Malls vs High Street: What do consumers prefer?

Remember Crossroads, Mumbai’s first mall at Haji Ali, where one had to either show a mobile or a credit card to get entry? A wrong move since Crossroads started seeing dwindling footfalls thereafter. In fact, the problem started even before that.

Retailers in the swanky premises found there were less of serious upmarket buyers and more of thrill seekers from the outskirts of the city who wanted to experience window shopping at the glass and steel temple to consumerism. In other words, they didn’t get the audience they expected to cater to. The result: Crossroads folded up however, it did trigger a debate between the relative viability of high streets and malls. Who scores higher? The perception is that high streets offer better bargains and deals than a mall. Indian high street shops are varied and scattered but generally sell a mix of branded and unbranded products through exclusive stores and MBOs.

The divide between high street and malls was clear until a few years back. The general perception was that malls were for footfalls and window shoppers, but high street was where the real sales happened. However, perceptions seem to be changing now with multiple malls coming up across the country, developers offering retailers lower rentals as an incentive to enter their properties. Incidentally, even large formats who are into organized retailing fall in the category of malls.

So in Gurgaon for instance with a rash of real estate development the first signs of malls eating into high street shopping are already visible. High streets have always had the lead on rentals, but some malls are slowly changing the game. High streets still command a premium given their limited supply and the fact that they attract serious shoppers. As a rule, they still charge more than malls. But now some malls that have become successful in the past couple of years have begun to charge more. For example, the Basant Lok-Priya Complex in New Delhi’s posh Vasant Vihar colony was one of the most popular high streets of the capital till recently. Top apparel and FMCG brands like Benetton, Sisily, Reebok, Lilliput to name a few had their EBOs here. But with the development of swanky malls like DLF Promenade, DLF-Emporio, Ambiance Mall etc, in the vicinity the high street has fallen into bad times. With sales dipping, a lot of EBOs have either closed down or shifted to nearby malls.

With the increase in the number of malls, rentals have moved from flat rates to revenue sharing models. Malls have also begun aggressively campaigning themselves as weekend destinations and the combination of shopping, food courts, movies and live events all in an air-conditioned environment has begun catching on. Fashion brands, particularly those that have entered India recently, are leading the way in expanding in malls since customers prefer the comfort of malls and with easy parking. Add to that is the snob value.

While the jury is still out there on who scores, malls or high street, in the near future, one can expect clear-cut categorization of malls viz. premium, luxury and value malls and existing formats will change radically according to size and category. However, businesses like automobile showrooms and bank branches will still prefer operating on high streets. Obvious reasons could be instant visibility and ability to get attention. As for apparel brands the only reason why they are not on a high streets of Mumbai like Linking Road or Sarojini Nagar Market in Delhi is the availability of good retail space.