Must for malls: USP

Pradeep Jain, Chairman, Parsvnath Developers Ltd, talks about the company’s plans for expansion in a in tête-à-tête with the Retailer

Retailer: What is your criterion for selecting the location of the construction of a mall?

Pradeep Jain (PJ): We undertake a detailed project of feasibility study before selecting and finalising a location for the development of a mall. However, the strategic location of the mall is the foremost priority of the organised retail. We anticipated the trend that metro would become a preferred mode of commute for people of all demographics and, hence, strategically developed malls could cater day-to-day needs of customers. On the other hand, for the launch of our first luxury mall which targets the niche segment of the society with high spending power having a demand of premium high-end brands, we chose Connaught Place as the desired location. Connaught Place, being the heart of the city, is easily accessible from all parts of Delhi and would attract the niche segment of the society.

Retailer: What constitutes the study carried out for mall projects?

PJ: Definitely, an in-depth research of consumer characteristics is done before selecting a location and we have an in-house survey team who, on a regular basis, studies different locations. This research helps us identify the demands along with the spending capacities. It is also instrumental in giving us a fair idea of the sex ratio and the household composition, which, in turn, help us in identifying the appropriate brand and product mix. Research is done through a process of sample survey, whereby our research team interacts with a sample comprising of people from different demographics. The results of the survey help us gauge the consumer behaviour. Another important study is also done to understand the future trends of growth of the area and city in terms of urban infrastructure, industrial initiatives and potential for IT, B.P.D and industries of other services.

Retailer: How do you calculate the completion-time?

PJ: Starting from the time of acquisition of land to finalisation of the concept, which includes getting the necessary approval and other preconstructions, a PERT chart is followed. Ideally, depending on the location and size, targets are set after getting necessary approvals to complete the project within the time frame of 18 to 36 months.

Retailer: How do you decide the brand mix for a mall?

PJ: Primarily, location and outputs of our surveys as well help us decide on the brand and product mix. However, our aim is to provide a variety of retail options and amenities in order to attract maximum footfall and bring about a paradigm shift of preference from mom and pop outlets to Parsvnath malls. In our malls, we try to bring a family together by catering to the needs of the entire household, ranging from apparels, accessories, eating joints to entertainment avenues.

Retailer: What is the procedure of deciding on an anchor?

PJ: It is clearly understood that anchors are the main footfall drivers in a shopping centre. And, it is very critical to have the right anchor or anchors. In our leasing strategy, we fix a lower rent structure for the anchor tenant and we approach anchors directly. In our strategic planning, we like to finalise the anchor tenants before we do the vanilla brands.

 
Retailer: How do you compare high street market to malls?

PJ: High street markets can be termed as mothers of modern day retail. Usually, it takes many years for a high street to get developed to its fullest. High streets can be understood as a conglomeration of several residential, institutional and commercial units. Largely unorganised by nature, high streets are now undergoing a radical change with more and more organised players looking for spaces. People all over the country are now looking at shopping malls as the perfect marketplaces that undo the drawbacks of high streets.

Retailer: Which are the hot destinations of the Northern region for constructing malls and what are the future mall projects of your company in this region?

PJ: Northern region of India comprising Chandigarh, Faridabad, Delhi, Noida, Greater Noida, Gurgaon, Moradabad and tier II and tier III cities has seen a burst of investment opportunities and emergence of its cities as hot destinations. But, I would say that the investment is not only restricted to the northern regions. In fact, the entire India is considered particularly attractive because of the size of its market and low presence of international retailers. High population density in metropolitan cities and satellite towns is driving the geographic penetration of modern retail i.e. the organised retail. We recently announced the launch of luxury mall in Connaught Place area of Delhi and, already, we have two completed-malls in Faridabad (City Mall and Mall Manhattan). At present, we have operational malls at some of the metro stations and are in the process of completing more DMRC projects. Launch of the first of its kind, Parsvnath Eleganza Mall in Dehradun will have a 4-screen multiplex. Parsvnath has plans to develop retail malls in 200 cities in India with sizes ranging from three to five lakh sq.ft. The builder is also proposing development of  another 20 large highway malls spread across 25 to 100 acres with built up area of around 25 lakh to one crore sq.ft per mall, expansion of Metro Rail in Delhi and NCR region including Noida, Ghaziabad and Gurgaon. Besides Delhi, Metro Rail shall also be developed in places such as Hyderabad, Bangalore and Chennai.

Retailer: What is the ideal time for the promotion of a mall?

PJ: Promotion of a mall starts right from the planning stage. The moment an organisation finalises a potential site, small scale promotional activities like putting up hoardings, soft launch advertisements and inception of public relations activities are undertaken. However, an aggressive promotional plan is envisaged when the project approaches completion stage. Road shows, TV and radio advertisements and various other promotional means are used so as to create a distinct image for the project.

Retailer: How do you ensure mall competitiveness?

PJ: Both the numbers of developers in the industry and projects under development have increased manifold over the last few years. In order to attract the best brands and tenants, emphasis is given on creating a USP, which could be anything, for example, a speciality mall. The objective is clear: make your project stand apart from the rest. There are several ways by which an organisation ensures right traffic and retailer-value. However, the same varies from developer to developer and, of course, from location to location too. A very obvious way is to finalise an anchor store of repute for the project. The anchor serves as the biggest puller of serious customers and other tenants and vanilla stores get benefited by them. The idea is simple: the mall should be able to address all the needs of the targeted customer segment.

Retailer: How do you make sure the success and longevity of a mall?

 PJ: Earlier, the retail was practiced in a much unorganised manner with kirana shops at every corner. Malls did not almost exist. Now, introduction of new formats with ultra modern amenities and features comparable to international standards has changed the definition of organised malls.

However, success and longevity of a mall depends on the location, architecture, format and, finally, the product mix. Competition is not only restricted to the organised retail sector. It is a general phenomenon for every business. In order to capture maximum market share, one needs to provide innovative concepts to consumers. Consequently, it can place itself in a better position vis-à-vis competitors.

Retailer: Do you make use of special agencies in mall management, retail leasing, ensuring footfall etc.?

PJ: Yes, we do have specialised agencies and they work on project basis. The specialised knowledge enables us in better showcasing of the project in the vicinity. These days, consumers look forward to having a perfect shopping experience and, therefore, even a minute imperfection can divert them to another substitute. For instance, professional mall management agencies are nowadays equipped with the latest technologies to ensure the highest levels of mall maintenance.

Retailer: How do you capitalise – by selling mall space or leasing it?

PJ: The route of capitalisation is lease and sell model. A lot depends upon the location and project particulars. Our preference remains to be leasing out the space. However, we also sell in case any brand prefers owning the space.

Retailer: How do you see the growth of retail industry in the next five- years?

PJ: As per Global Emerging Markets Survey (GEMS), India is the most sought-after retail destination among emerging markets. Twenty seven per cent of international retailers surveyed have either opened their first stores in India in the last year or are planning to do so soon. The country's dynamic retail landscape presents a unique opportunity to investors across the globe. Currently, the India retail market is worth $ 332.8 billion (Rs1, 330,000 crore) and growing at 10.8 per cent per annum, Images F&R Research estimates.  Share of organised retail in 2007 was estimated to be only 5.9 percent of the entire market, which is $ 19.6 billion (Rs 78,300 crore). However, modern retail segment grew at the rate of 42.4 per cent in 2007, and is expected to maintain a faster growth rate over the next three years. Even at this rate, organised retail is expected to touch $ 57.5 billion (Rs 2,300 crore) by 2010, constituting roughly 13 percent of the total retail market and is expected to increase to 16 per cent by 2011-12.