Chapter-1

CHAPTER-1

A. CONCEPTUAL FRAMEWORK OF RETAIL TRADE

Retailing consists of all activities involved in the marketing and sale of goods and
services directly to consumers for their personal, family or household use. A retailer
in any business organization derives more than half of its sale form retailing. For
example, retailing occurs when you purchase gasoline at the service station, movie
ticket at a theater or clothing at a departmental store. Retailer’s success or failure is
ultimately determined by how well they serve the consumers.

B. MEANING OF RETAIL MARKETING

Retail marketing is the process by which a retailer tries to identify the target market
and works out the mix in terms of nature of merchandise and services offered. It plans
about the appropriate pricing policy, promotion and advertising, location, store design
and visual merchandising that can satisfy the desired target market need and build up
a sustainable completive advantage. A good retail marketing effort can be attempted
by proper positioning of the retail mix, working on customer loyalty programs,
finding suitable location, fostering good human resources management programs for
employees, efficient distribution and information systems, proper display of unique
merchandise, develop strong relationships with vendors and offer excellent customer
services. Retail marketing can help the retailer to create an environment for the
consumer essential purchases such that consumer will be enticed to go for impulse
purchases. Through retail marketing retailers can chart out programs and conduct
research studies or surveys to understand the consumers shopping trends and their
needs and sustainable strategies can be worked out for the 4P's – product, price, place
and promotional activities.

In the past there were some typical ways in which the retail outlets used to function,
they were often irritating the consumers. Few of them are:

 The security person of some fancy retail market outlet instructed the
customers entering the store to leave their belonging outside with a slip given

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to them for their belongings. The customers used to feel uncomfortable as they
had to leave his or her costly belongings out of their reach and outside the
stores.

 Untrained salespersons attended to consumers or customers, conveying a bad

taste to the prospects.

 There was no clear cut positioning or any promotional activity for the retail
outlets that motivated customers to shop at the outlet.

 There was unorganized mushrooming of competitors especially in the

commodity market. Retailers used to sell lower quality products for high price,
making the consumer feel he was being cheated by paying more for shopping
at the air conditioned showroom.

Today organized retailing has come a long way and with the help of retail marketing.
Retailers have been able to reach out to the consumer by placing before them several
products and services of good quality and making them happy and delighted with
their shopping experiences. Today retailers are always required to be on their toes
trying to anticipate and respond to what the consumer wants. Although the organized
market in the form of departmental stores, malls, supermarkets, hypermarkets and
discount houses have occupied space in the consumers mind. But in present time the
consumer is a hard nut to crack. In spite of laying out an array of new products, they
still prefer the products which offer them three basic things: quality, value for money
and convenience.

Comparison of Retailers

The table 1.1 shows the comparison between two types of retailers; independent
retailers and corporate retailers. It is done on various factors like control, flexibility,
economics of scale, long run planning, competition, leading concerns. The first two
criteria's are the positive aspects of independent retailers while economics of scale,
long run planning and competitions are the strength of corporate retail chains.

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Table 1.1
Comparison between Independent Retailers and Corporate Retail Chains

S. No. Criteria Independent Retailing Corporate Retail Chains

(CRS)
1. Control  Direct control of  Reduced managerial
strategy, image and control because of
consistency. geographical dispersion

 Centralized decision  Centralized or

making coordinated decision
making

 Lack of communication
and time delay effect in
making and
implementing decisions
2. Flexibility Flexibility in location and Limited flexibility as well
strategy established norms have to
be followed.
3. Economies of Only if operating on a large Efficiency in multiple
Scale scale store operations through
shared warehousing
facilities and volume
purchases.
4. Long Run Owner is intimately Specific personnel are
Planning involved in daily creations assigned the task of long
with responsiveness to new run planning with
legislation. consideration of time and
resources.
5. Competition  High competition Lower competition
because of easy entry of because investment costs
competitors and low are high. Individual outlets
capital requirements (as face competition from
compared to CRC). players offering similar
assortment of goods /
 Simple licensing services.
provision.
6. Leading  Identification of In addition to maintaining
Concepts successors and consistent retail marketing
dependency on family strategies in all branches,
members. adapting to local needs of
the target market.
 Management training for
family members.
Source: Ron Hasty, James Reardon – Retail Management

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Retail Life Cycle (RLC)

The concept of Retail Life Cycle is almost similar to Product Life Cycle (PLC). It
helps in understanding the characteristics of retail business in each stage of life cycle
to form the strategies accordingly. The table 1.2 explains the concepts of Retail Life
Cycle.
Table 1.2
Retail Life Cycle

