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Apr, 01 2007

Retail-entertainment mix in malls

A significant trend in the marketplace today is the development of a combination of retail and entertainment centres

A significant trend in the marketplace today is the development of a combination of retail and entertainment centres. Lets find out how important it is to balance retail with entertainment before you start a business in a mall.

THE retail sector in the country is witnessing a sizeable revamping exercise as traditional markets make way for new formats, such as hypermarkets, supermarkets and specialty stores. India has been rated as the fifth most attractive emerging retail market in the world. With the organised retail sector already inching its way towards becoming the next boom industry, new-age retailers are jumping onto the retail bandwagon to extract the maximum share.
If we were to ask as to where this retail revolution is heading, the answer would lie in one single word, that is, franchising. Today, franchising, is the buzzword with plenty of options available in the retail sector. Even though retailers today prefer to take up space on lease, the increase in competition and the need to expand has made them opt for franchising. The exact percentage of the retailers' preference for franchise as an option is not available, but, it is definitely higher than 80 per cent. Which further implies that the rent is on the franchised business that you decide to start out of that space and eventually the load of the rental is on the franchisee who is the operator of that business.

Check the mall profile

Mall development and management is not just about glass facades, marble flooring and escalators. It is more about tenant mix, adjacencies of tenants and making quality retail space available to the retailer at a reasonable price.
In case you, as a retailer, plan to take up space in a shopping mall, then, hang on for a while, because a lot requires to be checked before you can even think of accepting the mall as your profit generating location. Some areas that you will require to inspect would include, the profile of the mall management firm, the floor plan, the location, and tenant mix, which is the most crucial factor.

The popular belief that ‘bigger is better’, may not always prove to be an element of success for retailers while reviewing malls. The retailer should select the property according to his/her brand and not vice versa.

Broadly speaking, malls can be classified into two types: Entertainment-centric and Retail-centric malls

While in an entertainment centric mall, product mix of food and beverage outlets, small retail formats, gaming zones, etc., are common, a retail centric mall would cater to big departmental stores, jewellery outlets, etc. Before opting for an outlet in any of these two types of malls, an investor needs to evaluate the mall in terms of his preference, area and location.

The new-age mall

A significant trend in the market today is the development of a combination of retail and entertainment centres. While the number of shopping malls has seen a spurt in the recent past, the future development is now increasingly being focussed on providing leisure activities as well. A considerable number of multiplexes are being developed as an integral part of retail malls along with facilities such as food courts and gaming zones

The point to observe here is whether the developers of such shopping malls are able to balance retail with entertainment. The synergy of entertainment and retail in a shopping mall has come to be recognised as indispensable. For today's customer, a value-packed shopping experience includes the sense of anticipation felt as s/he thinks of visiting the entertainment-enriched retail centre.

Today's generation of shoppers crave for that ‘little something extra’. In other words an experience or attraction that makes them glad they came and, more importantly, keeps them coming back. Most think that entertainment and retail are no longer separate entities. With escalating customer demands, developers are converging to form an explosive combination that offers literally 'everything'. Entertaining the customer while s/he shops means that the customer would be hooked into coming back. And coming back invariably means more profits for the retailer.
Another consideration is the time factor. In today's hectic life, the consumer no longer has the time to do both i.e., look for entertainment and indulge in shopping. By fusing the two in one location the retailer and the consumer get the best of both.

100 per cent retail

Malls that are exclusively related to retailing come under this category. While offering their views, mall developers and retailers are of the opinion that in such malls the choice of brands should not be limited. Mr Varun Maheshwari, Promoter and Developer, Sumangalam, says, “Specialty retail does sort out many issues for the consumer, as it provides a one-stop solution to the consumer’s particular product category needs. Specialty retail discounts the fact that the typical Indian consumer (who in most cases are women) derives satisfaction not from the product, per se, but from the entire experience that ensues as part of the purchasing decision. Therefore, a mall developer should ensure that there are more than one brand of a product category available at the mall, specially for high involvement goods like jewellery.”

Mr Yesho Saboo, Managing Director, Ethos, opines, “Specialty retail does require a differentiated ambience, and does not readily mix with a general entertainment format.” Also toeing similar lines, Mr J.S. Jolly, Business & Operations Head, Fun Republic, feels, “The advantage of specialty retail is that they are focussed and send the right signal to the discerning customer that all her needs of shopping are available under one roof. Here the customer sees leading international and national brands with surely much wider choice for the customer and a price which is highly competitive.”

