hangouts as
these complexes are centrally air conditioned.
After advent of modern shopping malls, there was
fear that high street retail will vanish.
It was also feared and mom and pop kirana stores will also suffer badly
and slowly but surely they will also be finished. But reality is something different in
India. In fact the high street retail
has also evolved, kirana stores have adopted to the new reality and they came
out with new avtars of modern retail. Now the front counters have gone in stand
alone shops, side counters have come up.
Customers have choice of picking up the stuff of their choice unlike
earlier time where customers used to wait for shop keepers to show the options.
Most of the high street shops are
centrally located. The Kirana shops are
traditionally found place close to residential colonies where customers
including children can go easily and bring the stuff fast. As against this, the big retail malls are
normally found place either in new townships within city or at the outskirts of
the city where huge land parcels are normally available.
The construction, development and running of a
shopping mall poses big challenges. In
India, the land prices are exorbitantly high.
Running of an air-conditioned shopping complex is a tedious task of
balancing various expenses like power, security, maintenance, parking,
etc. This adds to overall cost to the
retailers. While the margins are thin, its very difficult for the retailers to
sustain after bearing the cost of rent and common area maintenance
expenses. Therefore, there is very high
degree of churning in the Malls. There are very few Malls in India which are
successful and rocking. At the same time
at least 50 percent of the properties in India which were meant for Mall
remained incomplete. In Punjab alone, there are minimum 25 such
properties which were started between 2006-2013 have not yet seen the light of
the day. Some Malls were initially
started but subsequently failed and now they are simply vacant or
underutilised. The main reasons for
their failure is very high cost of funding, poor selection of the site, dispute
between landlord and developers and in some cases the developers simply ran
away after feeling the heat of the market.
The vacant or under-utilised assets are national wastage and therefore,
serious attempts should be made to put them to use.
Now the World-wide Pandemic of COVID 19 has forced
government to lockdown the complete economy except essential services. After two months of lockdown government of
India has taken measures to open the market again. But unfortunately, the shopping complex and
multiplexes are at the last priority.
Its generally believed that these are places were virus may spread due
to closed environment and fear of overcrowding.
This is where the problem has
started. Malls have their fixed expenses
of maintenance. Retailers do not have
any source of income and as such they stopped payment of rent and CAM. There is huge tussle going on between Mall
owners and retailers. Many retailers
have given the notices of vacation of the premise as uncertainty of lockdown
will pile up their liabilities. Going
legal way is not a solution. The
situation is extra ordinary, a pandemic, a natural calamity, a government
action, forceful closure and so on. The
Court will have to go through many aspects to arrive at a decision. This may take years together to decide. Better, Mall owners discuss with the
retailers their problems and find a solution before the situation goes out of
control.
The Pandemic has opened the gate of high street
retail again. While the Malls are still
closed, government has given relaxation for high street shopping albeit with certain
restrictions on timing and days. But the
retailers have now realised that on high street they can at least remain
afloat. In Mall death is sure shot in
case of such lockdowns.
The COVID 19 has taught us that the life will not
be same again. Malls will be requiring adopting
new methods, new technology, social distancing norms, sanitization and so
on. Even after opening, the next six
months will be crucial for retailers as a few customers will find entry in the
Mall. The restaurant and Cinemas may
still take longer time to get permission.
And therefore, the major entertainment factor will be missing in the
Malls. Now it’s up to the Mall
management to restructure their maintenance expenses and help the retailers with
rental discounts for some time. This is the only way retailers can survive and,
in the process, Mall will thrive.
Pradeep kumbhat
30.5.2020