Area of Innovation Accelerated Maturity Decline

Concern Development
Market Indicators
No. of Very few Moderate Many direct Moderate
Competitors competitors direct
and moderate competitors
indirect and many
competitors. indirect
competitors.
Rate of Sales Very rapid Rapid Moderate to Slow to
Growth slow negative
Profitable Low to High Moderate Very low
Level moderate
Duration of 3.5 years 5.8 years Indefinite Indefinite
Stage
Appropriate Retailer Actions
Investment / Investment High level of Tightly Marginal
Growth minimization investment to controlled capital
sustain growth growth in new expenditure
markets
Management Concept Establishing Excess Engaging in a
Concern refinement preemptive capacity and "run-out"
through market prolonging strategy
experimenting position maturity
Area of Innovation Accelerated Maturity Decline
Concern development
Use of Minimal Moderate Extensive Moderate
Management
Control
Techniques
Most Entrepreneurial Centralized Centralized Moderately
Successful Decentralized
Management
Style
Source: Ron Hasty, James Reardon – Retail Management

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C. RETAIL SCENE IN INDIA

"The best way to predict the future is to create it", quotes the famous management
personality Peter Drucker. The modern consumer is seeking more value in terms of
improved availability and quality, pleasant shopping environment, financing options,
trial rooms for clothing, return and exchange policies. This has created a growing
opportunity for organized modern retail formats to emerge in recent years and grow at
fast pace. Retail has played a major role world over in increasing productivity across a
wide range of consumer goods and services. The impact can be best seen in countries
like USA, UK,México, Thailand and more recently in India and China. Economics of
countries like Singapore, Malaysia, Hongkong and Dubai are heavily assisted by the
retail sector. Retailing in India before the decades of eighties was completely
unorganized and it thrived as separate entities operated by small and medium
entrepreneurs .Traditionally it was family's livelihood with their shop in front and
house at back or low cost retailing formats e.g. owner managed general store,
convenience store and local corner shops. More than 96% of these retailers function in
less than 500 sq. feet of shopping space. Over last 20 years many forms of retailing
have developed which have helped in shifting from unorganized to organized retailing.
These include publicly traded supermarkets, corporate backed hypermarkets, retail
chains and privately owned large retail business. Figure 1.1 shows various formats of
retail.
Figure 1.1
Formats of Retail
Retail

Store based Retailing Non Store Service

Retailing Retailing

Ownership Location Size * Banking

* Insurance
* Direct Selling * Car Repair
* Street Paddling *Telecommunication
Merchandise Price * Mail order * Tourism
* Internet
* Automated
Merchandised

Source: Pradhan,S - Retailing Management, Tata McGraw Hill Retail Management

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Prominent Growth Drivers

The prominent growth drivers for retail business in India are:

1. Demographic dynamics – Approximately 60% of Indian population is below

30 years of age.

2. Reduced trade barriers among countries.

3. Cheap labour availability in emerging markets.

4. Indian economy and its policies are becoming liberal towards allowing foreign
companies to enter Indian markets.

5. Rise in purchasing power of Indians and their per capita income.

6. Favourability to farmers as it has helped them in remaining middleman and

enhanced their remuneration.

7. Indian population has become a good consumer and they are accepting all
national and international brands.

8. Internet revolution which has helped foreign brands to understand Indian

consumer and influence them before entering the market.

9. Government acceptance in 100% ownership for single brand stores and 51%
FDI for multi brand retail in India.

Thus, India the nation of shoppers gets a makeover with advent of organized retail.

Forms of Retail

Retail sector in India is divided into two categories; unorganized and organized retail.

Unorganized Retail: (Traditional Retail)

1. The ownership and management of retailing is with one person in traditional

or unorganized retail.

2. These retailers are small in size.

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3. These formats typically require low skilled or unskilled manpower and cheap
labor (work is shared by family members).

4. There is no monitoring of labour laws.

5. There is difficulty in enforcing tax collection mechanism therefore negligible

overheads and taxes.

6. There are minimal rental and operational costs (unregistered kiosks or

traditional property).

7. These are highly competitive outlets due to the easy penetration and have the
higher share in total retailing in India (92%).

8. Unorganized retailers suffer due to poor shopping experience, inability to offer

a wide range of products due to lack of sourcing capabilities.

