'Malls still learning the trick of winning over customers'

At a time when most mall owners are struggling with empty spaces and low footfall, the Mumbai-based Oberoi mall has managed to break even within three years of its operations. Nirzar Jain, vice-president, Oberoi Mall, tells Nupur Anand what has worked in its favour and the shape of things to come.

The going has been tough for mall owners. How do you see it panning out in coming months for you and the industry?
For the industry, things have not been on the very bright side. To give you an idea, there are some 205 malls in the country and there are many that are yet to break even. However, we are not seeing a dip in sales as of now. But one can say the growth process is slower than what retailers would have had experienced in a robust economy. In these times, while some retailers are holding back their growth plans, we also have brands with deep pockets that are focusing on aggressive expansion plans.

For us, we have managed to get the right trade and brand mix and have been successful in attracting footfall and that has worked in our favour. Going forward, we plan to bring many more international brands into our mall and also start more customer related activity.

So, what is it that you have done differently?
We have a whole host of international brands and we also have major national brands. We also initiated the system of flat 50% discount in the mall which has this year been picked up by others as well. In this, on a given week day, we get 50 brands together and offer a flat 50% discount. This helps our vanilla retailers get up to 10% of their annual sales in one day.

Apart from this, we also do other things like Women’s Wednesday where we incentivise women shoppers to come. We are toying with a concept of Sunday Fun day. In suburban Mumbai, there is no place to go for a family outing. Therefore, we are looking at a place where a family can sit and interact and not only among themselves but also with other families.

Any insight into the consumer behaviour and how you plan to tap it...
Customers in India spend money in May, August, December, Diwali and end-of-season sales. So, we focus on doing big events at that time. During these months, we incentivise shopping by giving assured gifts. Going forward, we also plan to start a loyalty programme.

Can you throw some light on the rental scenario?
At the moment, it’s Rs200-220/square foot on the ground floor. And there are some special schemes and prices in this. As you move a floor up, the rates keep going down by Rs10 per square foot. Leasing rate also differs on whether the mall is a performing one or not. If it is mall that has not been able to garner good footfall, then it will be typically at a 20-30% discount to the rates that we offer. And as a business model, we do both revenue share and minimum guarantee. Our revenue share is on our food and entertainment options where minimum guarantee is on apparel.

One of the biggest worries for retailers has been sale...
That’s true. And as a result, they have started correcting their inventory model. So, what the retailers have done is they have sectioned the inventory order. So, now it doesn’t come in one lot, it now comes every three weeks. On the one hand, there is a churn of stock happening frequently and on the other, it has also made sure a stock pile is not created.

Malls have also come under criticism as apart from retailers, they are engaging in deep discounting. What is your view on it?
Retailers may complain, but they like it as well. This year when the flat 50% sale in the mall was on, one of the CEOs of a top departmental store suggested that we should extend it to a three-day event. Though I was appalled thinking that their margins will be severally hit. But when you don’t have a choice, there is very little that you can do. The concept of mall and organised retail is still nascent in India and we are testing the waters by adopting various strategies.