How Bright is the Future of Neighborhood Malls?

Neighborhood malls have to sharply target their customers with the need of the hour of customers.
How Bright is the Future of Neighborhood Malls?

The neighborhood mall is a small community space. It can be in the middle of the town or a satellite town. Its size isn’t like a lifestyle center, it’s smaller - anything in between 2,00,000 to 6,00,000 sq. ft. The neighborhood malls are built to serve the community in that area and it expresses themselves through food, entertainment, and especially hypermarkets. Then you can add on as much as the space allows. Movie chains are always looking for such spaces at all given points of time because in India for movies as well as food people don’t prefer to go too far. Grocery, fashion, and accessories help neighborhood malls flourish. 
 
Explaining it further, Bhuvnesh Mendiratta, Vice President P&L, Miraj Cinemas says, “Neighborhood malls are for metro cities because people of that city face challenges in terms of traveling far due to the traffic. It’s a concept famous in Bengaluru, Hyderabad, Delhi/NCR, and Mumbai. Being a national chain whenever we explore a place in metro cities, neighborhood malls is a preference. But apart from that, a city which has a population of 7,00,000-8,00,000 then neighborhood malls are not there so usually 5 malls are fulfilling the requirements of that place.”
 
“We like to put our cinemas in neighborhood malls because the prices are reasonable. If you talk about big malls then you are ready to spend approx. 150 rupees sq. ft. rent. We prefer malls that have the size of 1,00,000-2,00,000 sq. ft. and we love to open our 4-5 screens there,” he further adds.

“We look for both – neighborhood malls and big malls. When we opened our first outlet in a mall, it was an experiment for us because we didn’t know how this was going to work out for us. But after its success, we got the confidence to open our salon in malls. We have 6-7 outlets in malls in Bengaluru and all of them are doing great business,” adds a spokesperson from YLD Salon.

Essential Elements of Neighborhood Malls

Space and location in a neighborhood mall make a big difference. You have to center it around a big player, sometimes it could be a cinema or hypermarket. This depends on local surveys and feedback. After that, you have to populate it to make it wholesome for the customers to come.

Elaborating it further, Indraneel Majumdar, Head of Mall, Sarath City Mall states, “Fundamental requirements of malls change from one place to another even in the same city. When we arrived in Hyderabad in 2018 with such a huge floor space everybody told us that it is going to be difficult for us. In 2 years another two malls are announced, their requirements might be different. We did 7 screens and this month's occupancy is 91 percent. It helps that the brand Ambassador is Mahesh Babu. We went for a regional cinema outlet, not a national chain because we know if we want people from districts, towns, nearby towns to visit our mall, we have to bring in a strong regional cinema player. Hence, we brought Asian Cinemas and they coupled up with Mahesh Babu. Because of that one cinema, we have got two food courts and that too is chock-a-block. We do business worth Rs 40 lakh from our food courts itself in one day.

“Every player will have its own mix. In some places, even two KFC outlets won’t be enough and in some places, you shouldn’t have a KFC outlet at all. Sometimes, even 5 screen cinemas are not enough for your space, in fact, bigger companies have found out that they should have gone for at least 7 screen cinemas at some places or have an auditorium with lounges. We have to think hard before we get into the mix. For example, in hypermarkets, everybody did 80,000 sq. ft. hypermarkets when they initially started and then it shrunk to 30,000 sq. ft. Today they are thinking that they should have added 10,000 more because suddenly gourmet clientele has arrived in that area. I started with two home stores and I have 9 now. I have a store called Kitchen Hub with just kitchen requirements, it is spread across a 17,000 sq. ft area. We just have to understand our clients and put in things according to their needs,” he further adds.
 
However, when it comes to cinema a lot of science is involved in it. For example, Bengaluru is a market where all the languages run, from Tamil to Telugu to English. So, obviously, if some brand wants to open a multiplex out there, they will go for a maximum number of screens. 

“If I open a cinema in Kanpur or Meerut then I’ll probably go for a fewer number of screens because my content options are fewer there. To understand India, you have to get to the ground reality of each and every region. With cinemas, we need to plan where we are opening, how many screens to run, what kind of content to run. If you distinguish between the North and South sector then North has higher KPIs because the average ticket value is Rs 350 and the average FnB spend is Rs 150 with maybe occupancy of 30 percent. If we get into South, the occupancy might be 45 percent but KPIs are less than Rs 200 a ticket and Rs 60 for FnB,” asserts Mendiratta.
 
Customer Experience

Neighborhood malls have to sharply target their customers with the need of the hour of customers.

Majumdar explains it with an example stating, “For example, if that area is solidly middle class, they are religious in their module, food is a big segment, some people of a house go out regularly; not all, and lastly a lot of healthcare is required. If your neighborhood mall is in such a sector then you need to target brands and services that would meet these requirements. I have been running a mall with a 15 lakhs sq. ft. carpet area and I barely see men shopping alone, women shopping alone, or with kids or their partners. 69 percent of people in our mall are women and children, now because of such intrinsic data we need to target such an audience.” 
 
“In malls, we offer services for women, men, and kids but our standalone salons are exclusively for women. Initially, we were hesitant to start services for men in malls but we are glad that it is doing well for us,” adds spokesperson of YLD Salon.
 

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