9. Traditional format retailers are kiranas, general stores, street markets and
exclusive / multiple brand outlets.

Organized Retail: (Modern Retail)

1. Organized retailing is owned and managed by companies or corporate houses.

2. These retailers are typically large in size.

3. These formats require skilled and professional manpower.

4. There is a proper monitoring of labour laws.

5. There is a greater enforcement of tax mechanism.

6. There are high rental and operational cost.

7. Low competition in India due to the lower share in total retailing in India (8%).

8. Organized retailing provides rich shopping experience due to the ability to

provide a wide range of products and resource capacity.

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9. Modern format retailers are supermarket, hypermarket, department stores,

specialty stores, convenience store, malls etc.

Historical Overview of Indian Retail Sector

According to the figure 1.2 given on evolution of Indian retail shows that the roots of
Indian retail are very strong and old. In the ancient days there have been weekly
markets, village fares and melas which were considered to be the source of
entertainment and fulfilling needs. Particularly these retail practices developed in
rural India. Later on with the emergence of urbanization, industrialization,
development of technology and fast life style, new formats for retail emerged. These
were convenience stores, mom and pop shops considered as neighborhood stores or
convenience stores. With the ever increasing population and creation of demand the
government took the initiative to regularize the market practices. New formats
emerged with the objective of timely availability of goods, effective prices and proper
distribution to all. These retail formats were known as PDS outlets, Khadi stores,
Cooperatives. Talking about the current scenario, this modern time is an era of
particularly organized retailing which provides event shopping experience and value
for money. Some of the modern retails formats are exclusive brand outlets,
hypermarkets, supermarket, department stores or shopping malls.

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Figure 1.2
Evolution of Indian Retail

Historic Rural Traditional Government Modern Formats

Retail Pervasive Retail Supported International

Exclusive Brand
Outlets
Hyper / Super Markets
Department Stores
Shopping Malls

PDS Outlets
Khadi Stores
Cooperatives

Convenience Stores
Mom and
Pop / Kiranas

Weekly Markets
Village Fairs
Melas

Source of Neighborhood Availability Low Shopping Experience

Entertainment Stores Convenience Costs Distribution Efficiency

Source:-Abhijit Das – Taxmans’Mall Management

The Present Position of Retail in India

The three tier structure shown in the figure 1.3 depicts the existence of different
formats of retail in India. First has the traditional format such as haats, mandis or
weekly fares. Second has the established format like kirana stores, company multi
brands showroom, convenience stores, PDS, fair price shops etc. Third format has
some emerging formats like hypermarkets, rural oriented formats, fast food outlets,
services galleries and malls. It is now thought that the emerging formats or the
organized retailing is to be the major focus area in the Indian retailing in the near
future.

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Figure 1.3
The Indian Retail Scenario

Traditional Formats Established Formats Emerging Formats

 Daily Salesman  Kirana Shops  Exclusive Retail outlets
 Haats  Convenience  Hypermarkets
 Mandis  Department Stores  Internet Retail
 Weekly Fares  Company Multi Brand  Malls / Specialty Malls
Showrooms  Multiplexes
 PDS Fair Price Shops  Rural Oriented Formats
 Cooperative Stores  Fast food outlets
 Pan / Beedi shop  Service Galleries

Source: Pragan, Swapna, Retailing Management Text and Cases

Prospects of Retailing in India

The future prospects of retailing in Indian may be easily assessed on the basis of
following facts:

1. Retailing is the world's largest private industry.

2. Currently retail sector is having $7 trillion sales annually.

3. Retailing is the largest industry in India and accounts for 14% of GDP of India.

4. Retailing is the second largest source of employment in India after agriculture

industry.

5. India has the highest retail outlet density in the world.

6. India's retail sector is expanding by more than $27 billion a year.

7. The Indian retail sector is divided in to organized and unorganized sectors.

8. Organized sector of retail in India shares around 8% of the total retail trade in
India and accounted for billions. Today, the organized retail sector has 350
new malls, 3000 supermarkets and departmental stores. Organized retailing in
India is expected to cross $ 100 Billion by 2020.

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The above mentioned fact in respects of expanding retail sector in India clearly
indicates that there is very strong possibility of faster growth of retail sector in India.
With the recent decision of allowing foreign direct investment in multibrand retail. In
the next 10 years the retail sector is going to become very strong, vibrant and
multidimensional sector of the Indian economy.

Factors Affecting High Retail Growth in India

The factors affecting high retail growth in India are:

 Rising incomes and improvements in infrastructure are enlarging consumer

markets and accelerating the convergence of consumer tastes.

