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The Changing Scenario of Management Education in India
Prof. C. S. Venkataratnam, Member, FICCI Higher Education Committee & Director, IMI, New Delhi
Ms Shobha Mishra,
Joint Director & Team Leader, Education & Health Services Division, FICCI
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path: MBA in Retail Management
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Emerging opportunity in retail and development of malls

Dr Ranjeet Mehta

Indian retail real estate development started in 2000 with the first couple of malls becoming operational. All these malls saw rampant success with the developers and the investors witnessing huge returns on their investments. The retailers too in these centers have seen success and healthy turnovers. This success led to the swing of the second round of expansions, which was not very professionally managed. This development had predominantly been investors driven and was treated as a real estate development rather than a retail development, creating a situation of strata title sales. Malls were sold as piecemeal to multiple investors with no clear directive towards mall management and leasing process, leading to low occupancy, unplanned adjacencies and bad tenant and trade mixes.

Emerging markets such as India and China are the final frontier for retail taking the focus away from saturated Western markets. The Indian retail industry in valued at about $300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015. However, only three percent of Indian retail is organised. Retailers of multiple brands can operate through a franchise or a cash-and-carry wholesale model. Retail sector in India accounts for over 10 per cent of the country's GDP and around eight percent of employment. It is only second to Agriculture sector. It has emerged as one of the most dynamic and fast paced industries with several players entering the market.
Mall development

The churnings in the Indian Mall segment is getting more interesting with each passing year. The pitfalls of the initial mindless initiatives have already started showing and now the stress is more on professionally managed development. India is zooming to become a shopper's paradise. New/old, India/International, all kinds of brands available in a multitude of formats. Department store, hypermarkets, big box retailers, major branded retailers, everybody is available and available everywhere. Shopping centers all around and customer doesn't need to drive for an hour to get his favorite brand.

Malls are gradually inching their way to becoming the next boom industry. The whole concept of shopping has changed in terms of format and consumer buying behavior, ushering in a revolution in shopping. It has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof, with the change in Indian population demographics a large number of young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organised retail sector.

Shopping malls are available in all major and mini metros and some are already crowded. While the planned centers are doing well and the retailers are happy, the others are failing miserably, with poor sales and occupancy. The first round of shake-out has already happened with malls falling out and dying. However, new malls with international developers and a few professionally managed Indian developers are doing considerably well.

It has been interesting to witness retailers from every part of the country, especially the organized, corporate retailers pushing the developers not to sell their retail space due to the shortcomings of the model and the retailers realizing the losses they have to face due to poor management. The second reason for this model changing is the willingness of financial institutions to fund shopping center development, which was not the case earlier. Construction finance, equity participation and rent discounting, all these models of funding are available for developers today for their funding, making it easier for them to leave the old strata sale model. It is encouraging to see developers in northern and western India also adopting these models of funding today, leaving the old strata sale model behind and making the future of shopping center industry brighter.

However, the entry of professionals in the field of real estate development has also had a significant impact on the way business is being conducted today. The owners of development companies are leaving specialized businesses such as shopping center development and management to professionals. These professionals have played a key role in transforming the business and have inspired a number of others to look at this sector as a proper career option.

These professionals take exceptional care to discuss and study the projects before entering to development, resulting in making a good shopping center, with a mix and positioning suitable to the catchment they cater to. With the arrival of such professionals and with international real estate development companies coming into India and planning shopping centers, it is only a matter of time that the industry shall see a sustained growth path, rather than the bubble we see now.

With the rapid development of the malls and high rentals in retails sectors there have been dearth of retailers. The worrisome builders and developers have started selling these retail spaces to any one and every one. This practice has resulted in the mismanagement of malls and whosoever opened business in these mismanaged malls, have been struggling for footfalls. Since, all the best practices of mall management have been neglected in these malls they are looking for ways and measures to bring foot falls in these malls. In the process the management has been trying many methods of sales promotions- but the one practice which has been noticed for increasing footfalls is the Exhibitions.

But the gaps in mall management practices are not witnessed in South India, where most of the projects are going on a 100 per cent leased model and are being developed with some thorough planning. South India has seen slow and careful development as compared to the rest of the country but most of these projects are looking at long term returns rather than short term returns unlike their northern and western region counterparts. However, there are few malls in south delhi like city select walk and dlf place that are wholly on lease. And are positioned very well as per the current market demands.

Opportunity for small entrepreneurs in malls

Today people from all walks of life are visiting malls as malls are not only visited for shopping but it has also become a leisure activity. Due to recession the malls are also witnessing sharp decrease in footfalls. To increase foot falls in the malls many malls like City Select walk, DLF Place, DT Mega Mall have started organizing small exhibitions in the mall at attract foot falls and to make goods/services available for people from all income levels.

There are many small entrepreneurs and Karigars who have excellent products but they can not take a shop on lease in malls as the rentals are very high. These people can now visit any mall and take a small space on daily basis for showcasing and selling their products through Exhibitions. There have been several exhibitions in different malls in Delhi and NCR where very small entrepreneurs have exhibited and sold their products.

The advantage for these exhibitors in the malls is-- ready footfalls with high purchasing power, these consumers otherwise do not visit far flung areas for shopping but they are always looking for some exciting products in lower prices which are value for money. Malls in Metro cities are prime retail centers well reflected by the fact that they are eyed by all prestigious international brand and life style product seekers, even the small business men with good quality products have equal opportunity to interact with these shoppers.

Suggestions for small exhibitors

1. It is good to plan regular demonstrations, competitions or activities that will entertain and motivate visitors.
2. Display and highlight new releases and design the stand around the products/services rather than trying to fit products into a design
3. Have detailed information on how to obtain your product or services nationwide.
4. Take time to select the place for exhibition. And set a goal for the show. If you keep a staff, it is critical that the staff creates a welcome atmosphere - not clustering with friends and other staff - nobody will approach a group of strangers - it is too intimidating.
5. Don't ignore visitors -if staff are too busy when someone approaches, they should try to acknowledge them or try to include them in the conversation. If conversing with other staff they should break it off immediately.
6. Rehearse qualifying lines for the staff for the exhibition.
7. Link existing advertising with your participation in the exhibition. Announce your involvement in the show by including a brief message and your stall number on your mail outs.
8. Promote incentives in all advance publicity and promotional materials and make prospects come to your stand for fulfillment.

The author is professor and head, training, Rai Business School