How Neighborhood Malls Are Changing the Retail Landscape in India

Neighborhood shopping malls are opening in abundance in the close vicinity of the residential areas, catering to the basic needs of the consumers.
How Neighborhood Malls Are Changing the Retail Landscape in India

Neighborhood shopping malls are the talk of the town. These days, we have seen that a lot of shopping malls are opening in the close vicinity of the residential areas which cater to the basic needs of the consumers.

These malls along with fulfilling shopping needs of the consumers provide options for entertainment and dining – making it a perfect place for family get-togethers, office meeting or a casual date.

Explaining it further, Rema Menon, Vice President- Retail & Commercial PAN India, Parsvnath Developers Ltd., states, “Neighborhood mall is the mall close to your house where you can just walk down by yourself to shop. The area of the mall is generally around 40,000 – 1 lakh sq. ft.” 

“The deciding factor for a neighborhood mall is how well it is versed with the local community, for e.g., services like laundry, salon, a pub in a shop, and many more,” adds Ashish Gupta, Head Leasing, Elan Group.

Neighborhood Malls or Big Format Malls – Which is a Better Bet For Retailers?

Many retail brands are placing their equal bets on neighborhood malls as well as big format malls.
“Lenskart has a presence in neighborhood malls, high-streets as well as big format malls. Of late, the train is moving towards neighborhood malls and stores, primarily because it is convenient and safer to travel a shorter distance. As a result, my neighborhood business is much better than the high-street stores. We are also getting business from big format malls because consumers are doing impulsive buying but shopping at neighborhood malls is more planned,” explains Sunil Menon, Chief Retail Expansion Officer, Lenskart.

However, Benetton is present mainly in big format malls, but now the brand is also opening stores in small format malls. 
“Having an excellent healthy retail mix, Benetton is inclined more towards organized malls which are kind of destination centers to leverage impulsive buying,” says Vivek Srivastava, Head of Business Development, Benetton Group.

What Do Consumers Prefer – Neighborhood Malls or Big Format Malls?
The deciding factor of which mall – neighborhood mall of big format mall - does consumer prefer depends upon what do they want to buy. 

“When I am looking through a customer lens, I think they expect two things: overall experience and convenience. The decision-making criteria for customers depend on what they have to buy. So the daily consumable and daily wear SKUs will always get higher traction in neighborhood malls as compared to destination malls,” asserts Ashish Gupta.
Resonating the same thoughts, Sunil Menon says, “Yes, even for Lenskart, the sunglasses contribution is much lesser in neighborhood malls than destination malls because impulsive buying happens in destination malls, and that impulsive buying for my brand is for sunglasses. In a neighborhood mall, a customer comes with a focused buying purpose. So contact lenses sell more in neighborhood malls in comparison to destination malls.”

Elements of Neighborhood Malls

There are certain elements like the right retail mix, tenant mix, a convenience which add to the success of the neighborhood malls.

Explaining it further, Ashish Gupta says, “Like I said, in neighborhood malls, the important factor would be what is convenient to people like a salon, tailor shop, cobbler, a dental clinic is a must. We can avoid formats like FunCity.”
“When I am looking at the success of destination malls versus neighborhood malls, the number of successful destination malls is few, like Palladium Mumbai, Select CityWalk Delhi, Ambience Gurgaon, etc. on the other hand, the success ratio of neighborhood malls is high. Coming to the tenant mix, the food and beverage mix is going up, and I'm not considering the last 1 year and a half. Cinema follows this, and even one-screen movie theatres are doing good business. Hyper and supermarkets play a critical role in driving footfall in the mall along with retailers,” adds Vineet Jain, COO, V Mart.

However, Rema Menon opines that entertainment should not come to neighborhood malls as if we someone wants to watch a movie, it is a planned trip with family and friends.
“Everything and anything that a homemaker or a child in the house can go and pick up comfortably is a neighborhood mall to me. The mix is not pre-planned; it happens by the need and desire of a particular locality. Small street food restaurants, good food delivery places, in fact, a salon, hypermarket, for me such things should definitely be there in neighborhood malls,” she further explains.

“Selecting the right brand for a neighborhood mall is of utmost importance. We also have to see the demography it will cater to,” adds Sunil Menon.
How Bright is the Future of Neighborhood Malls

The way metropolises are developing, it will become impossible for destination malls to survive only on secondary catchment or additional catchment. 

“Considering the traffic situation in metropolitans, soon the distance will be measured by time and not kilometers. Therefore, the more neighborhood malls, the merrier consumers will be,” states Sunil Menon. 
“During the pandemic, we started respecting these neighborhood malls. So you see a lot of popular brands like Bata, V Mart, etc., coming to the neighborhood malls now. The other factor I think will be that a lot of local brands will become national brands,” adds Rema Menon.
“Most of us have our lenses on metro cities, but for V Mart, most of our business is coming from Tier-II and Tier-III cities, 70-80 percent of my business is coming from Tier-III cities. These cities need neighborhood malls because destination malls might not work there. Soon, the development we saw in Delhi, Mumbai, and the same development is happening in Tier- II and Tier- III cities. So that's the next journey, in my opinion,” concludes Vineet Jain.

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