In the context of high rentals and low shopping spirit, mall developers are now converging their primary attention to woo retailers, generating hype around retail through various festivals, events and workshops. How effective is their endeavour?
What Retailers say?
There are retailers who have been all praise for the shopping festivals and then there are the ones who don’t think it serves much of the purpose for them. “Yes, an activity in the mall certainly gives the consumers a reason to shop and the overall mood in the mall has a positive inclination towards shopping. Combined with the activity in the mall , we at store level also have special promos which gives consumers a reason to walk-in and hence leads to sales conversion”, says Mr. Pradeep Banot, Brand Head, Sun Glass Hut, who has a store in DLF Promenade and are a part of the ongoing shopping festival there.
But Neeti Gupta, Brand Head, Alcott, the international apparel brand, which has her store in the same mall, feels that “The ongoing shopping festival could be beneficial for us if this could happen in the month of March, May, June or September when footfalls are usually low.”
Although for Minawala, which sells precious gems and jewels in a high end shopping mall, these kind of festivals do not benefit them with their sales. “We sell jewellery that are on the higher side of the price scale. Customers who come to us are pre determined if they need to visit our stores. So, although the footfalls in the mall increases, which results in creating awareness for our brand, but there is no direct sales because of these festivals” opines Priya Singh, Business Development Manager-North India, Minawala.
Select City Walk, a prominent mall in Saket, can boast of newer business practices, apart from regular festivals by way of events and various dance classes like Salsa and Hip-hop dance classes; the recent one being acting workshop by acting baron, John Barry. These events maintain a spurt of customers all throughout the year.
"In this race of attracting customers, Select City Walk stands ahead with its most advanced, embryonic and upto the minute event strategies", cites a regular customer of the mall while adding indigenously,"I am an impulsive buyer and for me such events are a big puller. If not anything, I just walk in to check the new activities happening here over a cup of coffee at Barista or a pie at the cake shop".
What Mall Developer thinks?
If we have to believe the mall developers, then these gimmicks are amazingly a success mantra for any mall developer. The sole and the most important intention to initiate these shopping festivals is to retain the retailers who have been paying so much of a rent, and if they don’t do profits, they will simply leave making it a losing situation for both the parties.
“All the retailers should get back to us saying that they have clocked in 20-25% more sale this year in comparison with the previous one. We have got some retailers who came to us saying that they have clocked 50% more in terms of their sales estimate. So, we can say it’s successful and it is working for us” Ms. Pushpa Bector, Vice President, Mall Management, DLF Services Ltd, said, when asked about the target they set to achieve after the completion of the 4 week long shopping bonanza. She further adds, “We are the ones who initiated it obviously, but then we asked the retailers for the participation, and they gladly participated. There was a lot of enthusiasm from the retailers which is good because the one who haven’t participated and did not get to reap the benefits of the sale this time, will surely queue up the next time round. This festival will be growing big with every coming year.”
High Rentals, Difficult to Breakeven?
Malls these days are indulging in the revenue sharing with the retailers, so that retailers can have the benefit of the minimum risk, if the mall fails to attract the customer. Sometimes, a retailer may have to pay a much higher rent in the revenue sharing, if the store is doing very well but then the retailer is also secure that they don’t have to pay higher rents when the mall is failing. Even the malls takes initiative to boost the sales of their tenants since they are now involved in the whole procedure.
“Yes, we do indulge in revenue sharing with the retailers. It’s just that there is a minimum guarantee or revenue sharing, whichever is higher,” says Ms. Bector. But then the malls also have the option of fixed rentals.
“We have opted for a revenue sharing which is 10% of total net sale value for the month, excluding tax”, says Neeti while adding further, “being a new brand in India, it’s too early to discuss returns on investment. While on the other hand Banot says that “Return on Investment is positive considering high end malls bring in consumers with high spending power. Being a premium brand such malls go hand in hand in helping brands position.”
Again, not all retailers go for revenue sharing as in the case of Minawala. Priya says that Minawala pays the fixed rent and consider it as the ideal model of payment. They know their monthly sales and are aware of the rent they have to pay. It is a simple calculation for them. So even if they are given an option to share revenue, they will not be interested. As far as return on investment is considered, Priya avers that they are pretty much satisfied the way they are doing business in the mall, provided it has been just 6 months for them there.
Facilities Provided to the Retailers
There are malls which are high on rents and the reason for that is the availability of so many of international brands which have grazed Indian malls post recession. So it becomes a challenge for the mall developers to justify their cost to the retailers they are housing in, in terms of infrastructure, footfalls and in terms of service standard.
“The international retailers are lot more demanding because they are used to a certain level of service but then they add a lot of value. They have understood that in India they have to do certain compromises, but within the mall we have taken the service standards equal to the services you find in the malls of the Europe or any other place”, clarifies Ms. Bector.
Priya from Minawala suggests “We are quite happy with the kind of facilities DLF Promenade provides to its retailers. There are some issues but then nobody is perfect.”
It seems that the mall developers in India have learnt their lesson and are looking beyond just building the malls and selling the space. They are working in tandem with the retailers and are also ready to bear the loss if they fail to generate the desired footfalls. These are all the signs of the better future for the retailers.