The mall-retailer connect

A sneak peek into what goes into the mall-retailer relation.
Mall Retail

The success of any shopping centre is based on studying and proper understanding of catchment area. The point to be kept in mind is that every brand sells but the target audience differs. The proportion of categories available is also something that is of crucial importance.

 The mall version


Referring to the criteria for selecting potential retailers, Paras Arora, Sr. Vice President, Moments Mall says, “At Moments, we undertake a robust customer research with categories and wish list in terms of brands. We also follow a strategic leasing policy based on zoning, category mix and adjacencies. Moments is following a  well-planned  and  executed  tenant  mix , which will help the  mall sustain  its  “destination” status  even  in  the  face  of  ferocious competition. Lease tenure varies from 3-9 years depending on the brand and category.” “Visibility is an important factor when it comes to choosing the space in a mall. We, at Moments Mall, have the rental as - Rs 200-300/sq ft for the ground floor,” he further adds.

Yogeshwar Sharma, VP - Commercial and Leasing, Citywalk, opines, “Like there is a proportion for every category of products one needs, the mall should be laid out in a similar proportion. For instance, the proportion of merchandise in a wardrobe can be considered here. Like five optical shops on the same floor makes no sense. However, there must not be any monopoly too.” Citywalk is based on a 100% lease model, however, right beside Citywalk – MGF Metropolitan is based on a 100% sale model. “The lease model gives us the opportunity to have a revenue share model with our retailers and also, our interests are aligned with the partners,” says Sharma. Some crucial points to be considered, as shared by Sharma, are – know your customers including their customer habits; facts about retailers like how aggressive is their approach, how flexible they are, etc.

Answering the question as to how the anchor tenant is chosen, Arora shares, “The anchor tenants are chosen based on customer and demographic research and competition analysis. Ours is a mix of anchor category -Departmental stores, hyper market, large MBOs, consumer durables & IT, food court, family entertainment, etc.” “The criteria of choosing  a  flagship  anchor at Moments is also based on creating both  merchandising  variety  and  enduring  categorical strength in the mall relevant  to  the  primary  target  segment,” he further states.

Commenting on the strategies to attract and eventually sustain retailers, Arora opines, “To attract retailers we share with them our committed marketing plan, Zoning mix and Brand mix. We also give them Smart Lease structure which is a combination of minimum guarantee and revenue share. We at our best also support them in terms of various marketing and PR initiatives and promotions. The mall believes in forming a partner rather than a ‘rental’ transaction with key tenants and various retailers.”

Sharma points out, “Per square feet sales is the first and foremost consideration, with rest everything being secondary. Rent is a component of ‘function of sales’. Higher the sales, higher are the rentals.”

Coming to the difficulties faced by malls in sustaining retailers, Sharma says, “If the retailer is not willing to change and has a specific mindset, he may not be conducive in accordance with all the catchment.” Interestingly, Sharma points out that every 5 kms the catchment changes - further implying that according to the concept of the mall, the study of the target group is of utmost importance.

Sharma adds, “When the mall and the retailers come together, it becomes much easier to market the mall, synergising the strength of the retailers – cohesive effort to bring people together.” “We consider our mall to be a third home for people, being event oriented too and not just a place for selling or shopping,” he further states.

Summing it up with regards to the relationship of the mall and the retailer, Arora explained, “Retailer-mall relationship is of paramount importance for hand in hand strategic alliance. We support them through strategic mall branding, gift voucher management, mall maintenance strategy, competitive positioning, and a promotion and marketing strategy for the entire mall on a regular basis.”

Retailers’ take

We caught up with a few retailers present in malls to understand their perspective. “Location of the mall, catchment area, how the mall is positioning its image i.e. luxury mall, which vanilla brands have signed and definitely history of mall management etc. are few factors that a retailer looks into before buying the space,” says Natasha Shah, MD, The Nature’s Co. Apart from the points mentioned above, Vaibhav Tiwari, Brand Head, Crabtree & Evelyn, India shares that the mall’s tenant mix plays a crucial role. “We need to be alongside the right brand mix. Also, the image of the developer is an important factor which includes their market rating , previous projects and the way they promote themselves,” adds Tiwari.

Another area is that how much do the rent figures and the footfalls contribute as the factors involved? “I won’t say that one can totally rely on footfalls as serious shoppers and conversions is what actually drive the sale and not only footfalls that come to hang around in a mall as an entertainment centre,” shares Shah. However Tiwari feels that the rentals and footfalls absolutely are key factors to be considered. “Especially in India, rentals play a crucial role. As opposed to global standards where the rentals should be 5 – 10% of your sales, in India due to dearth of prime retail avenues we end up paying 30-35 % which is a huge factor that affects our sustainability in the long run. Footfalls are always a vital factor; however, it’s not just about the volume but also the quality of walk-ins that make the big difference,” he further shares.

Throwing light on the criteria of visibility in the mall for space allotment purposes, Shah avers, “Definitely, ground floor is the best floor. Central atrium is the main focus area. Next to big formats is again where your crowd is going to be. Also being placed in a wrong zone can hamper your visibility, i.e., brand focused on men being allotted a space in the kids zone. The space allotment can make a brand visible or totally ignored. The main criteria in choosing a mall and ensure the brands visibility is a SPACE right in the face in correct zoning.” Tiwari sums up by stating, “Where you are located makes all the difference in terms of visibility, especially when the brand is a new entrant in the market and when spontaneous purchases play a significant role in influencing consumer buying behaviour.”

Timmy Sarna, MD, DLF Brands which recently launched their new multi brand store - AVE.NEU in Delhi avers, “Moments mall is strategically placed and caters to areas which are still untapped so it has given us an opportunity to reach the consumers in these areas as well, though we have our standalone stores in the likes of Citywalk and Promenades.”

Varun Sharma, General Manager, The Body Shop gives a crux and says that assessment needs to be done in a very subjective manner and all decisions should be far sighted.

 

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