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Winning strategies for Mall Development

April 21, 2010


In continuing our coverage on Mall Development in India, today we will touch base on the Winning Business Strategies for Mall Developers. You can fine tune and apply the same for your family / consortium promoted Retail Business Realty Development as well. Post slowdown, it is expected that retailers would be a lot more cautious in terms of their expansion and would evaluate the profitability of each location more thoroughly than ever before.

Mall Planing and Zoning – Formulating the right tenant mix and its placement/ zoning in a mall would be the key to the success of a mall. Tenant mix refers to the combination of retail shops occupying space in a mall, while zoning refers to the division of mall space into zones for the placement of various retailers. It is important to note that in the Indian context, as also in most matured markets, ‘All Under One Roof’ formats have done well. By stocking products as per the catchments requirements, a retailer can churn significant footfalls and conversions.

Sustainable Revenue Model – Mall developers would now need to look beyond fixed rental models and develop innovative models where both retailers and developers have a win-win relationship. Working out a pure revenue sharing model with a minimum guarantee is also at the disposal of retailers and developers. Landlord/ developer may be more receptive to leasing at higher rentals, it is important to have a long term view as to whether the tenant shelling out substantial rentals will be able to sustain and earn sufficient revenues or may exit in the short term.

Effective Mall Management – Need of the Hour – Mall management has been a major challenge for India’s mall owners, who until recently had mostly developed properties and then sold it to investors who further leased it out to retailers. This fragmented holdings, may find resistance from the various stakeholders for the overall management of the mall. Thus, centralised ownership is advocated for mall sustainability in the long run.

In our next post we will cover on The Way Ahead and Opportunities and Survival Strategies for Retailers in India.

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