 Liberalization of the Indian economy which has led to the opening up of the
market for consumer goods has helped the MNC brands like Kellogg’s,
Unilever, Nestle etc. to make significant roads into the vast consumer market.
Offering a wide range of choices to the Indian consumers.

 Shift in consumer demand to foreign brands like McDonalds, Sony, KFC,

Pizza Hut etc.

 The internet revolution is making the Indian consumer more accessible to the
growing influences of domestic and foreign retail chains. Reach of satellite TV
channels is helping in creating awareness about global products for local
markets. About 47% of India's population is under the age of 20 and this will
increase to 55% by 2015. This young population which is technology savvy
watches more than 50 TV satellite channels and displays the highest
propensity to spend. It will immensely contribute to the growth of the retail
sector in the country. As India continues to get strongly integrated with the
world economy riding the waves of globalization the retail sector is bound to
take big leaps in the years to come.

 Kearney’s study on global retail trends found that India is least competitive as
well as least saturated of all major global markets.

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The Indian retail sector is estimated to have a market size of about $ 180 billion; but
the organized sector represents only 2% share of this market. India is the last largest
Asian economy to liberalize its retail sector. In Thailand more than 40% of all
consumer goods are sold through the super markets and departmental stores. A similar
phenomenon has swept through all other Asian countries. Organized retailing in India
has a huge scope because of the vast market and the growing consciousness of the
consumers about product quality and services. Good talent pool, unlimited
opportunities, huge markets, availability of quality raw materials at cheaper costs is
expected to make India overtake the world’s best retail economy by 2042.

Challenges of Retail Sector in India

With high growth drivers for retail sector in India, there are some challenges for the
sector. Table 1.3 shows challenges of retail sector in India.
Table 1.3
Challenges of Retail Sector in India

Factors Description Implications

Barriers to  Single brand FDI allowed  Absence of global players
FDI  Limited exposure to best
practices
Lack of  Government does not  Restricted availability of
Industry recognize industry finance
Status  Restricts growth and
scaling up
Structural  Lack of urbanization  Lack of awareness of
Impediments  Poor transportation Indian consumers
infrastructure  Restricted retail growth
 Consumer habit of buying  Growth of small, one store
fresh foods formats, with unmatchable
 Administered pricing cost structure

High Cost of  Pro-tenant rent laws  Difficult to find good real

Real Estate  Non-availability of estate in terms of location
government land, zoning and size.
restrictions  High land cost leads to
 Lack of clear ownership titles constrained supply
and high stamp duty.  Disorganized nature of
transactions duty (10%)
Supply Chain  Several segments like food  Limited product range
Bottlenecks and apparel reserved for SSIs  Makes scaling up difficult
 Distribution, logistics  High cost and complexity

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constraints restrictions of of sourcing and planning

purchase and movement of  Lack of value addition and
food grains increase in costs by almost
 Absence of cold chain 15%
infrastructure
 Long intermediate chain
Complex  Differential sales tax rates  Added cost and
Taxation across states complexity of distribution
System  Multi point octroi  Cost advantage for smaller
 Sales tax avoidance by stores through tax evasion
smaller stores
Multiple  Stringent labour laws and  Limits flexibility in
Legislations governing hours of work operations
 Minimum wage payments  Irritant value in
 Multiple licenses / establishing chain
clearances required operations
 Adds to overall costs
Customer  Local consumption habits  Leads to product
Presences  Need for variety proliferation
 Cultural issues  Increases complexity in
sourcing and planning
 Increases the cost of store
management
Availability of  Highly educated class does  Lack of trained personnel
Talent not consider retailing a  Higher trial and error in
profession of choice managing retail operations
 Lack of proper training  Increase in personnel costs
Manufacturers  No increase in margins  Manufactures refuse to
Backlash disinter mediate and pass
on intermediary margins
to retailers
Source: Market Participants, Fitch.

D. EVOLUTION OF SHOPPING MALLS

The Oxford Dictionary defines a shopping mall ‘as a large building or covered area
that has many shops / stores, restaurants etc. inside it. The shopping mall concept is a
big hit with the sole purpose to provide everything under the sun under one roof or in
one big complex. Customers state that malls are well organized with no qualities
issues, the range of choices and value-for-money deals make them happy, the
ambience is good, there are better deals across categories with more choices and they
get everything under one roof with good deals on bulk buying. Thus, mall is
collection of independent retail stores, services, parking area and entertainment all

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under one roof. It is the largest form of organized retailing today, located mainly in
metro cities in proximity to urban out streets, ranging from 60000 sq.ft to 70000 sq.ft
and above.

