Mall Management in the Indian Scenario

The Indian retail market is expected to continue its growth trajectory into 2010. Mall management has been identified as a critical factor for the success of malls and the retail industry across the world.
Mall management broadly includes mall positioning, zoning, tenant mix, promotions/marketing and facility/finance management. Currently, the Indian retail market lacks designated mall management firms. Large real estate developers and retail chains either have their own mall management arms operating as subsidiaries or have contractual agreements with international property consultants.

Till recently, mall management was limited to facility management by a majority of developers in India, leading to gaps in mall management practices. Given the high future supply of malls and increasing competitiveness within the Indian retail market, developers must correctly address these gaps to ensure success.

Organised retailing in India witnessed a gross turnover of USD 320 billion1 in 2006. Although this figure is low compared with other developed economies, industry experts expect the growth rate of this sector at 35%2 until 2010. At present, about 100 malls are operational at a Pan-India level with a total area of 19 million sq ft. As per the current estimates, about 3003 additional malls are expected to be constructed across the country by 2010

According to the Jones Lang LaSalle Retailer Sentiment Survey 2006, 95% of the respondents expect their gross turnover to improve and have plans for expansion in 2007. About 70% of those who have expansion plans said they prefer malls over high streets for their expansion, indicating the rising demand for malls as the preferred destination of organised retail in India. Moreover, about 65% of those who preferred malls over high streets also said that mall management is expected to become the deciding factor for a mall’s success in the future.

However, a sense of concern was expressed over the following challenges to the Indian retail market:
- lack of quality locations
- shortage of trained staff
- rising rental values
- mall management

The first three concerns can be classified as external factors, whereas mall management is internal. External factors are common to all players in the Indian retail industry, whereas mall management is specific to individual malls. We anticipate that the success of Indian malls will not only be achieved by housing the biggest and the best mix of retailers, but also by setting up new standards and procedures in mall management that will provide a platform to differentiate its products and services from competitors.

In the current market scenario, both consumers and retailers have limited choice in terms of mall shopping experience. As organised retail grows, we expect the market to be more competitive by providing more choices to consumers and retailers. At this point, developers will have to work harder to create a differentiation for their product. We believe consumers and retailers will be attracted to malls that are professionally managed, making effective mall management a critical factor behind the success of a mall.

The prime objective of landlords as well as of investors is to attract shoppers and persuade them to purchase goods and services. This will in turn boost retailers’ turnover and benefit their bottom line. Efficient mall management can help landlords achieve this goal.

Globally, mall management broadly includes:
 - positioning a mall
 - zoning – formulating the right tenant mix and its placement in a mall
- promotions and marketing
 - facility management – infrastructure, traffic and
 - ambience management
 - finance management

Indian Scenario for Mall Management
The partial foreign direct investment (FDI) relaxation in 2006 allowed 51% ownership in joint ventures by single-brand companies in the retail market. This triggered high international singlebrand retailer interest in the Indian retail market. Additionally, large Indian conglomerates such as Reliance Industries and Aditya Birla Group are commencing their foray into retailing across the country. This prompts the Indian retail industry to undoubtedly move on a high growth curve. However, at this juncture, retailing is still faced with one major
challenge: systematic mall management.

Currently, there are very few designated mall management companies in India. However, big retail chains such as Future Group and some large developers have set up their own mall management divisions that operate as their subsidiary companies. Some developers such as DLF have also recently entered into contractual arrangements with international property consultancy firms to manage their malls. Historically, developers were managing their malls in-house, which is expected to change going forward.

Earlier in the decade, mall developers were more inclined towards exiting the project early by selling retail mall units to investors at the pre-completion and post-completion stages and booked profits. As the ownership of individual retail spaces were with different entities, there was no central authority managing the malls. There was no control over the various facets of mall management mentioned earlier in the paper. Even though there have been some examples of professionally managed malls in recent years, organised retail in Indian malls have a long way to go to achieve optimum mall management.

Issues Related to Mall Management in the Indian Retail Market
a - Lack of Feasibility/Market Research Prior to theDevelopment of a Mall – In the past, some malls were constructed without carrying out a rigorous due diligence exercise on their feasibility. The market scene is gradually changing wherein more and more developers are approaching property consultancy firms to conduct feasibility and positioning studies for their projects.

b - Zoning – Landlords/developers tend to lease out retail space on a first-come-first-served basis. This creates a sub-optimal tenant mix like a food and beverage outlet next to a designer apparel shop instead of an accessories or a footwear shop.

c - Design Issues – At present, most of the popular malls have long queues and congestion outside their main entry points during weekends and festive seasons. Having only one entry and exit points also leads to overcrowding. Similarly, the visibility of retail units from all vantage points is poor in many malls.

