Moderator: Anand Sundaram, CEO, Pioneer Property Zone; Nigam Patel, Director, Prozone CSC; P Subramaniam, Consultant, RmKV Silks (P) Ltd.;
Shubhranshu Pani, Regional Director, Retail, Jones Lang LaSalle; Girish Pande, COO, Fun Cinemas and Mani Chinaswamy, MD, Appachi Cotton<\/p><\/div>\n

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Question from Moderator: Anand Sundaram, CEO, Pioneer Property Zone:<\/span><\/b> \u00a0<\/span><\/b>How do you choose a market to set up a mall?<\/span><\/b><\/p>\n

Nigam Patel, Director, Prozone CSC<\/span><\/b><\/b><\/p>\n

“Mall management is all about patience<\/span><\/i><\/b>\u201d<\/i><\/b><\/span><\/p>\n

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• First mall in Aurangabad<\/li>\n
• Our concept of Ground + 1, large car parking, \u2018dominant shopping center\u2019 \u2013 helps us capture emerging markets.<\/li>\n
• We need a good mix of local plus national retailers. It took us time to understand this in Aurangabad, but we\u2019ve been able to apply this markets like Coimbatore.<\/li>\n<\/ul>\n

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  P Subramaniam, Consultant, RmKV Silks<\/span><\/b><\/p>\n

  “Key questions for us : What is the \u2018fertility\u2019 of the market? How does the brand connect and consumer relevance operate in that city?<\/span><\/i><\/b>\u201d<\/i><\/b><\/span><\/p>\n

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  • Each brand needs to look at its own areas of strength and how those can be leveraged<\/li>\n
  • RmKV has its roots in TIrunelveli (TN) \u2013 it\u2019s a familiar and a family brand in that market.<\/li>\n
  • In spite of that \u2013 we had to analyze to understand why move to a particular city and not another city<\/li>\n
  • For example \u2013 our hypothesis was that Coimbatore is a \u2018feeder\u2019 market \u2013 catering to Salem, Erode, Tirupur, Pollachi, and Palakkad<\/li>\n
  • We are an established brand, but we had to answer some key questions when moving into emerging markets like Coimbatore<\/li>\n<\/ul>\n

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    Girish Pande, COO, Fun Cinemas<\/span><\/b><\/p>\n

    “In deciding to open up a mall in a tier 2 city, we go back to the basics: Do consumers have money? Do they want to spend? Do they have other opportunities to spend?\u201d<\/span><\/i><\/b><\/p>\n

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    • We\u2019ve opened 8 malls before Coimbatore and we\u2019ve found that tier 2 markets give us much better success.<\/li>\n
    • Cities like Ahmedabad, Chandigarh & Lucknow \u2013 these are places where we see growth.<\/li>\n
    • Coimbatore has emerged as a flagship market for us \u2013 we have the highest ad rates in Coimbatore, and we see 100,000 customers a month at our multiplex.<\/li>\n
    • At the mall \u2013 the anchor retailers \u2013 Reliance \/ McDonalds are also doing exceedingly well.<\/li>\n
    • When we open a new mall in a tier 2 market, we go back to the drawing board and ask basic questions about consumption patterns.<\/li>\n<\/ul>\n

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      How do you view the retail \/ mall opportunity?<\/span><\/b><\/p>\n

      Mani Chinaswamy, MD, Appachi Cotton<\/span><\/b><\/b><\/p>\n

      “Retail can build an \u2018aura\u2019 around niche businesses \u2013 malls provide footfalls.\u201d<\/span><\/i><\/b><\/p>\n

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      • We are a one-store wonder; a factory outlet in a niche \u2018sustainable cotton\u2019 market.<\/li>\n
      • Our \u2018product\u2019 is niche, high value handloom sarees, stoles, scarves etc.\u00a0 The retail arm for us is a channel to absorb all the organic cotton produced by the contract manufacturers whom we work with.<\/li>\n
      • We\u2019ve used the sustainability plank to create a \u201ccotton trail\u201d a visual imagery of how organic cotton reduces the \u2018man-animal\u2019 conflict.<\/li>\n<\/ul>\n

