In the rapidly burgeoning retail space of malls, there are two main categories that take up the major chunk; one is food retail and the other is fashion retail. The glitz and glamour of an apparel store, the dazzling display of jewellery store windows and the plush interiors of a footwear store are the adornments that are must-haves for every popular mall. They are must-haves because retail mix is a very important aspect of any mall. The success of a mall largely depends on this. Some mall developers make the mistake of accepting everyone who shows interest in hiring the retail space irrespective of whether or not the product of that retail goes with the target market. For a mall to do well, developers need to choose what the target market is and go after it.
Number of fashion brands
Having a right mix of tenants and brands in fashion retail and their space allotment are crucial to a mall’s success. So what percentage of overall space is allotted to fashion brands while zoning a mall? To this Susil S Dungerwal, Chief Mall Mechanic, Beyondsquarefeet Advisory replies, “Area wise, it is 48-52 per cent, as an off-hand figure.” However, Arif Sheikh, President Retail, Advance India Projects Limited, states, “As many as possible, it is fashion, which brings in footfall and business both.” It seems, malls try to attract as many fashion brands as they can, given that the figures go up to as high as taking up half of the mall space.
Zoning a mall on the basis of category is also a trend that’s fast catching up with real estate developers. The fashion zone is further bifurcated on the basis of product category. Categories in fashion like footwear, jewellery, apparel, innerwear, etc are allotted space after conducting a detailed study on the catchment area.
While some developers exclusively rely on specific researched data for the segmentation that they want in their malls, others follow some tried and tested formulas. Dungerwal avers, “We do a consumer profiling within a 3 km radius of the upcoming mall. It is purely research based and very specific.”
Sheikh on the other hand specifies the percentage allotment, he says, “For shoes it is 2 per cent, sports brands have 5 per cent occupancy, jewellery & accessories take up 1 per cent, apparel has 53 per cent, lingerie covers 1 per cent, bags & leather occupy 0.50 per cent of the total fashion space.”
It is observed that some mall developers follow the international practices, wherein the ground floor is allotted to luxury and international brands. The reason behind this is that the ground floor has the highest rentals and highest footfalls. However, if a mall does not target elite customers there would be fewer or no luxury brands.
As the fashion retail is all about the local customers’ preferences so the space allotment as per the value formats, lifestyle, and luxury formats, needs to be in synch with the type of people visiting it. Dungerwal feels, “It is again something that is decided by research data. It depends on the mall positioning.”
Sheikh however, believes, “Segmenting place for fashion based on value is not fair. Today even ready-to-eat meal comes in fashionable packs.”
Experts say that generally the first floor is allotted to women’s and kidswear brands. On this floor, the rentals are lower than that for the ground floor, but sales are hit by up to 30 per cent, in general. How about the menswear stores? How do developers segregate the allotment based on menswear, womenswear and kidswear brands? Looking at the fashion retail space with a bird’s eye view, it is women’s fashion and women’s wear that dominate the overall ratio of this category distribution. Dungerwal substantiates, “We usually look at the break up as--- women’s wear – 40 per cent, men’s wear – 30 per cent, kidswear – 20 per cent, and generic/mixed/unisex – 10 per cent.”
Sheikh gives away the details as “Mixed Fashion – 40 per cent, woman's fashion – 9 per cent, men's fashion – 2 per cent while children's fashion – 2 per cent.”
Big and small
The Forum Mall in Bangalore is zoned in a ‘dog bone’ fashion, an anchor tenant is present at each end ( Landmark and Westside) while vanilla retailers in the middle.
Forum Mall continues to be one of the most successful malls in the city in terms
of annual revenues. The success of this mall is accredited to its perfect zoning and superior tenant mix vis-à-vis other malls in the city.
Following this set example, a lot of developers are giving due importance to the space allotment based on the size of stores, that is, vanilla stores and big-box stores.
Dungerwal replies, “Vanilla stores are spread across an area of 800 – 1500 sq. ft, mini anchor/category pillar stores occupy 5000 – 10000 sq. ft and big box stores cover 20000 sq. ft.”
Sheikh states, “Vanilla stores forms 500 SBA for accessories to 5000 and big box could go to any many sq fts as possible but looking at current SKU build up in India one should stay within 50000 to 75000 sq. ft and edit SKU's for best optimisation of retail space.”
The anchor tenant is the largest occupier in a mall in terms of square feet. Vanilla retailers cluster around the anchor and feed off the shopping traffic it generates.
The store rental in malls varies from place to place and city to city, but it is mainly the footfalls that determine how high the rentals may climb. Dungerwal confirms, “It differs a lot from area to area, depending upon footfalls. Usually in metro cities it is around Rs 120 – 300/sq. ft for ground floor, 20 per cent less than ground floor for first floor, 20 per cent less than first floor for second floor and so on. This pattern changes, when there is a parking lot on every floor. Then each floor becomes a ground floor; or when there is a food court or a movie hall on a specific floor.”
Sheikh does not agree with it and says that rentals vary from location to location. A space on the ground floor in a mall at a good location in metro may be rented for Rs 400 to Rs 600 per sq ft. on an average. Tier II and out of town locations have rentals of Rs 60-100 per sq ft for a similar space.”
Not everyone visiting a mall intends to shop. Commonly, there are two types of consumers visiting a mall. One type is focused-buyer and another is impulse-buyer. The time spent by focused buyers in malls is relatively small while impulse buyers hang-out for a long time. Impulse buyers enjoy window shopping. Though there is little that retailers can do to attract focused buyers. But impulse buyers can be lured by including retailers and products they are regular with and fond of.
It is heartening to note that mall developers pay special attention to local retailers, as they believe that local retailers bring in a traditional flavour to the retail space of a mall and spruce it up. Dungerwal exclaims, “Definitely! We give a lot of emphasis to attracting local retailers to our malls as they add glamour to the retail space and make it lively. We try and provide them with reasons why they should take up space in malls and help them grow with a ‘red carpet treatment.”
Sheikh too says with a grin, “Definitely, all our malls have got special zone for local fashion retailers and are doing extremely well. They are offering differentiated products with higher margins but at lower MRP than national brand to the customers.”
Franchised versus company owned
Malls seem to prefer more of company owned outlets, compared to franchised ones. According to Susil Dungerwal, some malls also get into a tri-party agreement where the company finalises the details of the retail space booked and then hands it over to the franchisee.
On a different note he says, “It is usually a mix of both with franchised outlets having 20-22 per cent occupancy as against company owned outlets having 78-80 per cent occupancy. Though, there are some brands, which operate largely through franchised outlets, like Archies, Adidas and The Loot to name a few.”
Specifying details regarding his mall, Sheikh states, “Almost 28 per cent of the space is occupied by franchised outlet at our mall.”
Having the right tenant mix and zoning help attract and retain shoppers by offering them multiple choices and satisfying multiple needs. It also facilitates the smooth movement of shoppers within the mall, avoiding clusters and bottlenecks. It results in influencing shoppers’ mall preference and frequency of visits.