Where mall glamour palls

Two years ago, India’s first designer mall, Gallops, came up in Ahmedabad, announcing that Gujaratis looking for global lifestyle brands would no longer have to travel to Singapore, Hong Kong or Dubai with their shopping lists.

But the globe-trotting Gujarati customer, who may dig into his deep pockets outside the State, is known to bargain hard within it. Today, many shops at Gallops are gasping for breath. A ‘designer mall’ is one where the outlets are specifically designed to give the customer a ‘global experience.’ For instance, an outlet of, say, ‘Lifestyle’ at Gallops has exactly the same look and dimension as its outlet in Mumbai, Frankfurt or New York so the customer would not feel out of place in any of these.

Today, few outlets in the swanky mall can boast of ‘business’; many have, in fact, closed shop due to lack of customers; others, who had booked space, have not even opened shop.

Of course, the parking lot is seen almost packed, but the car-owners are either shop-keepers themselves, window-shoppers, or those heading straightaway to the food court on the top floor of Gallops.
Elusive footfalls

Simply put, many of these outlets are yet to break even. But this trend is not restricted to Gallops alone. Many other malls, whether marketing lifestyle products or grocery, are crying for customers’ attention.

The so-called ‘footfalls’ have hardly translated into actual business in most cases. And, of course, the traditional grocery stores (kiranas) have not disappeared, as feared by many only a few months ago. If anything, they are now giving stiff competition to the big boys of retail after the public’s initial enthusiasm wore off.

A number of reasons may have contributed to customer disinterest in retail, locals say. The Gujaratis are known to generally store their supplies of basic articles — foodgrains, sugar, edible oil — for the whole year and shop for the remaining needs in their neighbourhood store.

They even shop for clothes for the entire family in the ‘sales season’ of July and August. So, grocery and clothes, which constitute major portions of a retail outlet’s billing, do not really attract the customer in Gujarat to the swanky malls unless some freebies are thrown in.

Vegetable and fruits retail stores such as Subhiksha and Reliance Fresh face another problem: Gujarat being a ‘hot’ state, vegetables and fruits have low shelf-life. Most people buy these in small quantities, daily or even twice a day, from the larri-wala .
Where corner shops score

According to realty developer Mr R. K. Patel, the ‘old world’ shopkeepers have several advantages — rents at old rates, non-air-conditioned shops, minimum manpower, no-frills environment, flexibility of business hours and meagre overhead costs, they have more staying power and can afford competition. Few retailers, including the pioneering Big Bazaar, have, therefore, managed to break even.

In a mall, on the other hand, the shopkeepers are required to shell out for electricity bills , skilled manpower andrents.

Lease rents in Ahmedabad, for instance, have increased four to five times during the last three years compared to the high street, stand-alone old shops.

Unlike Mumbai, New Delhi or Bangalore, malls in Ahmedabad, Surat and Rajkot do not attract the high net worth individuals (HNIs), such as IT professionals, simply because Gujarat is yet to emerge as an IT-major State.

Moreover, sale of branded articles is often split amongst the many shops selling the same articles in a limited area. For instance, about a dozen outlets in a radius of just 3 km sell the same brands of shoes, wristwatches or computers; this has split business and adversely affected these outlets as they all have set up shop in each of the half-a-dozen malls or hyper-markets within a 2-3 km radius.
Supply exceeds demand

There is too much supply but little demand, according to Mr R. K. Jain, a realtor. However, this has not deterred construction activity, although some of the mall developers are rethinking or recasting their plans: some have simply postponed construction, mainly due to increased costs involved now, or have changed plans to construct commercial, corporate and business complexes instead of swanky malls.

Interestingly, some of the major malls are now actually downsizing their outlets due to various reasons. Some shop-keepers at malls, according to another realty developer, have even formed ‘unions’ threatening to pull out unless their lease rent was reduced by mall managements! Some have, even after signing up, cancelled occupation

‘Unrealistic’ least rents on the new business artery of Ahmedabad, the Sarkhej-Gandhinagar Highway, have only compounded the problem: rents on this Highway have increased three-fold during the last six months, from Rs 1,400 to Rs 1,500 per sq.ft to Rs 3,400 per sq.ft. As a result, more than 10 lakh sq.ft of retail space is ready but has no occupiers in Ahmedabad.

Again, this has not deterred some of the developers: they are still busy constructing some 20 lakh sq.ft in the city this fiscal. Any takers?

Article courtesy: http://www.thehindubusinessline.com/iw/2008/07/20/stories/2008072051031700.htm