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From L-R: K. Radhakrishnan, CEO, KB FairPrice & President, Future Freshfoods Ltd. (FFL); S. Raghunandhan, Chief Executive Officer, Retail, Prestige Group; Subhash Chandra, Chairman and MD, Sangeetha Mobiles Pvt. Ltd.; Shubhranshu Pani, Joint Managing Director, Retail, Jones Lang LaSalle; K. E. Venkatachalapathy, Chief Executive Officer, Arvind Retail Ltd, Megamart; CA Aroonkumar R R MRICS, Chief Financial Officer, Express Infrastructure Private Ltd.; Prashant Chopra, Director, PS Group & PSSrijan Realty and Rafiq Sait, Managing Director, Gatsby Collection Pvt. Ltd<\/p><\/div>\n

The session \u201cBrick by Brick\u201d \u2013 The Mallification of South Indian Retail\u201d @ CRS 2013 was moderated by K Radhakrishnan, CEO KB Fairprice,. The eminent panelists were S. Raghunandhan, Chief Executive Officer, Retail, Prestige Group; Subhash Chandra, Chairman and MD, Sangeetha Mobiles Pvt. Ltd.; Shubhranshu Pani, Joint Managing Director, Retail, Jones Lang LaSalle; K. E. Venkatachalapathy, Chief Executive Officer, Arvind Retail Ltd, Megamart; CA Aroonkumar R R MRICS, Chief Financial Officer, Express Infrastructure Private Ltd.; Prashant Chopra, Director, PS Group & PS Srijan Realty and Rafiq Sait, Managing Director, Gatsby Collection Pvt. Ltd.<\/p>\n

Three reasons malls get built<\/b><\/h2>\n
\u201cMalls usually get built based on geography (market potential), consumer behavior or speculation\u201d \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<\/i><\/p>\n
Shubhranshu Pani, Jt MD, Retail, JLL<\/b><\/p>\n
Malls in the South<\/strong><\/h2>\n
\n
With 59 malls in pipeline, southern cities represent 56% of the country\u2019s future mall supply between 2012 and 2016.<\/li>\n
All India level, mall space per capita is 2 sq feet.\u00a0 In Chennai its less than 1 sq foot per capita.<\/li>\n
Bangalore has almost the same population as Chennai \u2013 but has 18.5 mn sq feet of mall space versus Chennai\u2019s 4.5 mio sq feet.<\/li>\n
Within the Bangalore market \u2013 mall performance is variable. The top 4 malls account for most of the market and are profitable. The others, including shopping centers are not.<\/li>\n<\/ul>\n
<\/p>\n
5 things to get right while setting up a mall<\/b><\/h2>\n
\u00a0<\/b>Factors determining the success of a mall:<\/p>\n
\n
Location<\/li>\n
Mall Design<\/li>\n
Zoning and mix of retailers (local versus national, parking)<\/li>\n
Mall maintenance, promotion and tenant relationship management.<\/li>\n
Pricing \u2013 needs to be appropriate to the location.<\/li>\n<\/ol>\n
<\/p>\n
\u201cWithout doubt, location is the single most critical factor for a mall to be successful.\u201d<\/i><\/p>\n
S Raghunandan, CEO, Retail, Prestige Group<\/b><\/p>\n
\u00a0<\/b>\u201cYou have to create a destination and an experience. At the same time your mix of tenants should be relevant to the local catchment.\u201d<\/i><\/p>\n
Aroon Kumar, CFO, Express Avenue Mall<\/b><\/p>\n
<\/p>\n
Do all retailers need to be in malls?<\/b><\/h2>\n
<\/p>\n
\u00a0<\/b>\u201cWe have 215 stores and in all markets except Chennai we are in the malls. In Chennai, we have not been able to find space, the number of available malls are few.\u201d<\/i><\/p>\n
Subhash Chandra, CMD, Sangeetha Mobile <\/b><\/p>\n
\u00a0<\/b><\/p>\n
<\/b>\u201cAs a value retailer, the fundamental issue for us is whether the mall generates enough footfall to justify the rentals. We have 25 stores in Chennai, one is in a mall, and it does well.\u201d<\/i><\/p>\n
K E Venkatachalapathy, CEO, Arvind Retail, Megamart <\/b><\/p>\n