The first shopping mall was the country club Plaza, founded by the J.C. Nichols
Company and opened near Kansas City, Missouvri in 1922 which was a group of
store accessible only by cars. It was constructed as the business district for a large
scale residential development. In the later 1920s as automobiles began to clog the
central business districts of large cities, small strip centers were built on out skirts.
The typical design was a straight line of stores like supermarket, drug stores or
convenience type stores with space for parking in front. The first modern shopping
mall, South Date Centre was established in 1956 in Edina, Minnesota outside
Minneapolis. It was the first fully enclosed mall with a two level design. It had
centralized air-conditioning and heating, a comfortable common area and the
competing departmental stores as anchors. The concept of mall was originally
conceived as a community centre where people would converge for shopping, cultural
activities and social interactions. Traditional developers attracted consumers to mall
through the promise of making available a wide assortment of stores and merchandise
at a single location. It has the advantage of climatic comforts and gives shoppers the
freedom from noise and traffic. More recently, mall interiors have evolved from
comfortable yet mediocre spaces to architecturally rich with lavish materials and
sophisticated design elements such as multilevel atrium and curved escalators. Mall
managers have been organizing special events within the malls like home
improvement expos, walking clubs, art exhibits, health screening, auto shows and live
music. Malls have also become important meeting places, especially for young people
and senior citizens. Some bigger malls have become so famous that they have
emerged as tourist destinations. The table 1.4 shows the history of malls.

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Table No. 1.4

History of Malls

Period Description

15th century AD Isfahan’s Grand Bazaar – Tehran

 10 km Long
 58 streets
 4000 shops

1916 Indoor Mall – Duluth, Minnesota

First fully – Enclosed mall South Dale Mall in Seattle was

1950
designed by victor Gruen (Father of Malls)

West Edmonton Mall – Alberta

1986  World largest parking lot
 Largest shopping centre
Source: Arif I. Sheikh & Dr. Kaneez Fatima, Mall Management, Himalaya Publishing.

Types of Mall

There are 4 types of malls based on their size, number of anchors and location. They
are –

1. Regional Mall: It is a large mall with 4,00,000 sq.ft. to 8,00,000 sq.ft. gross
leasable area and has at least 2 anchors. They have high end stores that require
large service area to be profitable.

2. Outlet Malls: At outlet mall (or outlet centre) is a type of shopping mall in
which manufacturers sell their products directly to the public through their
own branded stores.

3. Seamless Malls: This mall helps n removing barriers in the customers' minds
and allows them the freedom to easily move from one display to another and
from one section to another to compare and choose their favourite items.

4. Vertical Malls: The concept of the vertical mall is a departure from the
common western model of flat shopping mall. In a vertical mall, the space

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allocated to retail is configured over a number of stories accessible by

escalators linking different levels of the mall.

5. Specialty Malls: A specialist malls focuses on a specialized product category.

Since specialist malls are about specially retailing, they are destination points
where serious buyers of a particular kind of commodity come to shop in
comfort.

6. Discount Malls: Discount malls offer a great collection of branded outfits at

reasonable prices. Consumers could never imagine getting all international
brands at their original prices offered by discount malls.

Stages in Mall Life Cycle Curve

Like other products and services, the concept of product life cycle may also be
applied to shopping malls. A mall's stage in life cycle is determined by a host of
factors such as the mall's age, competitive forces, changes in shopper behavior and
changes in the marketplace. The life cycle concept provides a rational explanation for
the decline and fall of shopping malls in a society and economy. According to Jame R.
Lowry, there are four stages in the life cycle of a shopping mall:

(a) Innovation or introduction

(b) Growth or accelerated development.

(c) Maturity

(d) Decline

These stages are identified on the basis of the following parameters:

1. Market conditions: This parameter comprises observations regarding

competition (who and how many), footfalls (number and break up), growth
rate of business and vacancy rates inside shopping malls.

2. Mall developer strategies: This parameter includes a mix of decisions taken

by the mall developers relating to tenant mix improvement, revenue model,
leasing practices, facilities and infrastructure, advertising and promotions.

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3. Tenant strategies: This parameter covers decisions taken by the tenants

during different stages of the mall's life cycle. These decisions relate to store
size, layout, merchandise, advertising, promotion and discounts.

