Mantra to revive ghost malls: New brands, right product mix are key

Malls also need to transform into community spaces and become prominent 'shoppertainment' locations to draw footfall

Before he finalised a store at the struggling Atria Mall, Tata Starbucks's CEO Sumitro Ghosh engaged in a little road test. He drove towards the mall from Marine Drive, imagined a Starbucks on his right and took a U-turn to get there. It took him four minutes to get there. He then added a couple of minutes for ordering a beverage and when he realised that the exercise didn't set him back more than seven or ten minutes, he opened a store there. A few months ago Inox kicked off a multiplex theatre along with a cocktail lounge on the top floor of the mall. It helped even more when French sporting company Decathlon launched, attracting an increased footfall and giving a boost to the product mix. 

According to Anarock Retail's CEO Anuj Kejriwal, in the next four years, 17 new malls are set to open in Mumbai with locations in Bandra, Worli, Juhu and Bandra Kurla Complex. To avoid the risk of years of low performance, the trick for all of them will be to get the formula right in the first attempt itself. "Malls that have failed to perform have been converted into commercial office spaces or developed into residential buildings," he says. City Centre, Centre One and Palm Beach Galleria in Vashi have been made into residential buildings, for example. Others like Ansal Mall in Khel Gaon were so busy with activity when they first opened that they even levied an entrance charge. Until of course swankier peers like Saket Mall arrived and took the wind out of their sail. In recent years, Ansal has undertaken a makeover and refreshed the mall. 

Research by Anarock indicates that India's share of organised retail compared to the total retail is at 9 per cent compared to Thailand's at 40 per cent and 85 per cent in the USA, suggesting that brand mix evolution is the missing link that the operators will have to perfect if they want to avoid ghost malls. 

Shopping can't be the prime source of revenue-generation and footfalls. Malls also need to transform into community spaces and become prominent ‘shoppertainment’ locations.

Atria Mall languished for years due to multiple reasons despite great catchment for footfalls because its product was weak. Mostly, it lacked the right mix of brands and that there were larger, more vibrant malls in the form of Palladium and High Street Phoenix barely a few kilometres away in Lower Parel. Collectively, because of these reasons, premium brands like Rolls Royce, BMW Motorrad and Ducati exited Atria, along with apparel brand Mango, watchmakers Tissot and Swatch, and an Apple retailer.

Location and infrastructure aside, the real success for malls hinges on tenant mix, says Sudip Mullick, partner with law firm Khaitan & Co. who specialises in real estate. "The classic formula warrants a multiplex and an anchor tenant. "Absent those two means failure," Mullick adds. If say, Atria is a case study, then Inox is its multiplex operator and Decathlon is the anchor tenant.

Other malls that experts say are struggling include the 220,000 square foot DLF Mall on MG Road in Gurgaon, which features department stores Westside and Landmark as it's anchor tenants.

Infiniti Mall's CEO Mukesh Kumar says that if a mall flounders, it doesn't mean the end of the road but getting the right anchor tenant, however, isn't a guarantee of success, the formula entails catchment, product mix as well as infrastructure. 

In some cases, live activity also helps attract footfall. Knight Frank India's executive director Gulam Zia says that the Inorbit Mall in Malad was a great example of a mall that started out strong, then slumped when competition came along in the form of Infinity Mall which had newer brands and more stores that drew business away from Inorbit, leading rentals to drop by 25 per cent to around Rs 1200 per square foot. Inorbit has since improved its food offerings on the second floor, has added as many as nine escalators to improve access, a Godrej Nature's Basket, a 12-screen multiplex, and has renewed its focus on women shoppers. Today, Zia says that rates (monthly rental) are at around Rs 1700 per square feet at Inorbit.

According to Zia, malls with an area under half a million square feet are not an easy sell. In Mumbai, Atria is 330,000 square feet, while its neighbour the High Street Phoenix is 650,000 square feet and the adjoining Palladium mall is around 880,000 square feet this makes a world of difference because of the wide range that becomes feasible. In Kolkata for example, the Quest Mall has approximately 800,000 square feet of space and features a multiplex and premium restaurants.

Inside most malls that work well, the life-cycle goes like this: suburban shoppers come into watch a movie, after which they grab a coffee, shop for their children, eat dinner and then head home after they pick up their cars from underground parking or call for an Uber that is easily accessible. If any of that becomes hard to pull off, write the mall off.