Whereas various factors have come together for the radical revival of shopping and consumerism in India, which has led to the increase in retail real estate space sales, started in 2004, there is no evidence of the phenomenon slowing down. Anuj Puri digs out the various formats available and the reason for their build up
The extent to which multiplexes and shopping malls have revolutionised the commercial scene globally remains without parallel. Between them, they have captured a huge cross section of the shopping population with its unique concept of diverse products and services to suit various budgets under a single roof.
Considering the extent to which the shopping bug has bitten the population, dissecting the roots of the phenomenon may be worthwhile. Organised shopping has surely come a long way. As it exists today in a typical Indian city, organised retail can be classifiable under four broad categories:
Shop-cum-residence: This traditional format that thrives in many Indian cities is, in many ways, still the most economical, people-friendly and convenient kind from the shopper's point of view. Invariably, such establishments offer a generous line of monthly credit and anticipate the needs of individual families in the neighborhood. While stocking most of the basic essentials of daily life, the range and depth of product categories may, however, be limited to the local buying pattern.
Small shopping centres: At the next level of the evolutionary chain, we have small shopping centres and plazas, perhaps ‘wannabe malls’ would be a good way of describing them. Purely commercial in orientation, they consist of a large but haphazard variety of retail outlets. The range of products and services can be quite impressive, but also confusing, since there does not seem to be a focal point or baseline to it.
In other words, you will find stationers, musical instrument shops, hosiery merchants, makeshift restaurants, computer peripherals agencies, and couriers all in the same building. Such shopping complexes are usually of optimum benefit only to those who are familiar with what they offer. To the entrepreneur this may be his only reasonable route to reach out to a valuable customer base.
Shopping malls: These are an entirely different kettle of fish. Broadly speaking, they are refined versions of the shopping complex because they follow certain fixed parameters. The level of security and services is invariably much higher than in a shopping plaza. Products offered in shopping malls are usually popular brands, and the available selection more appealing to discerning shoppers of more refined tastes who are less concerned about budgets and more concerned about quality and fashion. A shopping mall will invariably feature ‘impulse eating’ establishments such as fast food outlets (McDonald's, Pizza Hut, etc.). It may also take on the ‘discount mall’ avatar, which tend to cater to sections of society with higher disposable earnings and not the masses.
A popular variation is the multiplex-driven shopping mall. Such establishments, ostensibly, exist as multi-screen movie theaters, but a significant bit of revenue accrues by the attached shopping arcade and food court. Both these peripheral facilities are generally entertainment and impulse-led, and one often finds goods on display that are unavailable elsewhere in the city.
Hyper mall: Finally, we have the mega, or hyper mall. As the name suggests, such a mall provides the penultimate shopping-cum-entertainment experience. A hyper mall goes beyond the ‘all-under-one-roof’ concept. Apart from highly exclusive shopping that will invariably include imported leather, electronic and other lifestyle goods, it will incorporate a multi-screened multiplex cinema, lavishly scaled food courts and restaurants, multi-level car parking facilities, airline booking counters and international tailoring concerns as well as IT-related outlets, grocery stores and in some cases even hotel facilities.
Because of the multiple levels, such complexes are equipped with a whole bank of lifts as well as escalators for quick mass transit of customers. In India this concept has still not touched certain categories of occupiers such as utilities, white goods and furniture.
The presence of a hyper mall in any particular location brings any locality to the cynosure of public attention. This convenience it provides in terms of shopping and services results in rise in property prices.
Entry of shopping malls
Like most successful business concept, the multiplex and shopping mall format percolated down to India from the West, where it is has been an established force for a couple of decades now. Major cosmopolitan cities like Delhi, Gurgaon, Mumbai and Bangalore were the first to introduce it in this country. For instance, Mumbai saw the coming of the Crossroads Mega-Mall in 1999. The city had never seen anything on such a large scale of commercial enterprise before, and the concept captured the shopping brigade's imagination immediately.
With Crossroads' 1.5 lakh sq.ft of prime shopping area hijacking a significant share of regular shoppers, the concept of Mega-Malls soon took off in all earnest. Other undertakings like the gargantuan Phoenix Mall, Inorbit and Center One (Vashi) appeared on Mumbai's landscape, setting the ball rolling.
Meanwhile, projections at Kolkata are skyrocketing. A recent study indicates that the next few years will see sums in excess of Rs 4,500 crore invested in the city's retail sector, and over a hundred new shopping malls and entertainment complexes will rise all over the city in the future. Kolkata's retail boom is expected to percolate down to neighboring cities as well.
