Time to redefine mall concepts

The concept of shopping in malls and shopping centres is something that we seem to have taken for granted in this region with a per capita square footage of shopping space that is one of the highest in the world. But there are still some markets in other parts of the world where even today people have very differing views on this.

In Scandinavian countries, governments are very shy about giving approvals for large size shopping centers. A few have now been allowed, but they have been approved on the outskirts of the city and with a clear stipulation that the development has to be carbon neutral.

Debate in India

In India, the debate is of course at another level. On the one hand, large shopping centres and malls are seen as elitist and this means that the permissions go through another bureaucratic loop altogether.

In a recent Forum of Shopping Centres in Mumbai, it was surprising to note that the ‘organised' retail sector is only between 5 and 6 per cent of the total market. So in this malls and shopping centers probably constitute only 1 to 2 per cent of the total retail.

But what seems to have made it difficult for many of even these developments is the fact that many of the malls have not been built on a shopping centre business principle, but rather on the basis that real estate developers have seen it as being the third leg of their development programmes - residential, commercial, retail.

The heady development plans of over 1,200 malls being started in 2005 to 2008, never really happened and today there are about 180 operating malls across the country. The shocking revelation by Jones Lange Le Salle, is that after this 34 million square feet comes on line in a couple of years there will be no further additions for some years, since there are no new projects at all in the pipeline.

Another interesting statistic that they revealed was that at the end of 2013 there will be about 11.3 million square feet that will be unutilised or unoccupied. This space will remain unutilised, due to various reasons — particular malls being a failure, space in dead areas in malls, poor space planning etc.

So it seems that there is going to be a major correction in the sector in the next couple of years. People spoke of remodeling or redefining malls, for example, into hospitals, or residential complexes. Some even recommended demolishing some of the unproductive malls so as to release the potential of the underlying land which could easily be put to other uses.

It makes one think about what is happening in our region. There are a number of malls and shopping centers which were once doing extremely well, but which have practically no traffic now. Some of them have tried to reinvent themselves with aggressive marketing, or pulling in high visibility stores, or creating fancy or exotic destinations. But very often if you have no footfall then even the most exotic properties begin to look desolate and depressing.

Has the time come for developers to start thinking about how to redefine their assets?

The writer is an independent retail and business consultant.