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Retreat: Run of the mall coming to an end?

Retreat: Run of the mall coming to an end?

Author | Source: The Economic Times | Wednesday, May 30,2007 9:12 AM

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Retreat: Run of the mall coming to an end?

PUNE: Are some retailers merely being contrarian or is there a move away from the current mall frenzy? The reality is that some retailers are preferring the good old high street over glass and steel malls. “The footfall to sale conversion is very low in a mall, primarily because a mall is an entertainment destination and shopping is low on priority,” said Aloke Banerjee, CEO, Carmichael House of Total Home Expressions, a division of S Kumar's Nationwide Ltd. For Carmichael House, there is an even more significant reason to stay away from malls: if the anchor tenant is a discount store, it is difficult to retain a premium positioning as Carmichael House has positioned itself.

Sachin Sahni, associate vice-president, sales and marketing, Cotton County, says. “We are a discount brand, but we prefer to stay out of malls because sales volumes are poor there. Of our 258 stores, only four are in malls. We are definitely not focused on malls,” he said. This, of course, is music to the ears of retailers on high street locations who have been feeling left out with everyone wanting to be located in a mall.

However, Anuj Puri, managing director, Trammel Crow Meghraj Property Consultants Pvt Ltd, said a large, 10 lakh sq ft mall would have to have a discount store. “If a mall is spread over 10 lakh sq ft, it must have a hypermarket, otherwise the space just will not be filled. We do have successful examples of Big Bazar and Marks and Spencers and other top foreign brands being tenants in the same mall,” Mr Puri said.

“Each mall should be a thought out destination, keeping in mind the customer profile. Remember the old mandi where you went for specialised goods? A mall must be able to persuade customer to buy adjacent goods,” Mr Narula, CEO, Retail Business, Deepak Fertiliser and Petrochemicals Corporation, said. Mr Banerjee outlined low conversion into sales from footfall, the rub off effect of a discount anchor onto more premium neighbours as some of the reasons Carmichael House brand chose to steer clear of malls.

“Malls are now a weekend getaway, with multiplexes, offering air-conditioned comfort in summer. Serious shopping is not on the agenda. We are present in two malls in Delhi and Indore but in most other locations, from Hyderabad, Lucknow to Chennai, we prefer the high-street location or a shop-in-shop model,” Mr Banerjee said. He added, “If you want to retain your premium or luxury tag, stay out of a mall.”

Mr Sahni attributed this disenchantment of retailers with malls to the fact that malls are developed by real estate developers who do not know mall management. “All that a real estate developer is looking for is to get a tenant who will rent the space. This tenant does not know who his neighbour is going to be in a mall. It could be a discount store or a women's store when the need is for a suitable mix of brands. There is an urgent need for mall management, where the developer positions his mall,” Mr Sahni remarked.

Mr Narula said malls cannot follow a 'me too' policy. They need to plan their positioning and if a developer does not have the expertise, he should bring in a professional who will get him the right mix of tenants. Mr Puri accepted that a shakeout could happen but at the moment there are not enough malls. If all the projects get off the ground then there would be a shakeout.

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