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        How do you make malls more desirable than a high street \u2013 for retailers? Do they need to be?<\/span><\/b><\/p>\n

        Nigam Patel, Director, Prozone CSC<\/span><\/b><\/b><\/p>\n

        “Partner with retailers to make malls work in the long run.\u201d<\/span><\/i><\/b><\/p>\n

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        • Building malls is about making relationships with Retail work.<\/li>\n
        • It\u2019s a buyers market \u2013 we need retailers more than they need us.<\/li>\n
        • Malls are more attractive than high streets \u2013 because they are a secure environment \u2013 with parking. Appeals to all three generations.<\/li>\n
        • But the mall business is about patience \u2013 and break evens are northwards of 3 years.<\/li>\n
        • Building partnerships with retailers which will \u2018go the distance\u2019 is important.<\/li>\n
        • When times get tough, it\u2019s relationships and not LOI\u2019s (Letters of Intent) which come to the rescue.<\/li>\n<\/ul>\n

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          Why did you choose a mall in Coimbatore over the high street?<\/span><\/b><\/p>\n

          P Subramaniam, Consultant, RmKV Silks<\/span><\/b><\/b><\/p>\n

          “Strong brands in good malls act as a pull factor for consumers.\u201d<\/span><\/i><\/b><\/p>\n

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          • Three reasons:\n
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            • Shopping has become experiential<\/li>\n
            • Our brand challenge is to connect with the younger consumer \u2013 and malls give us this.<\/li>\n
            • There was no good property (which matches our brand) available on the high street.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
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              • Shopping has become experientialOur brand challenge is to connect with the younger consumer \u2013 and malls give us this.There was no good property (which matches our brand) available on the high street.<\/li>\n<\/ul>\n

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                • Also the mall option was a way to derisk our investment into a new market like Coimbatore. The alternative would have been to build our own store. Given we were entering a new (albeit adjacent) market, we wanted the flexibility that leasing provided us with.<\/li>\n<\/ul>\n

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                  What do regional retailers prefer \u2013 malls v\/s high street \u2013 in tier 2 cities? <\/span><\/b><\/p>\n

                  Shubhranshu Pani,\u00a0 Regional Director, Retail, Jones Lang LaSalle<\/span><\/b><\/p>\n

                  “Brands have to balance high streets and malls. They have to bring the experience of malls into the high street stores and the personal touch of high street stores into the malls. “<\/span><\/i><\/b><\/p>\n

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                  • Number of malls coming up in tier 2 cities is limited. In the last 15 years, malls have covered only the top 50 cities. India has 117 cities with population > 4 lakhs \u2013 the tipping point for mall development.<\/li>\n
                  • In the near future high streets will continue to be more dominant<\/li>\n
                  • Brands prefer high street stores and stand alone stores, as long as mall capacity is limited.<\/li>\n
                  • Once the malls comes in then brands will move.<\/li>\n
                  • For any retailer \u2013 to expand into tier 2 \/ 3\u00a0 – they have to therefore look at high street.<\/li>\n<\/ul>\n

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                    Question:Partnership dynamics between malls and retailers<\/span><\/b><\/p>\n

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                    Shubhranshu Pani,\u00a0 Regional Director, Retail, Jones Lang LaSalle<\/span><\/b><\/p>\n

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                    • In tier 2 markets, lack of space on high streets, and limited mall capacity means that strong retail brands may chose to build their own space.<\/li>\n<\/ul>\n

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                      P Subramaniam, Consultant, RmKV Silks<\/span><\/b><\/b><\/p>\n

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                      • Brands may not want to build their own stores in new markets \u2013 they will want to de-risk and \u2018feel\u2019 the market out before committing \u2013 i.e. a \u2018low stakes\u2019 approach.<\/li>\n<\/ul>\n

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                        Shubhranshu Pani,\u00a0 Regional Director, Retail, Jones Lang LaSalle<\/span><\/b><\/p>\n

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                        • Mall managers \/ landlords are usually willing to partner with strong brands \u2013 and waive lock in\u2019s.<\/li>\n
                        • Regional brands in malls \u2013 this combination attracts maximum footfalls.<\/li>\n<\/ul>\n