d - Few Promotional Activities – There are very few promotional activities organised in the majority of malls at present. Developers perceive that these events only help increase foot traffic and not revenues.

e - Facility Management – Good infrastructure/facility management of common areas becomes a problem in malls where retail outlets are sold as strata title.

f - Parking – Many malls in India do not have adequate parking. Since most malls are being built in the city, developers typically provide basement parking facilities. However, these parking spaces are inefficient due to low ceiling heights, bad lighting and single entry and exit points.
Source:
1CII-A T Kearney report, 2006
2CII-A T Kearney report, 2006
3Source: Jones Lang LaSalle Meghraj, 2007

Cheers,
Arroon
Spacedpractice.com

Low Cost Retail Marketing Strategies - Customer referrals

The best source of new customers for your store is your existing customers. Unfortunately, many store owners are missing out on this bonanza of quality customers because they do not have a referral system in place. Instead, they are sitting back and waiting for some invisible hand to prompt their happy customers to send in their friends. In short - that's not going to happen all that often. Retailers that are making the most of their referrals are proactive. They have a referral system in place, and they follow through on all the steps in their program.

Why Go After Referrals?
People who have been referred to you will usually spend more money, will buy from you more often, and will become very loyal customers. Because they were referred by a friend, they are usually less demanding and are much easier to deal with. Sounds like the ideal customer to me! It gets better. Not only is referral business lucrative, it is also easy to target, has low marketing costs, and will produce a steady stream of new customers into your business.

Referral System Strategies That Work
The key concept behind a referral system is making the entire process a win/win/win for all involved. The referring customer receives a reward, the new customer being referred receives a reward, and your store earns a sale.

Ask the customer for a referral
Ask, and you shall receive. One of the big reasons most retailers don't get referrals is because they simply do not ask for them. At a minimum, you should have your staff always ask for a referral as they are finishing up the sale. Train them in what to say based on your business.
A sample talk track to ask for a referral is:
"Mrs. Customer, I'm so glad that you found this … that you like. I'm sure you'll really enjoy it. I'd like to ask you a favor. We're looking for more customers just like you. If you know of anyone who you think would enjoy shopping with us, can you please refer them? I'm enclosing in your bag some information about our Referral Rewards Program. Please take a look when you have a moment. Thanks again for your business!"

Your referral system will be more effective if you then follow up with a thank you letter within thirty days of purchase. Studies show that within the first thirty days after a purchase there is a moment of maximum satisfaction. This is the time when the customer is thinking about and is the happiest with the purchase.

In addition to thanking that customer for the business, include a referral card that the customer can give to a friend. The referral card should spell out that the friend being referred will receive a discount when they come in and buy, and that the customer doing the referring will receive in the mail a gift certificate good at your store as a thank you.

A very important final step in your referral program is to acknowledge and thank your customers who are referring potential customers to your store, whether they buy or not, by sending another thank you note (make sure you include another referral discount card).

If all this sounds easy, you're right. Putting a referral system in place takes a little time, but is worth your investment. Not only will you drive new customers into your store, but you'll also strengthen the relationship with your customer base and make it extremely difficult for your competition (whether they are smaller retailers, big box stores, or chain stores) to take away your customers.
Source: Independentstoresuccess.

Cheers,
Arroon
Spacedpractice.com

New rules of Retail

Today, many markets are saturated and technology advancements, such as e-commerce and mobile retailing, mean that consumers have more information with which to make buying decisions. Shoppers have become more discerning. Retailers must now focus on differentiating themselves and re-establishing two-way communication with their best customers. While price remains important, the experience is what keeps customers coming back.

Rule #1: Listen to customers. Convert the critics to fans and the fans to influencers
Once a retailer gets a bad reputation, it’s tough to overcome. The rate at which reputation spreads is enabled by communications media of the day, and today’s social networks measure the dissemination of information in minutes. So it’s imperative for retailers to protect and enhance their image wherever customers converse. Retailers must neutralize dissatisfied customers by addressing issues quickly and directly, and convert happy customers into fans that spread the word.

Rule #2: Become a destination for information.

Customers with smartphones access product information and prices on their mobile phones – while in your store! Trying to stop the spread of information is not only counter-productive to society, but it’s an impossible battle to win. Assume your customers are accessing information, and make sure your data is part of it.
One way to ensure your brand is represented is to provide APIs to third-parties so that your information can be leveraged by anyone developing product comparison apps and posting reviews. Both Best Buy and Tesco have released APIs that allow developers to create innovative applications that leverage their product data. Since their release, new applications have appeared on the web, mobile phones, and in Facebook, all of which increase the reach of a retailer’s brand and go a long way toward building brand loyalty.
The retailers that share the most accurate and comprehensive product information win favor with consumers.

