India’s malls have learnt the hard way that it’s not always a case of ‘build and it and they [consumers] will come’.
In the past, developers often constructed malls without a solid understanding of the needs and behavior of local shoppers. As a result, a number of malls failed.
This approach is now changing fast as developers undertake detailed analysis of catchment areas to understand the prospective footfall of malls yet to open their doors. And data use doesn’t stop there; malls around the country are increasingly getting smarter about monitoring and analyzing their visitors amid increasing competition in the country’s booming retail space.
“There is a growing recognition of the need to collect more information on customer interactions and in-store performance to have the possibility of making strategic analysis for long term improvements in malls,” says Ramesh Nair, CEO and Country Head, JLL India. “And mall owners are now investing heavily on such analytics to have a real time view on experience across their property.”
The analysis of the data is providing malls with valuable insights. “When opening our recent mall in one of the districts of Delhi, we realized that potential buyers in that region are keen to visit the mall during the weekdays instead of going over the weekends,” says Abhishek Bansal, Executive Director, Pacific Development Corporation Ltd, a company that owns a number of malls some key cities of India including Delhi-NCR. “And we knew that a small mall will also do well in such a catchment area.”
Getting the right mix
Data is increasingly helping mall operators to get the right tenants in to meet changing customer tastes as India’s retail sector continues its transition from small mom-and-pop stores and bustling markets to larger chains, run by both foreign and domestic companies. Although 93 percent of India’s $670 billion retail market is driven by small outlets, the likes of H&M, Uniqlo and D-Mart are fast building their presence in the market.
“With entrance of foreign players and introduction of new domestic brands, competition is growing in Indian retail sector,” says Rohan Sarda, Director and CEO – India, FollowUp Customer Experience, a company that works in the area of retail analytics. “Retailers need to sell more, be aggressive with sales strategy and add efficiencies to operations to survive. Hence, we are witnessing much larger interest from companies looking to leverage analytics in their day-to-day operations. They are ready to invest in high quality solutions with a long term view.”
And it’s not just the malls in the big metropolitan areas; those in the second tier cities like Thane, Palava, Ahmedabad, Chandigarh, Lucknow and Jaipur are also using data to position themselves for success, according to JLL research.
Take Korum Mall in Thane that was located a kilometer from a new competitor, Viviana Mall, when it launched in 2013. After analyzing the visitor trend, Korum improved its tenant mix by adding more food and beverage options from brands such as Starbucks, Burger King and themed restaurants like Copper Pan, Woking Mama and Panchvati Gaurav. Fast forward to 2018 and the move has paid off with both malls continuing to draw in the crowds.
Ushering in a new retail era
As India’s retail sector matures, understanding consumers and meeting their needs is only going to become more important.
“Poor quality malls struggle to survive whereas malls of superior quality continue to attract demand from prominent retailers in both domestic and international category, and successfully draw people in,” says Nair. “Today’s malls are about providing a good customer experience, from sufficient parking to good store design and the right mix of tenants, all of which can be improved using insights from data gathered on both a local and national level.”
Between 2018 and 2022, about 90 mall projects are set to open for business, according to JLL’s Stepping up the Game report. Of the total supply, almost 62 percent of malls will be of superior quality.
“Developers have now learnt from their past mistakes and only experienced players are continuing to build malls,” concludes Nair. “As a result, the percentage of future supply which is expected to be of superior quality is greater than in the existing stock.”
That’s not to say that mall developers and operators have to stick to tried and tested formulas. India’s retail scene is changing rapidly as stores experiment with new formats and technology with a growing focus on experiential retail to ward off the challenges posed by e-commerce.
Yet when it comes to understanding the basics like the size and income of the local catchment area, along with accessibility and visibility of the malls themselves, data-driven insights are key to success.