There’s no doubt that online shopping has taken off in India, and businesses like malls now have to find out innovative ways to make themselves attractive to customers. Here’s how malls are trying to counter the massive competition faced from online shopping portals.
Shopping malls in the country are going through a transformation to make themselves more of an ‘experiential’ destination, adding more restaurants, spas, salons and even doctor clinics, at least partially influenced by the recent boom in online shopping. Bangalore-based real estate developer Prestige Group, for example, plans to bring food offerings to almost every floor and prominently on the first floor of its upcoming shopping malls rather than restricting food outlets mostly to the top floor as is the common practice now.
“Earlier people used to come for shopping and they would eat. Now, we think they will come for food and will shop as well,” said Suresh Singaravelu, executive director for retail at Prestige. “This is partly in response to increasing the experiential content and partly in response in recognition of the fact that you need to increase frequency of mall visits with all the online retailer catching the consumers’ imaginations.”
With online retailers such as Flipkart and Amazon seen cornering a chunk of the expected growth in India’s overall modern retailing, industry insiders say a lot of mall owners are nervous.
“We are all worried. We are trying to find out how we can fight the online and the issue of customers moving out,” said a Mumbai mall developer who keeps in regular touch with other mall owners in the city through an e-mail group. “We are trying to find solutions.” The person, however, said his own malls will not be impacted by the online retail boom. Looking at the prospects of the flight of a chunk of middle class consumers to online channels, malls are coming up with new offerings to attract consumers. Infiniti Mall in Mumbai plans an e-commerce site where its tenants can sell online, but consumers must visit the mall to take the delivery. Across town, Palladium Mall has doubled the number of events such as musical evenings to fashion shows this year.
Delhi’s Select Citywalk Mall is currently revamping its whole food court by replacing non-branded outlets with branded food sellers like Saravana Bhavan and some international cuisine specialists. “Very few people come to malls only for shopping. They come to us for the whole experience. That is why we have always believed in making the whole experience attractive,” said Arjun Sharma, director at Select Citywalk. Shopping Centres Association of India, a mall owners’ group that has been “mostly inactive” for the last three years”, recently held some meetings with retailers that looked into threat from online retailers.
“Online is always discussed. Especially when one of the online retailers sells products around Rs 600 crore in 10 hours, obviously it would be discussed,” said Anand Sundaram, chief executive at mall management firm PPZ, who is aware of the meetings. “All of us were aware that this is going to happen. We are able to draw parallel from the West. Large stores sizes are shrinking, experiential component is going to increase,” he said.
Flipkart, India’s largest e-commerce company, sold merchandises worth Rs 600 crore in just 10 hours on its mega sales day on October 6. Others such as Amazon and Snapdeal, too, have got huge response to their big discount sales this festive season. India’s e-retailing segment has been growing at 56% a year in the last five years, swelling to Rs 13,900-crore annual business in 2012-13 from Rs 1,500 crore in 2007-08, according to Crisil. But not every mall operator considers online retailers a threat to them. Munish Baldev, head of retail at Unitech, said that a major reason for online shopping boom in recent times is the heavy discounting that online retailers have resorted to.
“That is not sustainable,” he said. “If we take a look at the international market and assume that similar trends will happen here, then — online has just 10% of the market share (in other markets); so, even if India follows that pattern it will reach only up to 10%,” Baldev said. “Also, online has started with zero, so the growth figures look very big.”
