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Oct, 01 2005

Multi-mall mania

Mall developers are embarking on multiple projects, thus<br>having more than one mall under their banner. In such a scenario will the developers be able to deliver the desired results? How will the retailers respond? A perspective

MALLS in India, today, are big business. Their popularity is further fuelled by the fact that in spite of being a unique retail hub, organised retailing in India stands at a mere two per cent, thereby encouraging retailers and developers to follow the new wave of organised retailing. At the same time, consumers undoubtedly enjoy the comforts of the shopping environment provided in malls. Targeted as shopping and entertainment destinations, malls generate the kind of footfalls that a stand-alone outlet cannot.

More the merrier!

Considering the advantages and the profits that malls generate and to leverage the benefits of these, developers are embarking on multiple projects across the country. A question that arises is, whether this movement would have positive repercussions or die a slow death. Says Mr Ajay Khanna, executive director, DLF Retail Developers Ltd, “If a developer undertakes developing a number of malls, he has the advantages that come to a large organisation. A more specialised organisation can be created and better skills can be tapped. Also, with a large number of projects, the developer can enjoy the benefits of economies of scale and pass them on to the retailers.” Undoubtedly, when a number of projects are being handled by a team, the level of professionalism would increase and so would the specialisation. Hands on experience would also ensure that each employee understands his or her job better. Says Mr Vipin Mehta, deputy general manager, marketing, Ansal Housing and Construction Ltd, “Working on multiple projects is always more advantageous for a mall developer. The overall costs of each project decrease and this advantage can then be passed on to the end user.”

It is essential to take into consideration the perspective of retailers as well. Says Mr Vinay Nadkarni, chief executive officer, Globus, “At the end of it, the motive of most retailers is expansion and if you join hands with a developer who has a similar goal, expansion becomes much easier. Also since both the retailer and the developer have a common goal, therefore they are completely in sync and understand each other better. The long drawn work relationship makes it much easier for them to collaborate for new projects.”

This view point is further endorsed by Mr Vijyant Chhabra, executive director, Archies Ltd. He says, “A long term business relationship is possible only if you have established a comfort level with your business associate. This is possible if you liaison with the same developer for your expansion across a pre-determined area. The developer understands your needs better and becomes more receptive. At the same time, you establish a level where in you clearly understand the working style of the developer. Also, the basic motive of the retailer and the developer are in conjunction and they work as a team towards achieving the common goals. This makes the association more fruitful.”

Along with the comfort level, another factor that affects the decision of the retailer is the credibility of the developer. “With a number of successful projects in his name, a developer becomes more credible. He gets an edge over other developers and this becomes a testimonial as he has already established successful malls. As a result, a retailer has more faith in him. At the same time if a retailer plans to join hands with the same developer for a number of mall projects, he can clearly define his road map for expansion and would know exactly where he is heading. On the other hand, retailers basically look for two things: better positioning in the mall and economy. The developer would definitely offer a better deal to retailers who are with them for a number of projects,” says Mr Gautam Tarafdar, general manager, real estate and business development, Chadha Group

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