Role of Mall Management in Altering Retail Landscape in

India

Monica Srivastava

Assistant Professor

Jaipuria Institute of Management

Vasundhara, Ghaziabad

Usha Kiran Rai

Professor

Institute of Management Studies

BHU, Varanasi

Electronic copy available at: http://ssrn.com/abstract=2232140

Abstract
Retailing is a set of business activities that adds value to the producers and services sold to
consumers for their personal or family use. Often people think of retailing only as sale of product
in stores. But retailing also involves sale of services, medical facilities, boarding, lodging,
services of food, after sales service for repair, etc .Retail has played a major role world over in
increasing productivity across a wide range of consumer goods and services. The Impact can be
best seen in countries like the U.S.A, the U.K., Mexico, Thailand and more recently, in China.
Economies of countries like Singapore, Malaysia, Hong Kong, Sri Lanka and Dubai are also
heavily assisted by the retail sector. Retail is the second-largest industry in the United States
both in number of establishments and number of employees. It is also one of the largest
worldwide. Over last 20 years many forms of retailing have developed like Shopping Malls,
discount stores, superstores ,wholesale stores ,factory outlets, hypermarkets, convenience store,
specialty store and more recently E-retailing, all of them helped in shifting from unorganized to
organized retailing. This paper is an attempt to understand how consumer shopping experience
has changed overtime and the robust role malls have played in changing the retail landscape in
India.

Key words: Shopping Malls, Organized and Unorganized retail, Mall Management.

Introduction

Over the last few years marketers having studied the Indian organized retail sector have
concluded that India currently is in the second phase of the retail evolution cycle. Indian
consumers today have become more demanding with their rise in standard of living and changing
lifestyles. The major factors that have fuelled this growth are the increase in disposable income
of the people, improved lifestyles, increased international exposure and high awareness among

Electronic copy available at: http://ssrn.com/abstract=2232140

the customers. These macro level factors alone cannot be held responsible for this spectacular
market growth. Simply having the money to buy does not necessarily translate into an actual
purchase. The Indian consumers have used the retail boom to their advantage. They now have
many more options than before and exert their power of knowledge very well.

Retail Scene in India

A shopping mall or shopping center can be described as a building or set of buildings that
contain retail units and a multiplex with interconnecting walkways enabling visitors to easily
walk from unit to unit, offering diverse brands and utilities at the same place. Recently, Indian
consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail space is
no more a constraint for growth. India is on the radar of global retailers and suppliers/brands
worldwide are willing to partner with retailers here. Further, with the large Indian corporate
groups like the Piramals, the Tatas, the Rahejas, ITC, RPG Enterprises, Pantaloons race to
revolutionize the retailing sector, retail as an Industry in India is coming alive.

Factors Affecting High Retail Growth in India

The factors responsible for the development of the retail sector in India can be broadly
summarized as follows:

1) Rising incomes and improvements in infrastructure are enlarging consumer markets and
accelerating the convergence of consumer tastes.
2) Liberalization of the Indian economy which has led to the opening up of the market for
consumer goods has helped the MNC brands like Kellogg’s, Unilever, Nestle, etc to
make significant inroads into the Vast consumer market by offering a wide range of
choices to the Indian consumers.
3) Shift in consumer demand to foreign brands like McDonalds, KFC, Pizza Hut etc.
4) The internet revolution is making the Indian consumer more accessible to the growing
influences of domestic and foreign retail chains. Reach of satellite TV channels is helping
in creating awareness about global products for local markets. About 47% of India’s
population is under the age of 20, and this will increase to 55% by 2015. This young
population, which is technology-savvy, watches more than 50 TV satellite channels, and
displays the highest propensity to spend, will immensely contribute to the growth of the
retail sector in the country. As India continues to get strongly integrated with the world
economy riding the waves of globalization, the retail sector is bound to take big leaps in
the years to come.
5) India is the last large Asian economy to liberalize its retail sector. In Thailand, more than
40% of all consumer goods are sold through the supermarkets and departmental stores. A
similar phenomenon has swept through all other Asian countries. Organized retailing in
 India has a huge scope because of the vast market and the growing consciousness of the
consumers.

Mall Management -A Growing Phenomenon in Indian Retail Industry

Review of Literature

Sankar (2005) -A shopping mall is typically, a shopping complex connected by walkways. It

provides shopping as well as entertainment options to the target consumers. It generally, contains
one anchor store, which consumes twenty five percent of its retail space. In addition a mall
contains specialty stores for clothes, accessories, home needs, books, as well as food court,
multiplexes and entertainment zones.

Ranjan (2010) -In his research examined the impact of retail outlets and malls on the purchase
behavior of middle class consumers. He comments that the successful organized retail chains and
also the malls in the country today operate at regional segments and are not aiming at the
nationwide presence, at least for the time being. According to the author, in order to reach all
classes of the society in India, organized retail formats should design a comprehensive and
prospective business model which offers the quality product / services at affordable prices and
generate more socially balanced business.

