Images Report 2005 on shopping centre development in India - II

The fast growing middle-class population and the rise in women workforce and consumerism over the decade are the major force in driving demand in the retail sector. To the present generation shopping means much more than a mere necessity and malls are now fast becoming image benchmarks for communities. The future of Indian malls is in the Hybrid format, the Discount malls and Gen X malls that have emerged as the hottest concepts in 2005.

Chesterton Meghra findings

a. Middle-class forms 20-25% of the total population (200-250 million), and is driving demand in the retail sector.

b. Increased spending by India’s middle class is estimated to be over US$ 300 million.

c. Lifestyle orientation of people is changing: The super rich class of 17 million will increase to 35 million in 5 years.

d. Over 40 million in India have same purchasing power as Americans.

e. Overall consumer spending grew at a pace of 6% pa in last 10 yrs.

f. Around 75% of population in India is under 40 years of age.

g. Among factors that spurred the mall mania on: Dearth of organised retail for one and the demand to replicate the mall experience of shopping in foreign countries was the other reason.

h. Age of Gen X malls: Greater than 500,000 sqft with large entertainment area, ample parking spaces

i. Enter Discount malls: At least 5 outlets in each of the major cities this fiscal - to provide goods that are at least 25-50 per cent cheaper than the retail price, manufacturers can directly sell to the end-users.

Hotel shopping plazas gaining popularity

Traditionally hotel retail was restricted to jewellery and handicraft items but post 2003 this is changing with various international retailers entering the market preferring the hotel environment more suitable to get a feel of the market. Assessing this demand, new upcoming hotels are incorporating distinct retail areas in their plans on the lines of Grand Hyatt in Mumbai and Leela Galleria in Bangalore.

Jones Lang Lasalle findings

a. Hotel shopping plazas with sizes varying from 10,000- 220,000 sqft coming up

b. Existing hotels are making efforts to revamp and expand their existing retail spaces

c. In 2004-2005 Oberoi Hotel Delhi, Taj Mahal, Mumbai, Imperial Hotel Delhi, Maurya Hotel, Delhi have seen prime retail space being increasingly leased to high end retailers

d. Apparel consumes more than 50% of this hotel retail space.

Acute shortage of anchor retailers

One of the key challenges for a developer in India today is the lack of choice with respect to anchor retailers that is limited to a total of less than 15 as of now and clearly presents a demand-supply imbalance, especially with more than 300 shopping mall projects coming. For the developer, this means inability to create a distinctive positioning and character for the mall and also inability to replace a “not so well performing” retailer with a better performing one.

Pricewaterhouse Coopers findings

a. Majority of upcoming mall developments remain fragmented and sub-optimally planned

b. In near future there is likelihood of a shake-out within shopping mall business

c. Emergence of few large, dominant and relatively more professionally managed national/regional and a host of specialty/niche local players likely

d. With globalisation of the real estate sector, shopping malls of international scale and quality would soon emerge.

With FDI, India can replicate the Chinese experience in retail growth: Food and apparel most happening sectors India is the most compelling opportunity for retailers in 2005 though “timing” is one of the most crucial decisions in retail, which if not tackled properly, can cause retailers to exit the market. Fierce domestic competitors and shaky infrastructure are among the major obstacles for international retailers, says A T Kearney report. The success story of China is a glaring example where the domestic retail industry is still thriving despite FDI. Food and apparel present the greatest opportunities for global retailers in the Indian retail market, the study says.

A T Kearney findings

a. In 2005, India offers most compelling opportunity for retailers

b. India’s retail industry (food and non-food) is the second largest employer after agriculture

c. India’s retail industry is world’s second largest untapped market (after China)

d. Department of commerce has recently proposed that 100% FDI be allowed in retailing

e. Benefits from FDI: A multiplier effect on the economy as a whole, manufacturing, food processing, packaging & logistic services to gain

f. FDI to bring significant increase in employment in front-end and supply chain streams

g. FDI to lead to greater export opportunities for Indian suppliers due to increased sourcing by major players

h. Strong retailing sector will boost tourism as seen from the experience of Singapore and Dubai

i. In China: FDI permitted in 1992; retail sales have grown at the rate of 15% CAGR year on year; initially FDI was restricted to 49% equity shareholding, restrictions have gradually been phased out

j. Since 1992, foreign retailers have pumped USD 3 billion into China, have set up more than 2,200 branch stores, yet sales of foreign retailers make up less than 3.5% of all retail sales in China, indicating that the domestic retail industry is thriving

k. Food and apparel present the greatest opportunities for global retailers in India - most of the growth over the next few years is expected to be in these two sectors.

REITs can provide better finance solutions for retail estate

Financial structuring is among the most crucial aspects in mall development as the cost of a retail development is generally 40 per cent higher than any residential or commercial development and the mall takes 4 to 12 months post construction period operations to get fully occupied. REIT (Real Estate Investment Trusts) can provide a good alternate financing solution to retail real estate development as they bring in the flexibility to rope in retail investors and still maintain the overall control on the tenant mix and other aspects of the mall management, says the study by Cushman & Wakefield.

