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Will India be malled?

A Brooke International Report

From the 1950s through the 1980s, retailing was confined to central business districts in most of the Indian cities. But as suburban population grew, many local shopping areas in suburbs transformed into regional shopping destinations. Most of the retail development in Indian cities has been in the form of strip or ribbon centers. These strip centers comprise several adjacent stores located along a major street. While the rest of the world has moved from shopping malls to power centers, India has yet to see a good mall development. From Hong Kong to Jakarta, malls are the places where more and more Asians go--not just to shop, but to eat and be entertained.

What is a Shopping Mall? A shopping mall/ planned shopping center consists of a group of architecturally unified commercial establishments built on a site that is owned or managed, designed and operated as a unit, based on balanced tenancy, and surrounded by parking facilities. Its location, size and mix of stores are related to the trading area being served. A typical mall has one or more anchor store and a diversity of smaller stores . The term "mall" represents the most common design mode for regional and super-regional centers and has become an informal term for these types of centers.

Then why is it that shopping malls have not taken off in India?

For a number of years, the Western retail pattern-large chains and big malls-has been looked upon as `the' model to strive for in India. Much discussion on its possibilities has taken place and retail chains have happened. But unlike in the West, no set pattern has emerged yet. It could also be attributed to the fact the disposable incomes have undergone a substantial increase only in last few years. Infact, property development has been corporatised only lately which was also a reason for lack of any attempt to look at real estate market beyond residential or commercial developments.

The Mall of America The second largest mall in the world has a total floor area of 4.2 million square feet. Its 2.5 million square feet of retail space is occupied by four anchor department stores, seven "junior" department stores, 350 specialty shops, and enough small retail kiosks and stands to keep millions of shoppers occupied indefinitely. The huge structure also includes a cluster of nightclubs, restaurants, bars, and theaters, a LEGO Imagination Center, and an 18-hole miniature golf course. In the center of the giant square formed by the anchor stores--Nordstrom, Macy's, Bloomingdale's, and Sears--is a seven-acre amusement park, KnoWs Camp Snoopy. The mall is unusual in that it mixes upscale, off-price, and specialty retailers in one locale. The megamall, as it is popularly known, has generated its own mega-statistics, from the number of people employed there (over 11,000 at last count), to the cost of construction ($825 million in private and public funds, according to Melvin Simon & Associates, the lead developer).

Malls require a large area with ample parking space, which is generally not available and very expensive in the heart of the city. Hence malls are generally located in suburban and out of town locations. Low car ownership in Indian cities also acted as a barrier in development of malls. Insistence of retailers on being located in super premium shopping districts where the real estate cost barrier is the highest was also another barrier. Retailers blame the property developers, who are only keen to construct and then sell the retail space instead of taking the trouble to manage the mall properly.

Malls require that the individual stores complement each other in the quality and variety of their product offerings, and the kind and number of stores are linked to the overall needs of the surrounding population. In order to run a mall successfully, a coordinated and cooperative long run centerwide retailing strategy is required. It then becomes the responsibility of the shopping mall manager/ owner to market the development as a marketing destination and to ensure the maintenance and day to day management of the mall.

In the last couple of years, Indian developers made attempts in this direction. Spencer's Plaza in Chennai, the Piramals' Crossroads in Mumbai, the Ansal group's Ansal's Plaza in Delhi and Real Value Projects' Number One in Calcutta are examples of new professionally run malls. Although, Spencer Plaza Phase I was sold instead of being leased, the developer soon realised that selling means loss of control and creates hindrance in management of the entire development. And to ensure that the mall continues to be professionally run, Mangal Tirth has set up a mall management company, which will continue to run it even if the developers stop doing so. If developments like these can succeed, malls may be the incubator's for the retailing revolution.

	Shopping Mall	Strip Center
Tenancy	Balanced	Unplanned
Cost	Lower facilities cost as common costs are shared	Higher costs Lower facilities standards
Center Image	Unified image	Disjoint image
Parking	Large and planned parking space	Unplanned and inadequate parking
Environment	Pedestrian friendly Enclosed, climate- controlled structure.	Open to air / open canopies connecting store fronts.
Regulations	Uniform hours	Flexibility of trading hours
	Regulated signage
Rents	Higher	Lower
Security	Strict security of entire mall. Lower theft rates	Need to arrange security independently
Competition	Possibility of domination by large anchor stores	Stiff competition between small retailers

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