WHY RETAIL DESTINATIONS ARE SHUTTING IN AHMADABAD
Date: September, 2013
SUNDAY
EXPRESS (supplement EYE)
By :
AVINASH NAIR
The average mall vacancy (Empty space in malls)
National average is 15 %
Ahmadabad (33 %), the highest in
the country Hyderabad (0.45 %) Chennai (6.48 %) Kolkata (4.5 %) Bangalore (11.68 %) Mumbai (15.46 %) Delhi-NCR (15.69
%)
Rentals in malls in Mumbai and
Delhi-NCR grew by up to 19 and 10 % respectively between January and March this
year but they fell by 6 to 8 percent in Ahmadabad.
Close downs:
>Future Group has closed down
three stores in Ahmadabad since 2008, and is now left with Just 2 outlets. The company
insists it is in “consolidation phase" and cites a plan to launch 3 new stores
by the end of 2014.
According to global property
consultant Jones Lang LaSalle( JLL), nearly 7 lakh square feet of
retail space has closed down in the last three to five years in the Ahmadabad.
>In 2007, when Ahmadabad got the country's
first, and largest, hypermarket 1, 65,000-square-feet Reliance Retail store
that housed 95,000 product products, at the Iscon Mega Mall. More than six
years on, the hypermart has shrunk to one-third of its original size.
>A similar fate has met stores run by Promart,
Subhiksha, More and Spencers, among others Malls, too, are closing down. Fun Republic,
the city's first "mall-cum-multiplex", downed its shutters in July
2011. Piramyd mall and Gallops mall followed suit.
>Piyush Kumar Sinha. Professor of
marketing and chairperson of Center £or Retailing at IIM-Ahmadabad, blames it
on "the real-estate model of
retail". "It is killing the industry. From year 2000 to 2007,
when big names like Birlas, Reliance, Adanis, etc., entered retail, everybody
suddenly started seeing gold in the sector. Developers got into a race to build
bigger malls and were more inclined to sell space to investors, rather than focus
on developing their properties as suitable retail destinations," he says
What goes into making a suitable retail destination?
"The location, the sizes and positioning
of stores, and the brand mix” says Neeraj Tomar, head of Ahmadabad operations of Jll.
A good
example of the right brand mix, according to Neeraj Tomar is -
Ground floor - House apparel and clothing-related
accessories store Second floor - footwear, children's
apparel Top floor -
toys on the, and food courts, gaming
zones and multiplexes .
As it helps improve accessibility
and ease movement of customer traffic".
There were instances where a painter
(selling his personal creations) occupied space between two footwear brands. Or
where a chemist and an electrical appliance retailer were parked between
international apparel brands," says Tomar
Such inadequate planning led to fewer footfalls,
thus forcing stores to wind up
Vacancy level
Malls such as Dev Arc, 10 Acres,
Balaji Agora and R3 Mail were half-empty look. They began with very few or no
retailers and continue to struggle for occupancy. “Except for Alpha one Gujarat’s
biggest mall located in Vastrapur. The vacancy level in some of the malls is as
high as 60-70 %” says Tomar
"Malls without infrastructural
or mall management efficiency are forced to shut down thanks to poor economic
viability" Retailers Association of India CEO Kumar Rajagopalan says
Malls to Shopping streets
Many brands have, thus, moved
from the malls to "shopping streets" such as CG Road, Law Garden,
Prahladnagar and Satellite Road. Dotted with standalone stores of national and
international brands, these streets are now preferred over malls by many a
Gujarati customer for whom shopping is more a functional exercise than
entertainment.
Mall Vs Neighborhood vendor
Rohini Joshl.a 52-year-old homemaker,
who lives a stone's throw away from superstores like Vmart and Reliance Fresh
in central Ahmedabad, relates her shopping experience. "We earlier used to
go to mails and superstores even for our daily groceries. But we realized that
we not only overshot our budgets, we also ended up wasting. Now we prefer our neighborhood
grocer who caters exactly to our limited daily requirements and that too at
price-points that are below the MRP. I also feel that the vegetables and fruits
supplied by the neighborhood vendor are fresher than those available in
air-conditioned retail stores and malls."
Shopping hubs are concentrated in
the western part, which has the highest purchasing power. But that has also led
to saturation there, and competition has killed many a mall such as Gallops and
Piramyd
Learning from their mistakes:
>Reliance is opening stores in self-owned
properties.
>Alpha GCorp, the Gurgaon-based
developer that operates and manages Alpha One mall, the state's biggest and
most successful mail that opened in October 2011, has adopted the "revenue-sharing
model", in which the retailer pays to the mall owner or the landlord a
fixed percentage of the profits generated by the outlet. "We currently
have 98 % occupancy (the maximum for any mail in the city)," says Prodipta
Sen, executive director, marketing, of Alpha G Corp, adding that the mall has
seen 100 % growth in rentals in the last one year.
>"The market for retail in
Ahmedabad is not right at the moment. So we have postponed our plans to build a
second mall by a couple of years," says JP Iscon chairman Pravin Kotak who
is planning to build a 10lakh-square-feet mall near Gota crossroads on the SG
Highway
>Rajagopalan says the modern
retail sectors now going through "efficiency tuning". "The
sector has companies that are serious about retailing and are in the business for the long term,"
he says. Retailers can take comfort from a study by Booz & company, according
to which the size of the retail segment is expected to grow from $455 billion
in 2011 to $731 billion by 2016.