The advantages
The shopping and entertainment mall began as a novelty feature in major commercial cities, but it soon became obvious that huge chunks of local populations could be captured. The main advantages of malls and multiplexes to the consumer and the developers are as follows:
To the consumer:
Availability of most goods and services in a unified shopping environment.
Possibility of comparative shopping; in other words choice, depth and range.
Total family entertainment, inclusive of food courts, choice of movies and arcade games. Various members of a family can be together, yet continue to pursue their individually preferred leisure activities.
Cultural mixture and social appeal including the desire to be seen.
To the developers:
Economical use of commercial space; common infrastructure for a variety of shops, restaurants, movie screens.
Maximization of returns. Retail real estate is more profitable than commercial developments.
Catalyzing of overall increase in project visibility and hence project returns in mixed-use developments.
An added service to residential developments, and thereby an added attraction.
This being the case, it became clear that residential townships could harness the benefits of the mall, multiplex culture, too. Of course, the capital investment that such a project requires of a single building and development concern is huge but all major cities in India have their share of aspiring builders who find more value in developing malls.
Socioeconomic dynamics of the mall and multiplex boom
What is it about malls that has so enamored modern city dwellers? There are many factors involved. We can trace the roots of the New Indian's taste for such an upgraded lifestyle to three major influences:
Enhanced social preferences and aspirations,
greater spending power spawned mainly by the coming of the IT revolution, and
radical change of outlook in the country's youth.
Society as we know it is undergoing a significant transformation. In any major city of the world, we witness the slow segregation of various professional or social sectors into exclusive urban and suburban pockets. The accent of such subgroups is on ease of transit, nearness to the workplace - and immediate availability of all or most necessities and luxuries of modern life. In simple terms, their needs can be expressed as:
Domestic requirements (groceries, household implements, clothing.)
Entertainment (relief from boredom)
Time-saving facilities
Means of expressing social status
It is immediately obvious that malls and multiplexes offer solutions to all the above needs. Increased spending power gives rise to increased and more exacting demands, and the proximity of a mall is like an answered prayer for those who can afford to spend money in order to save time and effort.
The IT factor
In the Indian context, this phenomenon was not a common one until the coming of the IT, ITES sectors. Information technology has given a true boost to India's socio-economic status. Luxuries that were previously out of reach are now standard requirements for the contemporary IT professional. In financial earnings, youngsters now have in a few years what their parents took a lifetime to achieve. Added to this, easier credit facilities have fuelled consumerism. Youths now buy with future earnings - again a concept imported from the West against the traditional values of earning, saving and then spending the surplus.
Convenience and quality in all aspects of life are the new mantra. Because of the high grade of products and services available, shopping mall-cum-multiplex projects have instant, irresistible appeal. Products offered at such complexes tend to bear the most popular and recognized brand names, so a high level of genuine quality as well as aspiring appeal is readily available. Cheap imitations are rapidly becoming outdated, thanks to the mall culture.
Additionally, most personnel of IT multi-nationals are a globetrotting breed, exposed to international products and livelihood. Indian retail growth is now fuelling their desires to live the quality of life that they have been exposed to in their travels.
Residential and shopping systems that are novel conveniences to today's emerging Indian are matters of course to the many international IT professionals who are pouring into this country every year as such, they expect the best, and have the money to pay for it. The software explosion also brings in a large number of well-heeled people from all over the country, almost on a monthly basis.
However, an equally significant reason for the mall culture's success is the fact that the traditional retailer has been taking the consumer for granted and has been creating artificial product scarcities and not offering full depth and range. The consumer today wants to have all possible choices before making a selection. This is only possible through modern formats of retail that are more consumer-centric.
The retail growth has also spawned impulse and entertainment facilities. In metropolitan cities, there has been a rising demand for high-tech excitement amongst the youth. A recent Valentine's Day survey revealed that almost 75 per cent of the country's metropolitan college-going crowd celebrated the day with a day at the nearest mall. The emphasis on the 'latest' in music, branded clothes and accessories and international cuisine is most evident with Generation X. Shopping, dating, being seen at 'in' places cannot be matched by other options available to today's youngsters.
As already mentioned, having a multitude of commercial and recreational outlets under a single roof makes sound sense to both the supplier and consumer though clearly for vastly different reasons. This is why shopping malls, especially the kinds that include food court facilities, have caught on in a big way in metropolitan cities. As a result, the mall culture has now become representative of a progressive Indian lifestyle. Shopping as we knew it just a decade ago has become archaic and has been pushed onto the fast track with this new trend.
Entertainment galore
The multiplex is to the entertainment world what penicillin was to the world of medicine a definite shot in the arm. India's film industry has seen an unprecedented revival because of the new multi-screen format, and film aficionados suddenly have a dazzling range of movies to pick from in the very same locality.