Research Methodology
Secondary Research: Secondary data was collected from publications in academic and trade
journals, reports prepared by market research firms and with the help of Internet.

Research Objectives

To carry out this research the research objectives that has been formulated are-
1) To study the impact of the development of the concept of mall management on the
organization of the retail industry in India.
2) To analyze how the consumers’ shopping habits are changing with upcoming retail
formats, specifically malls.
3) To Study the strategy developed by mall developers and retailers for facilitating
consumers to prefer shopping mall over the unorganized market.

Concepts of Malls

The concept of ‘Retail as entertainment’ came to India with the advent of malls. Mall fever has
touched every facet of Indian society. Whatever is the income stratum of consumers, malls make
no distinction in proffering most-revered national and global brands. Shopping Mall refers to a
set of homogenous and heterogeneous shops adjoining a pedestrian, or an exclusive pedestrian
street, that make it easygoing for shopper to walk from store to store without interference from
vehicular traffic . Malls are incorporated with a whole bank of lifts and escalators for smooth
transit of shoppers. Malls are located in proximity to urban outskirts, and ranges from 60,000 sq
ft to 70,000 sq ft and above. The future of organised retailing is largely in the hands of mall
where the shoppers get quality, quantity, aspirational appeal, recreation facilities and ambience.
Under one roof, the flashy malls promises just about everything under the sun, from foreign
gizmos to the very desi, virtually an airbus full of national and international brands, to say the
least . Malls offer a plethora of attractions- high profile shopping, impulse eating establishment,
a glitzy and glamorous environment… to discerning shoppers of more refined tastes, who are
more concerned with quality and fashion and less concerned with budgets. Mall reveals six
factors namely comfort, diversity, luxury, mall essence, entertainment, and convenience which
are a source of cynosure.

What Is Mall Management

Globally, mall management broadly includes:
 Positioning a mall
 Zoning – formulating the right tenant mix and its placement in a mall
 Promotions and marketing
 Facility management – infrastructure, traffic and ambience management
 Finance management.

According to the Jones Lang LaSalle Retailer Sentiment Survey 2006, 95% of the respondents
expect their gross turnover to improve and have plans for expansion in 2007. About 70% of
those who have expansion plans said they prefer malls over high streets for their expansion,
indicating the rising demand for malls as the preferred destination of organized retail in India.
Moreover, about 65% of those who preferred malls over high streets also said that mall
management is expected to become the deciding factor for a mall’s success in the future.
However, a sense of concern was expressed over the following challenges to the Indian retail
market:

1. Lack of quality locations

2. Shortage of trained staff
3. Rising rental values
4. Mall management

The first three concerns can be classified as external factors, whereas mall management is internal.
External factors are common to all players in the Indian retail industry, whereas mall management is
specific to individual malls but the success of Indian malls will not only be achieved by housing the
biggest and the best mix of retailers, but also by setting up new standards and procedures in mall
management that will provide a platform to differentiate its products and services from competitors. In the
current market scenario, both consumers and retailers have limited choice in terms of mall shopping
experience.

Some Popular Malls in Delhi – The National Capital

Name Location Year Size

Metro Walk Delhi 2007 220,000 sq ft (20,000 m2)
Living Style Mall South Delhi 2010
TDI Paragon Mall South Delhi 2010
 D Mall Pitampura 2010 350,000 sq ft (33,000 m2)
Square one Mall Saket 2005 85,000 sq ft (7,900 m2)
Select Citywalk Saket 2007 1,300,000 sq ft (120,000 m2)
DLF Emporio Vasant Kunj 2008 320,000 sq ft (30,000 m2)
Khel Gaon
Ansal Plaza Marg 1999 175,000 sq ft (16,300 m2)

Mall Management Strategy

The Mall management strategy builds on the basic idea of interdependence between the Mall and the
Retailer. It focuses on the business benefits that can accrue out of collaborated business management
between the Mall Developers and the Retailers. This is not to say that the association between these two
parties does not exist in the current scenario. Mall developers and Retailers do collaborate, but this
collaboration has not been formalized and even when it is formalized, it is rather sporadic in nature. Thus
the whole focus of this article is on suggesting a structured and formal way of collaboration between the
Retailer and the Mall. This concept is a whole process of enhancing customer traffic, sharing costs and
increasing the profit margins.

Strategic Perspectives

Sharing the Burden-Collaborative Management

From the customer's perspective, there are two major benefits that every customer seeks out of shopping
in a Mall. One is an overall experience and the other is a whole variety of goods under one roof. These
two expectations cannot be met satisfactorily either by the Mall developer or the Retailer. But if roles are
clearly defined and each one develops a core competence, then a fantastic synergy can arise between the
two parties. The Mall and the Retailer should work out a strategy where the Mall focuses on enhancing
the overall experience and the Retailer focuses on the delivering a good variety of products. To formalize
this association, there would have to be a clear definition of expectations and most importantly sharing of
profits.