\u00a0<\/b><\/p>\n
\u201cWe are a stand alone apparel retailer \u2013 we find malls expensive.\u00a0 Unlike other retailers for whom visibility in a mall matters, for us high street stores in Chennai give us better return on rent.\u201d <\/i><\/p>\n
Rafiq Sait \u2013 MD, Gatsby Collection Pvt Ltd<\/b><\/p>\n
\u00a0<\/b><\/p>\n
\u00a0<\/b>What price rental?<\/b><\/h2>\n
\n
Rent is a function of the quality of the product and cost of execution.<\/li>\n<\/ul>\n
\u00a0\u201cRent as a cost has to be compared against total value delivered including profit share and the cost of providing power in markets like Chennai, where 90% of load shedding happens during peak shopping hours.\u201d \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0<\/i>\u00a0<\/b><\/p>\n
Shubhranshu Pani, JLL<\/b><\/p>\n
\u201cThe biggest misnomer is that malls are expensive for retailers. Rent is 15% of sales, when sales are good nobody worries about rental.\u201d \u00a0\u00a0<\/i><\/p>\n
S Raghunandan, CEO, Retail, Prestige Group<\/b><\/p>\n
\u00a0<\/b>\u201cRetailers need to understand both catchment and merchandise range when they chose a mall. The propensity to pay is a function of the kind of turnover that retailers see.\u201d<\/i><\/p>\n
Prashant Chopra, Director, PS Realty (Grand Mall)<\/b><\/p>\n
\u00a0<\/b><\/p>\n
Malls v\/s traditional markets<\/b><\/h2>\n
\n
Malls will not replace traditional markets.\u00a0 But they create new micro-markets.<\/li>\n
The economics of traditional markets are sound and cannot be substituted.<\/li>\n
Shopper habits in Chennai are still skewed to traditional markets.<\/li>\n<\/ul>\n
<\/p>\n
\u201cWe\u00a0 have learnt from markets like T. Nagar .\u00a0 We were keen to have one of the brands from that market as our anchor \u2013 and that role is played by RmKV\u201d<\/i><\/p>\n
\u00a0S Raghunandan, CEO, Retail, Prestige Group <\/b><\/p>\n
<\/p>\n
\u201cTraditional\u00a0 markets work on a cost plus model, keep overheads low and\u00a0 because of historical shopping habits generate extremely high turnover\u201d <\/i><\/p>\n
\u00a0K E Venkatachalapathy, CEO, Arvind Retail, Megamart <\/b><\/p>\n
\u00a0<\/b><\/p>\n
\u201cMalls are a good for entertainment \u2013 serious shoppers still head for the traditional markets. The historical \/ habit factor should not be underplayed\u201d<\/i><\/p>\n
Rafiq Sait \u2013 MD, Gatsby Collection Pvt Ltd <\/b><\/p>\n
\u00a0<\/b>\u00a0<\/b><\/p>\n
In Conclusion:<\/b><\/p>\n
\u201cRentals will always be relative to location and potential.\u201d<\/i><\/p>\n
\u00a0S Raghunandan, CEO, Retail, Prestige Group<\/b><\/p>\n
<\/p>\n
\u201cAs mall developers we can focus on design, tenant mix \u2013 but after that the retailer has to get their marketing math right.\u201d<\/i><\/p>\n
Prashant Chopra, Director, Grand Mall <\/b><\/p>\n
<\/p>\n
\u201cMalls help cater to new segments and demographics which are being created.\u201d<\/i><\/p>\n
Aroon Kumar, CFO, Express Avenue Mall <\/b><\/p>\n
<\/p>\n
\u00a0<\/i>\u201cOne of the areas where\u00a0\u00a0 retailers and malls need to collaborate is in making sure that renewals are mutually beneficial. Otherwise, \u201cMallification\u201d can become \u201cMaulification\u201d<\/i><\/p>\n
<\/i>K Radhakrishnan \u2013 CEO, KB Fair Price<\/b><\/p>\n
\u00a0\u201cMalls and traditional markets offer different experiences, there is no competition between them\u201d \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<\/i><\/p>\n
Shubhranshu Pani, Jt MD, Retail, JLL<\/b>
\n<\/b><\/p>\n
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