For understanding this concept, it is necessary to have a look at the US scenario where
shopping malls have been operating for nearly over 80 years. Analyzing data from
1970 to 2003, it is observed that the shopping centre annual growth rate in the United
States has come down from 6 per cent to 1.4 per cent during this period .The US malls
have taken more than 50 years to reach this stage of the life cycle curve. The US retail
market has become thoroughly oversaturated, with an excessive amount of retail
space in the light of current consumer demands. At this stage, the major challenges
before the US malls are reduction in patronage and sales, retention of tenants,
changing demographics, vacancy problems and the designing of survival strategies.

On the other hand, the first Indian malls came into existence a decade ago. Major
developments have started taking place only during the last four or five years. India is
clearly in the growth phase of the mall development life cycle. It is all the more
important for India to learn from the US experience regarding response to the
different stages in the mall development life cycle, as India is likely to consume less
time in reaching the maturity stage as compared to the United States. Figure 1.4
shows stages in global mall life cycle.

Figure 1.4
Stages in Global Mall Life Cycle

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E. INDIA'S ENTRY INTO SHOPPING MALL ERA

The concept of retail as entertainment ‘came to India with the advent of malls’. Mall
fever has touched every facet of Indian society. For many people, organized retail
appeared in India with the launch of the 'First Malls' in 1999. The launch of ‘Spencer
Plaza’ in Chennai , 'Ansal's Plaza' in Delhi and 'Cross Roads' in Mumbai are hailed as
the spark that led to the explosion of organized retail in the country and transformed
the whole retail landscape of India. Even highly respected news journals have
reported that "only three shopping malls" existed in India at the end of 2002. Malls
transformed shopping from a need driven activity to a leisure time entertainments.
There was a paradigm shift in the mall scenario from just 3 malls in the year 2002; the
country witnessed 220 malls in the year 2006.Exhibiting signs of further enlargement
India had over 600 malls in 2010 and today India is likely to have more than 750
malls by 2015. The table 1.5 shows the list of top 10 shopping malls of India.

Table 1.5
Top 10 Shopping Malls of India

S.No. Name of the Mall S.No. Name of the Mall

1. Lulu International Shopping 6. Z Square Shopping Mall –
Mall – Kochi Kanpur (Uttar Pradesh)
2. Phoenix Market City – Mumbai 7. Great India Place Shopping
Mall – Noida (UP)
3. Phoenix Market City – Pune 8. Select Citywalk – New Delhi
4. Phoenix Market City – Chennai 9. Alpha One Shopping Mall –
(Tamil Nadu) Ahmedabad (Gujarat)
5. Mantri Square Mall – Bangalore 10. Neptune Magnet Mall –
(Karnataka) Mumbai (Maharashtra)
Source: www.traveljee.com

Malls Move out of Indian Metros

The growth of India's retail sector is phenomenal. It is growing at a swift pace that is
expected to be sustained in future. Barring some slowdown in the mall construction
activity during 2008-09 due to economic recession, this sector has registered a fairly

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steady growth rate. The Indian retail growth has been fuelled by a strong economy,
favourable demographics, rising wealth levels, changing lifestyles and aspirations of
an every burgeoning middles class. The mall business is spreading fast, charting a
new course in Tier II cities of India. Real estate developers are taking this
phenomenon further to smaller cities with corporate houses like ITC and the Sriram
Group, making a steady progress in proving its feasibility even in the rural market.
Tier II cities like Ludhiana, Chandigarh, Nagpur and Surat are catching the eye of
mall developers. Smaller cities like Ahmedabad, Jaipur, Nagpur, Lucknow, Indore
and Ludhiana are also coming up with shopping malls. Thus due to radical revival of
shopping and consumerism shopping mall syndrome, malls are mushrooming from
metros and mini metros to Tier III cities and the spread is highly concentrating in
India.

Growth of Mall culture in India

Modernistic outlook, ultra hip architecture and air conditioned interiors, this is the
battleground of the brands and lifestyle fighting for consumer attraction. This is the
world of the all new Mega Mall culture in India. The purchasing power of the
consumer is on a constant rise. It leads to a better adaptability of the people to the one
roof multi divisionary market place which is presented in form of malls. It is not only
the metros that boasts of these malls but the majority of the mall presence is seen in
the village pockets present around them that are redefining the old ways of shopping.
Malls are teaching shoppers and retailer’s phrases like comfort, style and convenience.
Now the shoppers don't visit malls only to purchase but shopping has become an
entertainment for them on weekends and occasions.

The encouraging mall culture in India has resulted in enthusiastic generation of range
and scope of economic activities that promise many things to many people and paves
the way for the socio-economic revolution to gain greater ground in India.

Reasons for growth of Malls in India

The reasons for growth of shopping malls in India are:

 Fast growing middle class with higher discretionary income.