Pulling in the Customers

The biggest benefit of this strategy would be in facilitating enhanced customer traffic. Internationally
Malls are supposed to be places of entertainment. For e.g. Malls in Germany, U.S.A offer round the clock
entertainment services either in terms of carnivals, music shows or events. Mall developers should
organize regular events which have the capability of attracting huge masses of audience, which would
benefit the occupant retailers hugely. Although while undertaking such events a few things would have to
be kept in mind:
The events would have to be organized in such a way that Malls do not become merely places of
entertainment and buying becomes occasional. In such a case the whole point of organizing these events
would be lost. This problem can be tackled by associating a major percentage of the events with direct
purchases. Retailers could be intimated about the promotion beforehand so that the retailers organize their
merchandise accordingly. Mall developers should come up with a "Mall Events Calendar".

Another thing that the Mall developer needs to be convinced about is the benefit of investing in these
promotional events. While on the face of it Mall developers might feel that there are no tangible benefits
in undertaking such events, such an assumption is far from reality. Promotion events not only increase the
popularity of the Mall, they also increase the value of the space available in the mall. A mall which is
more popular would definitely attract better brands at better prices.

In any case to tackle the apprehension of the Mall developers the strategy has incorporated certain
financial strategies which create a Win Win situation for both parties. The retailers and the mall
developers would have to work out a financial strategy which creates sharing of the costs, the benefits and
at the same time does justice to both parties involved. How this can be done will be mentioned in
Financial Strategy segments that follow.

Strategic Planning for Merchandise

The Mall management would also have to restructure the way products are sold in their malls. One of the
ways could be to create mini malls within malls. For e.g. all stores in related categories could be placed in
close proximity, so as to provide a better variety to the customers and at the same time increase impulse
within the stores. Thus Apparel stores, Accessories stores and Shoes stores could be placed together and
thus create complete segments of related products within the Mall. The malls could now organize specific
promotion events for these sections or categories. Another way of Collaborated Merchandise Planning
would be by keeping the Retailers informed about Mall Events Calendar, so that retailers can respond to
the promotions by bringing about slight modifications in their product mix for that particular period. This
way the retailer benefits as well as the Mall Developer.

Developing the Team

To support these futuristic ideas of mall management, a competent team would need to be developed
which is fully devoted to these aspects, whose primary focus is to be in touch with the customers psyche
and constantly innovate promotion schemes. The team should ideally have a two three representatives
who are reporting to one person. Each of these representatives may hold accounts of occupant retailers.
Their primary responsibility would be to coordinate with these retailers and derive business out of them.
At the same time it would also be essential for them to be in touch with their requirements. The team
would also include traditional roles such as Marketing, Housekeeping etc.

Working out the Financials

Innovative ideas are of no use if they do not make business sense. Without a feasible financial strategy to
backup, the strategy would be a failure. While financial strategies would always be specific to the Mall
and Retailers, this strategy in its basic form incorporates the following strategies:
 1) Sharing of expenses between the Retailer and Mall would be undertaken. Possibilities include a
fixed fee to be paid by all the Retailers to the Mall developer. This fee would be over and above
the rentals being paid already. As a justification to the costs the strategic team may be held
accountable for either footfalls or certain minimum number of events in a year. Since these
events would always be held in consultation with the Retailer, retailer would stand to benefit
directly from these events.

2) Another strategy for Financial collaboration could be by way of Revenue sharing. The Mall
developer gets cut out of the revenues of the Retailers during a specific promotion.

Research Findings

1) Different malls have their different way of providing entertainment to their customers. Some
have big multiplex theater , some have a huge Food Court, some provides a good shopping
experience to their customers while some malls provides a very large gaming zone for the
adults as well as children‘s.
2) Different malls have the different alignment in terms of providing entertainment and their
environment serve different people according to their requirements.
3) Various marketing tactics are also applied by different malls to increase the footfalls in their
malls. E.g. GIP offers a loyalty card for their regular customers in their mall.
4) Each and every mall has a different image in the minds of the customers i.e. why people go to
those malls where they think that they can enjoy a lot.
5) Mostly people now days prefer to go to malls for their entertainment purpose as they can
enjoy there with their family & kids, partners, as well as friends.
6) Gaming dominates other modes of entertainment.

Conclusion

Until very recently, mall management was synonymous with facility management in the mind of most
Indian developers. The realization that they are different and that professional mall management will
affect the long-term viability and success of a mall is sinking in gradually and is being accepted across
developers, landlords and retailers. There are shortcomings pertaining to issues of mall management in
India. To overcome these shortcomings, developers must conduct professional mall management
practices starting from rigorous feasibility exercise or market research to facilities, ambience and finance
management of a mall.

The essential thing in the current situation is that both the Mall developers and Retailers take this whole
new idea with an open mind and begin the process of contemplation. The perfection of the system is a
matter of evolution and will definitely happen in the time to come.

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