Rule #3: Be transparent. Share both successes and failures with your customers.
Consumers respect honesty, so give it to them straight.
Zappos CEO Tony Hseih doesn’t hide behind his marketing staff. He’s active with blogging and Twitter, communicating directly with customers and letting his personality shine through. Whole Foods Market CEO John Mackey takes a similar stance, and both are big influences on their company cultures. Customers appreciate candor and want to align with the retailers that reflect their values.
For example, Mackey famously wrote in the Wall Street Journal on health care reform resulting in some polarization, with some customers leaving, but others recommitting. Since that August 2009 article, Whole Foods revenue has continued to increase and customer loyalty is on the rise.

Rule #4: Communities of your customers already exist, so help them organize better.
Bringing like-minded customers together can lead to product discoveries and better word-of-mouth advertising.
Social media allows us to communicate more efficiently. The same groups that have been around for years continue to exist today, but they are larger, more connected, and better informed. Retailers should harness the influence of these groups. Barnes & Noble provides an online community where book enthusiasts share recommendations, write reviews, and discuss books. Safeway’s FoodFlex site let’s customers discuss recipes and nutrition.Wet Seal enables co-shopping via social networks like Facebook. Friends can shop the Web Seal e-commerce site while circling products, leaving notes, and discussing fashion online while they shop together.

Rule #5: Serve small markets with niche products.
Look for underserved markets to attract new customers.
Yoga seems to go in and out of fashion over the years, but lululemon has found a core audience that’s interested in healthy living and the apparel that goes with it. lululemon started in 1998 as a community hub that slowly expanded into a chain of over 100 stores. By listening to its customers, lululemon is able to design athletic clothing for this very specific niche.

Rule #6: Customers want experiences to go with the products they buy.
The shopping experience differs greatly between Lowes and Home Depot. Home Depot is a warehouse full of tools and lumber, with dim lighting and contractors walking the aisles. Lowes, on the other hand, decided to cater to women, and more specifically the wives that make the design decisions for their homes. So their stores have been praised for being clean, well lit and hosting “how to” classes for beginners. “Home Depot is for lumber while Lowes is for lighting.” Different experiences attract different customers for the same products.
Know who your customers are and cater the experience to them.

Rule #7: Use social networks as data points for making better merchandising decisions.
Employees and customers form two influential groups of people with opinions about your stores. They are a gold mine for ideas, but it’s not always easy to capture that information. Social media makes it easier not only to collect, but to also collaborate and test ideas. That’s why companies like Best Buy, Dell, and Starbucks provide websites where the conversation is all about innovation and participants include employees and customers.
While several retailers already preview sales, promotions, and new products on Facebook, it’s only a matter of time before they start using Facebook for focus groups, where the design of products, promotions, and store layouts will be influenced.
You can’t rely on data from social media solely, but it’s a great compliment to other sources of data that help you make merchandising decisions.

Rule #8: Being green earns customers’ respect and lowers costs too.
This rule requires setting goals, changing operations and reporting progress to constituents. UK grocer Marks & Spencer has announced its plan to be the world’s most sustainable retailer by 2015. The company says it will revamp the products it creates to have a smaller carbon footprint, adhere to fair-trade rules, and rely on sustainable ingredients.
The Kohl’s Green Scene website explains the company’s efforts to protect and conserve the environment. They outline their plans to recycle, be more energy efficient, design better stores, reduce emissions, and encourage environmental values.
Green projects are a win-win for retailers and the environment.

Rule #9: Be prepared to pounce on you customers’ fickle interests.
Fashion is fickle. A new music video, for example, can change the fashion scene overnight so retailers need to always be read to capitalize on trends. Fashion retailers like H&M and Zara are able to quickly discern these trends, then manufacture low-cost versions that they take to market ahead of the competition. This keeps assortments fresh, and customers tend to visit stores frequently to see what’s new.
Instead of quickly adapting to the DVD-by-mail business, Blockbuster waited too long to challenge Netflix and lost sales as consumers found an easier way to get movies. In contrast, competitor Redbox moved aggressively in the market with great success.
Retailers must constantly take the pulse of consumers, and adapt to their ever-changing needs.

Rule #10: Give your staff permission to fail so innovation won’t be stifled.
With its heritage stemming from a flower shop in New York City, you wouldn’t think 1-800-Flowers would be a big innovator. But over the years this retailer has been among the leaders in the changing retail market. It was the first to do business on AOL, the first to perform a sale on Facebook, and recently won the Mobile App of the Year (2010) Award from RIS. The company’s culture allows for risk-taking and early adoption of technology, and so far this approach has paid handsome rewards.
Keep pushing boundaries and never be satisfied with the status-quo.
Source: Oracle Retail Whitepapers- May2010 issue 
Cheers,
Arroon
Spacedpractice.com