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 Emergence of youth as an independent shopper with lot of disposal income.

 Enthusiasm of Indian shoppers for a new shopping experience.

 Ability of mall developers to make shopping more enjoyable experience with the
presence of factors like cost effectiveness, convenience, wide variety of products
and entertainment with shopping.

 Influence of media and marketing communication resulting in change in

aspirations, lifestyle orientation and consumer perceptions about shopping.

 Prominent cities of India cover a huge part of population. And they serve as a
very big market for the retailers.

 The income level of people in industrial cities is higher than the level in rural and
some urban areas. People have more money to spend for good shopping
experience.

 Change in culture has developed a situation where both husband and wife are
working and they want all the required materials under one roof which has led to
development of more and more malls.

Limitations and Criticism of Malls

Malls have really changed patterns of retailing but everything in the world has two
aspects i.e. the advantages and limitations. Malls provide a great shopping experience
but in a country like India where retail sector is almost 92 percent unorganized, malls
have to do a lot to overcome their limitations. There are certain limitations and
criticisms of malls which are as follows:

 Like any other business and corporate they are also clustered in metropolitan and
big cities. Customers of rural and semi urban areas are still away from mall
revolutions.

 In malls the customers do get good services but lack in after sales services.
Customers visiting malls lack personal touch with shop owners i.e. they feel even
if visited regularly they still are treated like any other customer; whereas in the

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local kirana stores they are treated special and are known by their names, their
tastes and preferences, buying habits etc.

 Malls have become a battlefield where the brands, small, medium and big the
known and not so well known fight out for the customer’s attention. When
customer sees more they ask for more. This significantly increases their
unplanned expenditure.

 The customers shopping in the malls have a feeling that except for some products
the prices are highly inflated.

 The shopping in malls gives a convenience experience. At the same time for
going to shop in mall, the consumer first needs to design a plan and make a
separate adjustment in his schedule.

 Unlike in the west, the Indian psyche has not accepted the concept of malls
located on highways.

 Organized food and beverage retail is challenged by the home delivery system of
neighbourhood stores in the most cities.

 Value for money is the driving force for Indians.

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SWOT Analysis of Indian Malls

The table 1.6 shows SWOT analysis of shopping malls of India.

Table 1.6
SWOT Analysis of Indian Malls
S. No. Strengths Weakness
1. Skyscrapers with perfect blend of  Mall developers are
shopping, eating and entertainment, in enacting as mall
short "shoppertainment" managers.
 Retail is not accredited as
an industry in India
 Complicated taxation
system
2. Developed in contemporary style, Lack of adequate infrastructure
these flashy malls promises just about including supply chain and
everything under the sun, from foreign parking facilities
gizmos to the very desi brands
3. Attractive destinations for civic and Unavailability and skyrocketing
official meetings, hang out, reducing prices of prime catchment's areas
stress.
4. Procure goods directly from factories Poor positioning and zoning of
and farmers in case of lifestyle and malls
food / beverages respectively
5. Bouquet of value propositions like Shortage of qualified human
value for time, value for quality, value personnel in the area of facility
for experience and value for money management, creative firms and
design houses.
6. High quality shopping environment Lack of differentiated offerings
quality assortment at variant shopping i.e. same mix of shopping, foods
format. and films.
S. No. Opportunities Threats
1. Some of the Tier II and Tier III cities Non availability of adequate
are still untapped finance
2. Growing urbanization and increase in Undeveloped supply chain
purchasing power of consumers
Outsourcing from other developed  Vigorous competition
3. retail market from unorganized
retailers
 Keeping up brand loyalty
4. Progressive growth of apparitional Disturbance in income strata of
consumer class consumers greatly influence
malls growth
5. Believing more in spending than Threat from online players
savings, as most of the population is
youth
Source :- Basu B, India‘s mall explosion, Sense and direction.

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E. MALL MANAGEMENT IN INDIA

Indian retail sector is the largest industry in India. In the current market scenario,
there is plentiful possibility of emergence of more organized retailing including
shopping malls due to the increasing demand particularly in Tier-II and Tier – III
cities in India. It is fact that there has been a decline in the opening of new malls in
India due to several factors like impact of economic recession on real-estate sector,
mushrooming of malls in metros, competition with traditional retail, rising rental
values, lack of demanding location, scarcity of skilled manpower and lack of mall
management.

