Shopping Centers: Challenges For A Growing Trend

Development of organized retailing in India, in the form of shopping malls is one of the main reasons for the growth of shopping malls in India. With the changing shopping needs and aspirations, consumers are finding it easier to shop at malls where a wide choice of merchandise is available under one roof. Here we shall look into the challenges faced by shopping malls in India, today.
Shopping malls have mushroomed all over the major metros of India, spreading its tentacles far and wide. Gurgaon, Noida, and a few other satellite townships in the NCR (national capital region) of India’s capital city Delhi, have been standing witnesses and silent partners to this mall mania. Called as the ‘Shopping-mall capital of India’, Gurgaon has been a focal point of the this rising tide, with monolithic glass structures, colossal trade towers and a lot of glitzy skyscrapers manning the entire length and breadth of this erstwhile urban village. Many others have followed suit, as they jump into this bandwagon of a modern India, cashing in on the rising spending potential of the ‘great Indian middle class’.
But, beneath the swanky and ritzy surface, away from all the hype, the underbelly of this modern mega polis tells a totally different story. Not everything is bright and sunny as it seems. Recent studies have shown that many retail players have jumped into the fray and joined the rat race without much ado, completely overriding and overlooking the necessary checks and balances, before they get into a business venture.
Retail companies in India have missed the woods for the trees, as the trend in the market shows that there has been a complete mismatch of consumers and brands. It’s true that the foot-falls in most of the major malls have been great and phenomenal, matching those in any developed retail markets; but, not all footfalls generate business. Other than the few multiplexes and the fast food chains, most of the retail endeavors have run into big troubles. Not everyone who enters the mall is a prospective consumer, as majority of them come just to hang out, and indulge in window shopping in an air-conditioned environment for free. With high real estate cost, many of these retailers have failed to break even, and business has been abysmally low, even non-existent at times.
It is high time for companies involved in retail in India organized to seriously think over the location, demography, culture and taste of the target consumers, before they join the free-for-all brigade. ‘Mall Culture’ is in, but with the fierce competition in the market, not many will make it without proper planning and strategy.
Other Challenges
The challenges which many malls are facing today is to keep up with the competition and to attract retailers of a higher quality,
A host of additional challenges may exist for developers and their business and retail tenants in malls; these include:
• No-Change Areas: Tenants should identify those areas outside of the premises that are critical to their use (such as elevators, lobby areas, and access-ways between the loading dock, freight elevator and the premises), and make certain that those areas cannot be changed without the tenant’s approval. From the developer’s perspective, careful attention should be given to the tenant’s proposed no change area in order to make certain that the requested area is not too large so as to restrict the developer’s need for flexibility to accommodate demands by future tenants, market changes and laws.
• Loading/ Unloading: In malls, the loading/unloading dock is often shared by the building occupants. Ideally, the building will have a dock master who will coordinate the use of this dock, the cost of which will be included in building services or common area maintenance charges. If there is no dock master, then the developer and tenant need to address this issue in their lease negotiation because the tenant will want to make certain that its trucks can unload merchandise in a timely and efficient manner and the developer will want to avoid delivery trucks blocking roads and access to the building. Often an anchor tenant will negotiate to obtain priority rights to the loading dock during certain hours and an alternate means of loading/unloading if the main loading dock is unavailable.
• Parking: The parking areas are either operated by the developer or by a parking operator on a pay-for-use basis. As part of lease negotiations, the tenant should insist that its customers be able to park for free for a certain period of time, or, if not free, then at a reduced rate for the first hour or two. From the developer’s perspective, the developer must make certain that there is enough parking available for the entire project, and that available parking is not unduly limited by granting exclusive rights to parking spaces. In some projects, the developer can utilize some of the retail parking to accommodate overflow parking from the residential uses in the evening time after the stores are closed. This can be an additional source of income.
• Certificate of Occupancy: If the tenant is performing work in the premises prior to occupancy, then the lease will often obligate the tenant to obtain the certificate of occupancy upon completion of such work. However, some jurisdictions will use this request as leverage to compel the building owner to cure any building violations, even if unrelated to the subject premises. Tenants should therefore insist that their lease obligates their landlords to be responsible for curing any building violations that would prevent the tenant from receiving a certificate of occupancy following completion of their work.
• Satellite Dishes: If a tenant needs a satellite dish to communicate with a home office or other stores, the landlord will need to grant easements in the lease in order to permit the tenant to use building chases and the rooftop for the satellite dish. The developer must make certain that any work done on the roof be performed with roofing contractors approved by the developer and in a manner that does not void the roof warranty. In addition, the developer should insist that the tenant be responsible for any damage to the roof or building as a result of such installation.
• Scaffolding: Careful negotiation between developers and tenants should take place if scaffolding might be erected on the building at a future point in time (perhaps for renovation purposes, or to hold billboard/advertising materials — provided, of course, all scaffolding complies with legal and regulatory constraints). Though the developer usually retains the absolute right to erect scaffolding, the tenant should ensure its lease mandates scaffolding will not block access to its store or its signage.
Poor Mall Traffic
Although shopping malls started making their presence felt, consumers still go to the traditional stand-alone stores, when they are purchasing specialized products like electronics, home needs, and jewelry. What are the ways in which shopping malls in India can attract more number of customers?
Poor mall management and poor tenant mix have resulted in poor mall traffic and low conversion rate. This has led to the closure of individual shops, at several malls. What can the mall management do, to attract serious buyers? What are the secrets of successful shopping malls and how to apply them to your centre? How to develop/ redevelop and operate shopping centre efficiently? What are the innovative ways to increase center’s sales and profits? What are the latest techniques for maintenance and security tactics? These are all the challenges faced by a shopping mall in India, today points to ponder, and solutions to be FOUND……………….