Mall management: Key to success

Asset management is emerging as a key function to ensure the success of organised retail and stay ahead of competition.
Asset Management



With the provision of more entertainment options in malls, Indian retailers now have vastly enhanced their ability to increase sales. Till a couple of years back, street markets and bazaars were the top performers in the retail space, and they cornered a huge chunk of the overall sales in the sector. However, traditional markets now have to imitate malls by creating a better overall shopping experience for attracting potential customers.

Malls are now gradually replacing street markets and bazaars in the retail sector, given the ease of shopping and an array of services, including food and beverage, and other entertainment options.  Apart from that, organised retail also offers a range of brands and promotional offers to attract the consumer, and not to mention the superior layout and presentation.

New Business Strategies

And, rising competition amongst malls has forced their managements to focus on their core competencies and accurately research their offerings to target consumers.  As part of that strategy, mall owners must understand the needs of their consumers in the ‘catchment area’ and plan suitable retail offerings for them, in terms of brands and stores. 

Also, with the economy showing signs of slowing and consumer spending tight, malls are carefully evaluating all aspects of a location, before setting up a new facility there.

However, certain business strategies are viewed as essential for running a successful mall:

Zoning:  The array of different retail stores occupying mall space, also known as tenant mix and their placement in the facility is viewed as key.  This is essential for consumers to complete their shopping with ease. Zoning refers to the process of dividing the available mall space into different sectors for placing various retailers.

Sustainable revenue model:  Mall developers should not only concentrate on fixed rentals, but also develop innovative models where both retailers and developers would be able to earn profits.  As part of that strategy, malls can work out a pure revenue sharing model with a minimum guarantee, and it is en vogue.

Promotions and marketing:  Events, including food festivals, cultural events and celebrity visits, help increase footfalls in organised retail and eventually help sales. Also, malls need to understand in greater depth the needs of local consumers while devising these marketing events and to compete effectively with other malls, close by.

Asset Management

Asset or mall management aims to ensure optimum utilisation of resources, which include staff, available space, and relevant processes and technology. It encompasses three aspects:

 Infrastructure management:  It refers to the management of facilities provided to tenants, as well as risk management measures including essential safety measures, environmental audits and imparting emergency and evacuation training. 

 Ambiance management: Management of the mall’s overall appearance and ‘feel’, which is considered as necessary today. It also helps to differentiate one mall from another.

 Traffic management:  Crowd management, both inside the mall premises and in the parking zone, and it ensures malls function in an optimum manner.

The Road Ahead

Until recently, most mall developers considered mall management and facility management, as synonymous.   However, there is growing realisation that these two concepts are different, and professional mall management plays an important role in ensuring the long-term viability of organised retail.

 Mall management is well developed in mature markets, like Australia, UK and USA. In India, it has been present for the past five years and with competition intensifying, mall managements have increasingly outsourced the function of mall management to professional agencies.

Initially, asset management here began with simple facilities management functions, which basically encompassed the operation and maintenance of malls.  However, the scope of this function has gradually expanded to shopping centre management or overall management of a facility, but few companies offer this facility to their clients currently.

There are various business models on which mall management service providers operate; and the most basic model is based on a fixed management fee and a small variable component. In this model, the service provider acts like a manager on behalf of the mall owners, with a relatively low risk quotient.

A more evolved business model is based on reimbursement of operational costs, in addition to a pre-defined profit margin. And, the service provider has to collect receivables from tenants, to effectively balance the expenditure and revenue cycle of a mall.

A trend that is also emerging in this model; involves a fixed chargeable component to a mall management service provider’s fees, which covers a certain portion of the outgoings and also encompasses a margin of profit. In some cases, a variable component has also been introduced, which is a function of the enhancement of the mall’s revenue generation by virtue of these activities, as well as the collection of receivables.

The scope for asset management in India is enormous, with players in this segment expanding their presence to Tier II and Tier III cities.  And, while Jones Lang LaSalle was the pioneer in this field and currently commands the largest share of malls under management by a single service provider, many other players have entered this segment and are also offering advanced services.



Publish Date
Not Sponsored
Live: People Reading Now