Entertainment retail

An entertainment centric mall's focus is mainly on entertainment and is complimented by retail. Elaborating on this aspect, Mr Deepak Sachdev, Director, Ansal Township and Projects Ltd, says, “Today, shopping includes entertainment where people visit a mall for recreation without deciding on buying any particular product. In such cases the shopping is not need-based, but impulse-driven. The consumer is seeking an experience with his family, where food, shopping and movie all form a part of the experience.” Mr Varun believes in the same, “Entertainment retail is here to stay as it provides a unique opportunity to the consumer to unwind and shop at leisure. The proposition of the husband being able to watch a movie, or having his favourite food at leisure while his wife shops could not have sounded more attractive and an excellent compromise.”

Balancing entertainment with retail

While the benefits of mixing entertainment with shopping are obvious, mall developers and retail planners realise that there are obstacles to overcome. While expressing caution over the difficulty in balancing both in one particular area, Mr Saboo goes on to say that it can be done if the format is large enough to dedicate enough areas for achieving critical mass in both retail and entertainment. He adds, “Besides, a lot of care will have to be taken in design of the spaces and ambience in each section.” Going a step further, Mr Sachdev says, “A developer has to plan the specific usage of different areas before he starts lease in the mall. Footfall drivers must also be located in such a manner that every tenant in the mall benefits from the resulting movement of customers. The proportion of area allocated to retail and entertainment must ensure that both categories are strong enough to independently create their identity in the mall. If there is an over dose of one category, it may harm the business of the other, for example, if there is lack of entertainment and food options in the mall, footfall would dip closer to the meal hours.”

According to Mr Varun, “A mall developer should ensure that he secures a healthy mix of retail formats which are destination stores, like, a suiting showroom (which is definitely not an impulse purchase product) and stores like McDonald's. Such stores would provide wholesome entertainment, and fulfill the serious consumer’s shopping as well as recreation needs.”

Deliberating on the latest trends, Mr Jolly says, “The mall should be a balanced destination for business and leisure wherein a lot of permutations and combinations can be offered to the market compelling them to use the mall for every reason they can find.” Stating that the success of the mall has to be backed by services, as, today's customer is well-educated, well-travelled and understands the value of his money, Mr Jolly adds, “The consumer is looking for excellence in ambience, and comfort and availability for which he is paying. Today, money is considered secondary. It is quality and essence of service which should be the forte.”

Though the synergy of retail and entertainment works wonderfully, it is not to be forgotten that each of them has to be complete in its own way before total benefit can be derived.

Future tense of shopping malls

In a few years to come, malls will become primary locations for shopping in urban India. They will not be chosen just for an occasional shopping trip, but will be as necessary and as frequented as visiting our neighbourhood market today. The only difference will be that various malls will cater to various needs, and they may be within walking distance of each other, giving you the liberty to make a choice at the last moment.

Possibly, on a Friday evening you may visit a mall to buy from a supermarket rather than from your routine kirana shop. On Saturday you may visit the next-door mall which has a great food court. Sunday may be for yet another mall where you express your desired to see a movie.

Says Mr Sachdev, “This trend will offer exciting opportunities to both the developers and the retailers. Choosing the right mall for your brand will become more difficult and critical. Brands will run the risk of being present in the right locality but in the wrong mall. It will become important to optimise the size of the mall as big may not be beautiful in all markets and locations. Developers too will have to be careful not to undersize or oversize the mall. Both these cases may create cost pressure on running costs.”

Giving his views, Mr Saboo believes, “Malls will become larger format or more specialised. Smaller malls will have to focus on specific segments. There will be some that will focus on luxury retail, some on larger format retail, some on specific product groups, such as electronic specialities. Larger format malls will succeed if they can create differentiated zones for different segments. Combinations with entertainment centres will also evolve, but I think it will have limited success and cannot be considered as an invariable format.”

Mr Varun observes, “Time is increasingly becoming a very expensive resource, and people would definitely prefer a one-stop shop which can cater to all their needs ranging from a toothpick to jewellery. Consolidation is the key to the success of a mall, which is likely to put an end to the mom and pop stores.”

BOX ITEM

  • Tenant mix
  • must reflect
  • consumer’s
  • wallet share
  • Says Krish Iyer, EX MD, Piramyd,
  • in an interview with TFW Bureau

The studies published by KSA Technopak a few years ago, the construct of customer's wallet is as given in the figure. More than 76 per cent of the wallet is spent on shopping. Only 15 per cent is spent on entertainment and eating out put together. Clearly, for a lifestyle

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