Stores/malls suffer as online retail picks-up

Thane, near Mumbai, once bet big on the mall culture. But according to the Association of retail traders in Thane, rising number of consumers are turning to online shopping. Result: At least five per cent of retail outlets in the city have either shut shop or are in the process of winding up business. Rise of ecommerce is damaging business prospects of physical retailers, as consumers frequent stores/malls much less. Even festive season, has seen muted response.

Malls fail to face the ecommerce wave

As organized retail in Indian showed signed of positive growth, the country started developing mall culture betting big on its prospects. However, except a few placed at the right locations and having a considerable brand mix, rest are uncertain about the future. Just four years after its grand launch, for instance, Dreams Mall in Bhandup near Thane, is witnessing stores struggling to survive amid the empty spaces. While some shop-spaces are given out to call-centres, corridors are now rented out for wedding receptions and the top floor is being converted into a 170-bed hospital.

As per a recent CBRE South Asia study, India has more than 300 shopping malls, but only around 24 have been identified as successful, including DLF Emporio, High Street Phoenix, DLF Promenade, Select Citywalk, to name a few. Select Citywalk, for example, is currently 98 per cent occupied. Its tenants include Mango, Zara, Aldo, Sephora and Tommy Hilfiger and it is currently in talks with foreign brands like H&M, slated to open its first Indian store by mid-2015.

On the other hand, non-performing malls are introducing various initiatives to attract footfall. They are offering loyalty schemes as well as, services like free parking, free home deliveries and so on. And they are asking non-performing retailers to vacate space for the new entrants as fashion savvy Indian consumers seek foreign brands.

Ray of hope in sight for brick-and-mortar

While there have been constant reports of how consumers’ tilt towards online shopping and discounts offered by these platforms are negatively impacting sales and profits of offline retailers and brand, according to the report, ‘Malls in India’, the malls are last in the league to be scared of online retail. The report says, there were around 50 malls in 2005 which rose to 500 in 2013 and the number is likely to reach par 700 in 2016.

Provided the depiction of malls as entertainment hubs and hangout zones, mall operators are of the opinion that no matter how much people shop online, they ought to drive down to malls for social gatherings as they can’t have a birthday bash or friend’s outing online. According to mall owners, footfall continues to be intact since people cannot celebrate special occasions online, they have to go out to places like malls. Report says that going by consumer behaviour in India, shopping is more about outings and experience rather than procurement of goods. At the same time, mall’s location, brands present inside the mall and facilities as well as promotions on offer would definitely matter a lot.