However, it is not just about screening as many movies as possible at the same time. International standards have become the norm at multiplexes. A quick comparison between the quality of sound, seating and atmosphere at an Indian multiplexes and their single-screen predecessors makes this very evident. Seeing the latest film has become an enhanced experience. As a rule, these complexes, simultaneously, offer a plethora of other attractions fast food counters, high profile shopping, glitz 'n' glamour environment.
A welcome side effect of the multiplex revolution is that the quality of films has improved drastically. Film producers have woken up to a hard fact of life when the urban movie buff has a wider selection of films to see, he becomes choosy about matters like actor profiles, script, storyline, dialogue delivery, etc. In the past few years, we have seen an unmistakable upgrade in all these areas of film production. In other words, the multiplex is not just an imaginative money-spinner it has contributed positively to the overall quality of the movie entertainment experience.
Launching a multiplex is a matter combining numerous logistics, with clear-cut parameters, which include, outstanding location, well-planned parking facilities, shopping facilities, food court outlets, excellent service, and high grade of atmosphere
In other words, this is not a simple matter of throwing together four or five separate screens under a single roof. The management of various businesses at the same time while giving prime importance to customer satisfaction is a daunting task. For this reason, not a few multiplex projects have faded off the landscape at the drawing board stage itself. The ones that have survived by virtue of proper planning, execution and management are set to become national chains.
In commercial terms, the coming of malls, multiplexes and the townships that are built around them herald an utopian dream come true. Nothing like it has been witnessed in recent times, and it is indubitably the precursor of a modern India that will have the best of the West. It remains to be seen how we integrate our values and culture systems into these new developments. Typical examples of this would be inclusion of vegetarian sections in food courts and prayer rooms in malls.
Malls - the national situation
By the latest available statistics, every major city in India is literally bursting with shopping and entertainment malls. Pune is only now joining the bandwagon started that started rolling in cities like Bangalore, Chennai, Delhi, Gurgaon, Hyderabad, Kolkata and Mumbai. The cash registers are ringing full time - the largest malls in these cities average approximately 40,000 visitors (or 'footfalls') on weekends and about 25,000 per day on weekdays. This makes these establishments extremely viable in commercial terms. The mall trend is proving to be a definite winner. An internationally recognized real estate advisory firm has estimated that close to 250 lakh sq.ft of dedicated commercial retail space will be developed in the coming year.
However, it is fast becoming clear that commercial space in super malls will remain a rather expensive and, therefore, limited option for Indian retailers. The ones getting the largest amount of mileage out of the mall culture are international brands like Reebok, Lee, Sony, Philips, Van Heusen and indigenous market giants like Woodlands, Crossword and Park Avenue. The monthly rental costs for prime space in even the lesser-known malls can range from Rs 150 to 200 per sq.ft, while the cost of effective product display can go up to Rs 50,000 per month that is a significant investment to make for smaller players.
Discount malls adding flavor
In a different sector of society, grassroots economy still reigns as the supreme consideration of life. Recognizing this, America-based developer Sal Osio invented the unique concept of 'discount malls'. By now, most metropolitan cities in Asia have their fair share of these pocket-friendly establishments, and India is definitely no exception. Mumbai can boast of discount malls, such as the one in Goregaon courtesy the Royal Palms Group (which is also planning to launch a similar project in Marthahalli, Bangalore).
Apart from being a boon to less affluent consumers by offering centralized economy shopping, these establishments are also a convenient outlet of 'factory seconds' for manufacturers. These are fast-selling branded products that have sustained minor and often insignificant flaws in the manufacturing or transportation process. Such flaws render them unsuitable for the exacting export market. The existence of a discount mall in any city is the perfect means for manufacturers to get rid of 'dead stock.'
The 'being-seen-there' value of shopping at a discount mall is not quite as high as it is in higher profiled complexes. In the first place, they are invariably located far from the city's commercial epicenter to avoid clashes of interest with other retail outlets. Secondly, discounts are invariably based on the fact that the products offered are 'seconds' slightly damaged in the manufacturing or transportation process, or 'non-movers in more upgrade retail establishments.
The concept certainly does offer the intrepid bargain hunter with limitless possibilities. The distinguishing feature is, as the name suggests, a regular discount of 40 per cent to 70 per cent on branded goods that include clothing, leather goods, household appliances, etc. The advantage of comparing prices of already discounted goods without having to travel large distances is an irresistible one. However, the accent on discount malls is almost entirely on the shopping factor other aspects like entertainment and restaurants take the back seat.
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