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Mall Management - The key to a mall's success

20 Jul 2010

Col. Ashutosh Beri (MRICS), managing director - Property and Asset Management, Jones Lang LaSalle Meghraj

Until recently, street markets and bazaars were the top performers in the Indian retail space, and they contributed immensely to sales. Traditional market platforms now have to imitate malls by creating a better overall shopping experience for potential customers by offering a mix of diverse products - including food and beverage as well as entertainment outlets - preferably under one roof, like malls do.

A consumer is attracted to a mall because of the availability of world-class ambience and services, exposure to a multitude of brands, tempting promotional offers and significant periodic discounts. The superior ease of shopping in air-conditioned, aesthetic comfort as well as access to a variety of food options are added incentives to mall visitors.

Evolving retail market dynamics 

Rising competition has caused mall developers to focus on core competencies and accurately researched offerings to their target customers. To begin with, they attempt to understand the shopping needs of customers in their focus ‘catchment’ areas. Then, they proceed to build a well-planned bouquet of retail options that addresses the needs of those consumers. On their part, retailers have become a lot more vigilant in terms of expansion and evaluate specific dynamics and profitability of each location more carefully than ever before.

The ABC of successful mall operation

Zoning: Formulating the right tenant mix and the placement of these tenants within the mall is critical.

Tenant Mix: The orchestration of different retail stores occupying space in a mall is called the tenant mix

Zoning: The process of dividing the available mall space into different sectors for placing various retailers

A mall is dependent on the success of its occupiers, which translates to the financial feasibility of the tenant in the mall. Generally, there are two types of consumers visiting malls – focused and impulse buyers. The time spent by focused buyers in malls is relatively lower compared with impulse buyers who also enjoy window shopping. There is little that retailers can do to attract focused buyers, as they usually know what they require and from where. However, right tenant mix and optimum retailer placement after a diligent zoning exercise can help retailers attract both types of consumers, especially the impulse buyers.

Formulating the right tenant mix based on zoning not only helps attract and retain shoppers by offering them multiple choices and satisfying multiple needs, but also facilitates the smooth movement of shoppers within the mall, avoiding clusters and bottlenecks. This helps influence shoppers’ mall preference and frequency of visits. It also helps in building a distinct image in the minds of shoppers, which is critical considering the robust upcoming supply of malls.

A sustainable revenue model: Mall developers should not only concentrate on fixed rental but develop innovative models where both retailers and developers would be able to earn profits. Working out a pure revenue sharing model with a minimum guarantee is one of the most favourable practices at present.

Promotions and marketing: Events that help promote brands are an essential facet of mall management. Some of the most effective promotional models include food festivals and celebrity visits, which increase footfalls and, as a result, sales volumes. Organising cultural events has also proved useful. Developers can plan out marketing strategies for individual malls in order that are appropriate to the requirements of local consumers while simultaneously addressing the challenges of local or regional competitors.

Mall management: Mall management concerns itself with a combination of people, location, processes and technological systems in a particular building. It also aims to optimise the utilisation of resources in a manner that upholds the interests of the organization. Broadly, it covers infrastructure, ambience and traffic management.

Infrastructure management: Infrastructure management refers to the supervision and administration of facilities provided to tenants, risk management measures such as adopting essential safety measures, conducting asset liability and environmental audits as well as imparting emergency and evacuation training.

Ambience management: This aspect refers to the management of the overall aesthetics and appearance – a key factor in every mall.

Traffic management: This pertains to the effective managing of crowds, both within the premises and in the parking zone.

Until very recently, most Indian developers thought that mall management is merely another name for facilities management. The realisation that these two concepts are different and that professional mall management has immense bearing on the long-term viability and success of a mall is gradually being accepted.

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