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Malls India – Way Ahead – Consolidation + Innovation

May 6, 2010


We have been covering the Indian Mall / High Street Retail Space and today we conclude the series with future outlook of the sector in the medium term.

At the end of the day, early entrants who had anchored themselves strongly have a better chance of tiding over recessionary waves. The current slowdown is being treated by many as a blessing in disguise, which will force the industry to attune itself to consumer needs.

Consolidation in Retail As a fall-out of the current upheaval in the sector, fly-by-night operators who had accumulated over the past five years of rapid expansion are likely to fade away. But at the same time, as mentioned earlier, the current scenario offers the best opportunity for large retail players to consolidate their position in the market. This expected strategy of mergers and acquisitions will most likely coincide with the next upswing in the market. Further, in all likelihood, this consolidating exercise might hit the market by 2011.

Big retailers have already fine tuned their IT infrastructure, implementing effective back-end operations, rationalising real-estate portfolios and pruning unnecessary expenses. The biggest cost area for retailers is real estate, followed by manpower and marketing expenses. Multi-branding efforts and e-tailing (online marketing) are some tools to help reduce advertising and sales expenditure.

Innovation: Few innovative trends in Innovation are, Short-Term Mall Space for Start-ups & Small Entrepreneurs – Offer small start-ups and entrepreneurs special leasing rates that made it easier for them to test the waters among shoppers at the mall without entering into a long-term contract.

Pop-Up Retail – If new products can come and go, so can stores that display them. From gallery-like shopping spaces with one-off exhibitions to mobile units bringing inner city-chic to rural areas, trend watchers have noticed an increase in temporary retail manifestations around the world.

CRM for Loylaty Club Members – Regular loyalty programmes like discounts and special previews have become more customised to suit a shopper’s needs better. Reliance digital, Indus League, Arvind Brands and the Landmark Group began to re-work their loyalty programmes by associating them more closely with their offerings.

Flea Markets – A case in point is the Select City Walk at Saket, New Delhi, where a flea market is put up every Wednesday evening, with temporary structures like basic kiosks and/or tables provided to client retailers. Local retailers/ exhibitors/ small-time entrepreneurs choose to set up their stalls on a weekly/ fortnightly/ bi-monthly basis, as per individual preferences, with charges getting more affordable with a bulk booking order.

Organised retail today holds only a fraction (6%) of the market share potential in India. Optimists in the industry continue to foresee a mid-term share of 15-20% for
organized retail in India. What are your thoughts ?

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