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                          P Subramaniam, Consultant, RmKV Silks<\/span><\/b><\/b><\/p>\n

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                          • Consumer perception is that the prices in malls will be higher as compared to the high street \u2013that facilities such as the air-conditioning, parking,\u00a0 clean toilets will be priced in.<\/li>\n
                          • We had to undertake a \u2018uniform pricing\u2019 campaign to deal with this perception.<\/li>\n
                          • Consumers are willing to travel to malls to buy.<\/li>\n<\/ul>\n

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                            Girish Pande, COO, Fun Cinemas<\/span><\/b><\/p>\n

                            “If you build, they will come\u201d <\/span><\/i><\/b><\/p>\n

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                            • High streets with a long history (Linking Road \u2013 Mumbai, Connaught place in Delhi),\u00a0 with decent parking will thrive.<\/li>\n
                            • The issue is whether tier 2 cities can attract enough investments for new malls.<\/li>\n
                            • Stores in malls take time to attract footfall. Unlike high streets where presence ensures footfall \u2013 malls cannot immediately compete with high streets where consumers have shopped for decades. Malls take 3 years to settle. <\/span><\/b><\/li>\n
                            • As a retailer,\u00a0 take a view on the future of your high street\u00a0 \u2013 will it last 15 \/ 20 years?\u00a0 What developments are planned? How will the parking problem evolve over the next decade?<\/li>\n
                            • If you are not happy with the answers, move to a mall, if there is one available.<\/li>\n<\/ul>\n

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                              Audience Question: <\/span><\/b>What should small retailers entering into malls be careful about?<\/span><\/b><\/p>\n

                              Shubhranshu Pani,\u00a0 Regional Director, Retail, Jones Lang LaSalle<\/span><\/b><\/p>\n

                              “Malls can be trial and error \u2013 it takes 3 years for a store in a mall to settle. Once you settle, stay.\u201d<\/span><\/i><\/b><\/p>\n

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                              • Look at the intention of the mall developer \u2013 they should be in the business long term, and want to run the mall.\u00a0 They should have the infrastructure to maintain the mall.<\/li>\n
                              • Who is the anchor?\u00a0 The anchor tenant draws the catchment \u2013\u00a0 smaller retailers get the benefit of their \u2018name value\u2019<\/li>\n
                              • In tier 2 cities \u2013 you need strong regional brands to be present. \u2013 check whether they are.<\/li>\n
                              • Check that the catchment does not have other shopping centers \/ malls.\u00a0 What is the consumption potential of the catchment? What is the income profile?<\/li>\n
                              • Check the design of the mall \/ shopping center as a customer would \u2013 Is their parking? How does public transport work? Are there schools \/ colleges \/ markets in the catchment.<\/li>\n<\/ul>\n

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                                Question: <\/b>Why do kiosks get \u2018second hand treatment\u2019 from malls?<\/b><\/span><\/p>\n

                                “Malls are not targeted at kiosk owners but at retailers.\u201d<\/span><\/strong><\/em><\/p>\n

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                                • Malls are not in the business of kiosks.<\/li>\n
                                • Depending on what is sold in kiosks \u2013 there can be issues of security, safety,\u00a0 cleanliness and hygiene (food kiosks).<\/li>\n
                                • 70% of Kiosk owners are often first time retailers \u2013 not often serious about he business and do not have financial wherewithal.\u00a0\u00a0 They need to prove credentials and are often asked for a deposit.<\/li>\n
                                • Kiosks must not inconvenience long term tenants \u2013 hence sometimes, they are priced prohibitively \u2013\u00a0 to keep non-serious players out.<\/li>\n<\/ul>\n
                                  

                                  From L-R: Anand Sundaram, CEO, Pioneer Property Zone; Nigam Patel, Director, Prozone CSC; P Subramaniam, Consultant, RmKV Silks (P) Ltd.;
                                  Shubhranshu Pani, Regional Director, Retail, Jones Lang LaSalle; Girish Pande, COO, Fun Cinemas and Mani Chinaswamy, MD, Appachi Cotton<\/p><\/div>\n