Retail Dude

Malls have always faced the problem of more browsers than buyers, but in the first of it’s kind report, more retailers are pulling out of malls for the want of sufficient footfalls. As seen historically any store in the mall gets a conversion of around 18-30% depending on it’s location and accessibility within the mall. And, if the mall is not able to attract large number of footfalls, any retailer would find it hard to earn enough to match the rising rentals along with the cost of operating the store. With little or no support from the mall developers in marketing the store this has become a spiraling problem for not only the large houses but even the smaller ones.

Another area which the article brings to light is the lack of understanding an imperative (from a retailer’s point of view) concept of “tenant mix”. The term simply connotes the mix of retailers who are present in a particular mall. It is palpable that in a single mall the kind of retailers should similar to each other, in terms of their price points, demography of their target segment and in some cases the merchandise on offer (eg. Gold Souk in Gurgaon). But, as retail professional I can only feel sorry for those retailers whose professionals fail to analyze these considerations before they zero-in on a particular mall.

Well, one of the recent examples is happening right now in my city, Dehradun. Looking at the tenant mix of the mall (one of the first) one can only wonder - Would a brand such as UCB, Reebok and Big Bazaar, be able to generate similar kind of revenue operating out of the same mall? If you ask me I’m more than dubious. Though, the company would have done the indispensable study of the catchment and the competitors but still the point that they missed out was the understanding the majority of customers who would visit the mall, considering that it’s anchor tenant is Big Bazaar.

Like a ubiquitous silver lining, there a lesson in this whole episode too. It’s time for smaller retailers, who are bent on following footsteps of their larger and more established counterparts, to step back and think again. It is crucial to decide on any location only after asking oneself a simple question –Would my target customers be comfortable to shop at the selected location and subsequently, would they return to the store every now and then?

-  Vivin

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The inflation not only affected each and every aspect of India and its market but it really hitted hard the organized retail in India. Because of unbridled inflation and high interest rates the purchasing power of an average Indian dropped significantly and thus retailers faced a slowdown in purchases. But there is a light at the end of the tunnel for the retailers and that light is the government’s recent decision to implement the Sixth Pay Commission. a large segment of Indian middle class is a salaried class about 5 million central government employees and not only this each state will have their own six pay commission plan and every government employee will get his share. typically in a middle class 37% are the salaried employees which will suddenly have disposable income in their hands just before the festive season which is a good indicator for the retailers. Besides the enhanced salaries that will cost Rs 17,798cr annually, the Government has committed to payment of arrears as the hikes are effective from 2006 which cause a one-time burden of Rs 18,060 crore.  So you can see there is raining money in the middle class of India but we can’t generalize the thing that it will be beneficial for all the organized players in Indian retail market. As we can see that majority of the people that will enjoy the sixth pay commission belong to middle class and if we consider the psychology of a middle class, he will like to spend this money in discount stores and on big ticket items like hardliners for which he might be waiting for long time and this behaviour is also drived by the festival season and there will be sale and promotional offers on lots of item. High end retailing will not get much pie of this as the this crowd is not their target segment. but for the value, discount and off price retailers is a time to relax and do business to the fullest.

But wait this light at the end of the tunnel can also be a train that will run over the retailers, because this hike in salaries due to sixth pay commission will slowly led to further inflation and this will again hit back the business of organized players.

But what i suggest just enjoy the festive season we will face the later things later

- Prateek Katiyar

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