India is one of the fastest growing economies in the world today. The country's luxury market is the 12th largest in the world. The country's retail sector must orient itself to meet the needs of this new mass-affluent market. Currently, there are 12 million retail outlets in India, which is estimated to triple by 2015. The 25 per cent projected increase in retail growth illustrates the strong fundamentals of the sector, which is expected to contribute to 22 per cent of India's GDP by 2010. The fastest growing segments in retail are, not surprisingly, wholesale cash-and-carry stores, supermarkets, and hypermarkets. Shopping malls are another growth segment, with over 100 malls in the country now and over 600 malls under construction - mostly in Mumbai, Delhi and other A1-class cities (Bhatia, 2009).
Mall management has been identified as a critical factor for the success of malls and the retail industry across the world. Mall management broadly includes mall positioning, zoning, tenant mix, promotions/marketing and facility/finance management (Jones lang laSalle meghraj, 2007). Currently, the Indian retail market lacks designated mall management firms. Large real estate developers and retail chains either have their own mall management arms operating as subsidiaries or have contractual agreements with international property consultants.
Till recently, mall management was limited to facility management by a majority of developers in India, leading to gaps in mal management practices. Given the high future supply of malls and increasing competitiveness within the Indian retail market, developers must correctly address these gaps to ensure success.
Aspects of Mall Management
- Positioning of Mall
Positioning a mall refers to defining the class of services offered based on demographics, psychographics, income levels, competition in neighboring areas and extensive market research of the catchment. For example, if the market research indicates that the average number of households living in a particular area belongs to the upper middle class, then a high-end retail mall would suit the location (Jones lang laSalle meghraj, 2007). An example of this practice can be seen in Select City Walk in Saket and DLF’s Emporio in Vasant Kunj. These are the perfect examples of right mall positioning. These malls were developed after extensive research based on the catchment population of South Delhi. Positioning of all other malls in Delhi can be doubted for example Cross river mall in Shahdara, East Delhi. The mall initially was positioned as a very up market mall but this kind of positioning didn’t had a match with demographics, psychographics and income levels of catchment population of East Delhi. This is the reason why mall has really struggled over the years. Positioning also refers to the location of the shopping mall. A good location defined in terms of factors like ease of access via roads, good visibility, etc. is considered as one of the prime prerequisites for a mall. Although other activities such as trade/tenant mix can be revisited or redefined, the location remains fixed, making it an imperative factor for a mall.
- Zoning- Right Tenant Mix and Its Placement in Mall
Tenant mix refers to the combination of retail shops occupying space in a mall. A right tenant mix would form an assemblage that produces optimum sales, rents, service to the community and profitability of the shopping mall venture. Zoning refers to the division of mall space into zones for the placement of various retailers. A mall is dependent on the success of its tenants, which translates to the financial feasibility of the tenant in the mall. Generally, there are two types of consumers visiting malls – focused and impulse buyers. The time spent by focused buyers in malls is relatively lower compared with impulse buyers who also enjoy window shopping. There is little that retailers can do to attract focused buyers as they usually know what they require and from where. However, right tenant mix and optimum retailer placement after a diligent zoning exercise can help retailers attract both types of consumers, especially the impulse buyers. Formulating the right tenant mix based on zoning not only helps attract and retain shoppers by offering them multiple choices and satisfying multiple needs, but also facilitates the smooth movement of shoppers within the mall, avoiding clusters and bottlenecks. This helps influence shoppers’ mall preference and frequency of visits. It also helps in building a distinct image in the minds of shoppers, which is critical considering the robust upcoming supply of malls (Jones lang laSalle meghraj, 2007).
The selection of the right anchor tenant plays a crucial role in establishing a good tenant mix. The anchor tenant is defined as the largest occupier in a mall in terms of square feet. The Great India Place Mall in Noida is an example of a successful mall led by good zoning and tenant-mix mall management practices, dispersed placement of big stores like Shoppers Stop, Globus, Pantaloons, Big Bazaar, Lifestyle and Hometown ensures that customers move in every nook and corner of this big mall.
- Promotions and Marketing
Promotional activities and events in a mall form an integral part of mall management. Activities like flea markets, Kids Clubs, food festivals, handicraft exhibitions and celebrity visits increase foot traffic and in turn sales volumes. Organizing cultural events has time and again proved vital in attracting consumers to a mall. Such activities may also act as a differentiator for a mall. Select City Walk mall, Saket is a one such mall which has used such activities very smartly. Some experts say that concepts like concepts like flea market do benefit many retailers from the footfalls while some other premium brands may even experience a drop in sales figures because such visitors might not be suitable match for premium brands, and high footfalls of such customers might make the mall too generic and that would stop premium customers from visiting the mall. Thus it is also important to mall too adapt right kind of promotional strategy.
- Facility Management
Facility management refers to the integration of people, place, process and technology in a building. It also means optimal utilization of resources to meet organizational needs. It broadly includes infrastructure, ambience and traffic management (Jones lang laSalle meghraj, 2007).
Ambience Management
The overall shopping experience provided for consumers becomes an important factor for the success of any mall. Ambience management includes management of parks, fountains and overall look of the mall. A mall is not just a place for shopping but is also a place where people spend their leisure time. In favourable, lush green landscaping with seating facilities and the presence of food and beverage inside or outside the mall can increase foot traffic.
Traffic Management
Traffic management includes managing foot traffic into the mall and parking facilities. Foot traffic management involves crowd management inside the operational area of a mall. The flow of people is related to the design of the mall and the spatial distribution of its tenants. For example, a star-shaped mall tends to have a problem of crowding in the centre of the mall, as everyone has to pass through the centre while moving from one side to the other. Circular malls, on the other hand, would not have this problem. They tend to have better pedestrian flow and less congestion.
Infrastructure Management
Infrastructure management refers to the management of facilities provided to the tenants within the mall. This includes provision of adequate power supply, safety issues in case of emergency and miscellaneous issues related to signage, water supply, sanitation, etc. These form an integral part of mall management as they are the basic amenities that any tenant would look for in a mall. Infrastructure management also includes risk management issues such as essential safety measure asset liability and environmental audits as well as emergency and evacuation training.
- Finance Management
Professional financial management of a mall as a business venture is a must. Mall management also covers financial management, which involves monitoring and controlling of various issues such as:
- Cash receipts and collection of income including rentals, service charges, car park receipts, electricity and other utility income
- Developing accounting systems to track the ageing of debts, payment delay patterns, bad debts and payment of all invoices and expenses
- Developing standard financial templates so that a detailed annual property budget is prepared
- At times, organizing resources to deliver an efficient and effective annual external audit (Jones lang laSalle meghraj, 2007).
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