Mall management is an internal factor and specific to individual malls. It helps in the
success of malls by providing best mix of retailers and creating a base for them to
differentiate between the products and service offered from its competitors. Presently
consumers and retailers both have limited choices in terms of mall shopping
experience. Therefore it becomes crucial, that only those malls will catch consumers
and retailers which are professionally managed and having an effective mall
management system. Mall Management is basically managing all the services
required to keep and maintain shopping mall as a valuable, useful, clean, proper and
attractive destination so that it not only motivates shoppers to purchase but also
persuades to boost retailer’s turnover also.

The mall management function is divided into five phases as noted below:-

1. Mall Ideation: – It is the first stage where builder will select location of mall
basis the target group, positioning and branding.

2. Mall Construction: - Here builder needs to understand construction and

architecture of the mall.

3. Mall Operations: - Here the mall would indulge in aggressive public relation
activities to increase foot falls.

4. Mall Maintenance: - It includes all types of maintenance work of mall.

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Scope of Mall Management Function

1. Trade area and Site Selection: It is a methodology, a process or a technique that

provides a basis for understanding, visualizing and quantifying the selection of
mall site. It requires a sound area analysis that includes local market opportunities,
competing businesses and barriers that would discourage consumers from visiting
the site.

2. Tenant Mix Decision: It refers to the combination of retails shops occupying

space in a mall. A right tenant mix would form an assemblage that produces
optimum sales rents service to the community and financiability of the shopping
mall ventures. The table 1.7 shows types of shopping mall tenants.
Table 1.7
Type of Shopping Mall Tenants

Regional / Super
Convenience Neighborhood Community
Regional
Junior department Full Department
Minimart Supermarket
store Store
Discount Fashion department
Restaurant Drugstore
department store store
Discount
Beauty Parlour Supermarket Multiplex
Department Store
Off price Entertainment
Dry Cleaner Restaurant
superstore center
Fast food service Furniture Store Variety Stores Food court
Medical / Dental Large Formal
Hardware Store Family wear store
Office Specially Store
Large formal off
Automotive Store Furniture Store
price store
Liquor store Video Sporting goods
rental store store
Bank Drugstore
Source: –Abhijit Das – Taxmans’ Mall Management , 2nd Edition .

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3. Mall Promotions: Promotion activities and events in a mall form an integral part
of mall management. The malls should emphasize on the following promotional
activities.

(i) Activities like food festivals, handicraft exhibitions and celebrity visits
increase the footfalls and ultimately in turn increase sales volume and
revenue.

(ii) Developers can also work on drafting marketing strategies for individual
malls so that they can meet the needs of the local consumer base and face
the challenges of local and regional competitors.

4. Facility Management: This refers to inclusion of infrastructure ambience and

traffic management. The figure 1.5 shows the types of facilities taken care off in
facility management.
Figure 1.5
Facility Management

Facilities
Management

Health and Security and Building

Utilities Hygiene Safety Parking Ambience Management
Systems

Source: –Abhijit Das – Taxmans’ Mall Management , 2nd Edition.

5. Financial Management: Professional financial management of a mall as a

business venture covers financial management which involves monitoring and
controlling of various issues such as cash receipts and collection of incomes.

Challenges to Mall Management in India

There challenges faced by the mall management in India are:

1. Lacks of feasibility/Market Research Prior to the Development of a Mall – In

the past, some malls were constructed without carrying out a research. The market

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scene is gradually changing wherein more and more developers are approaching
proper consultancy firms to conduct feasibility and positioning studies for their
projects.

2. Zoning: Landlords / developers tend to lease out retail space on first come-first-
serve basis. This creates a suboptimal tenant mix like a food and beverage outlet
next to a designer apparel shop instead of an accessories or a footwear shop.

3. Design Issues: At present, most of the popular malls have long queues and
congestion outside their main entry points during weekends and festivals seasons.

4. Few Promotional Activities: There are very few promotional activities organized
in the majority of malls at present. Developers perceive that these events only help
to increase poor traffic and not revenues.

5. Facility Management: Good infrastructure/facility management of common area

becomes a problem in malls where retail outlets are sold as strata title.

6. Parking: Many malls in India do not have adequate parking. The parking spaces
are inefficient due to low ceiling heights, bad lighting and single entry and exit
points.

To overcome these shortcomings Indian mall developers are conducting professional

mall management practices, from rigorous market research to facility, ambience and
finance management of a mall. To ensure that a mall attracts retailers and consumers,
professional mall management is a necessity. The mall market is an extremely
competitive one, having a high degree of internal and external competition. To lure
retailers and consumers to its mall, a developer has to ensure that their property
follows the best practices in the market especially in terms of mall management.

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