Cushman & Wakefield findings

a. Cost of a retail development is generally 40% higher than residential or commercial developments and malls take 4-12 months post construction period to get fully occupied.

b. REITs can provide a good alternate financing solution to retail real estate development

c. Ongoing mall projects estimated to require construction cost funding of approx INR 128 billion

d. In the next stage of large scale stabilisation, more sophisticated funding mechanisms will emerge

e. The Indian retail real estate market is poised for an even greater revolution in the years ahead.

Concept based positioning more important than design/looks

During the last 10 years, four clear shopping center models have emerged: the Family Center, the Fashion Center, the Themed Mall experience as a leisure enhancement for tourists, and the Community based center - each suggesting quite different approaches to the interiors. Colour and materials are still important, but they’re no longer the whole story, says Mr Stan Laegreid, AIA, principal, Callison.

Modern retail practices and mall management call for expertise in various specialised fields and for sure the country is deficient in terms of trained professionals for these tasks, in retail as well as retail real estate - this is one major challenge that the industry will need to address in right earnest.

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Since 1983, The Shopping Center Group, with over 210 experienced professionals in 24 offices, has provided a full assortment of retail real estate brokerage services to retailers, landlords, developers, investors and financial institutions throughout the Southeast and Mid-Atlantic regions. We have earned our reputation of delivering "best in class" service in tenant representation, project leasing, property management, development consulting, investment sales and finance. With longstanding relationships developed over many years, we have been proven successful in delivering unsurpassed local market knowledge with a regional perspective and a national presence. Our approach is service oriented and our commitment to our clients' success is uncompromising.

Early shopping centers

An early shopping center in the United States was Country Club Plaza, which opened in 1924 in Kansas City, Missouri. Other important shopping centers built in the 1920s and early 1930s are the Highland Park Village in Dallas, Texas; River Oaks in Houston, Texas; and Park and Shop in Washington, DC.
However, the concept of the fully-enclosed shopping mall did not appear until the 1950s. The idea was pioneered by the Austrian-born architect and American immigrant Victor Gruen. This new generation, that were eventually called malls, included Northgate Mall, built in north Seattle, Washington, USA in 1950, Victor Gruen's Northland Shopping Center built near Detroit, Michigan, USA in 1954, and Gulfgate Mall in Houston were all originally open-air pedestrian shopping centers that later were enclosed as malls. The first enclosed, postwar shopping center (or mall) was the Gruen-designed Southdale Center, which opened in the Twin Cities suburb of Edina, Minnesota, USA in 1956. As equally important as the enclosed aspect of these new malls was that for the first time in the development of American cities, these malls moved retailing away from the dense, commercial downtown into the new sprawling and largely residential suburbs. This formula--enclosed space with stores attached, away from downtown, and accessible only by automobile--became a popular way to build retail across the world at different moments. In the UK, Chrisp Street Market was the first pedestrian shopping area built with a road at the shop fronts.
The Bergen Mall, the oldest enclosed mall in New Jersey, opened in Paramus on November 14, 1957, with Dave Garroway, host of The Today Show, serving as master of ceremonies.^[2] The mall, located just miles from New York City, was first planned in 1955 by Allied Stores to have 100 stores and 8,600 parking spaces in a 1.5 million ft² mall that would include a 300,000 ft² Stern's store and two other 150,000 ft² department stores as part of the initial design. Allied's chairman B. Earl Puckett confidently announced the Bergen Mall as the largest of ten proposed centers, stating that there were 25 cities that could support such centers and that no more than 50 malls of this type would ever be built nationwide.^[3][4]
The title of the largest enclosed shopping mall remains with the West Edmonton Mall in Edmonton, Alberta, Canada since 1986. West Edmonton Mall is listed in the Guinness Book of World Records for the "largest shopping centre in the world" and "world's largest parking lot".
One of the world's largest shopping complexes at one location is the two-mall agglomeration of the Plaza at King of Prussia and the Court at King of Prussia in the Philadelphia suburb of King of Prussia, Pennsylvania, USA. The King of Prussia mall has the most shopping per square foot in the US. The most visited shopping mall in the world and largest mall in the United States is the Mall of America, located near the Twin Cities in Bloomington, Minnesota, USA. However, several Asian malls are advertised as having more visitors, including Mal Taman Anggrek, Kelapa Gading Mall and Megamal Pluit, all in Jakarta-Indonesia, Berjaya Times Square in Malaysia and SM Megamall in the Philippines.
Beijing's (Peking) Golden Resources Mall, opened in October 2004, is the world's second largest mall, at 600,000 m² (approximately 6 million square ft). Berjaya Times Square in Kuala Lumpur, Malaysia, is advertised at 700,000 square metres (7,530,000 sq ft). SM Mall of Asia in the Philippines, opened in May 2006, is the world's third largest at 386,000 square metres (4,154,900 sq ft) of gross floor area. The Mall of Arabia inside Dubailand in Dubai, United Arab Emirates, which will open in 2008, will become the largest mall in the world, at 929,000 square metres (9,999,700 sq ft).

"Pitt Street Mall" of Sydney is Australia's busiest shopping precinct. This mall has eight retail centres and more than 600 speciality stores, within two city blocks.

A mall can refer to a shopping mall, which is a place where a collection of shops all adjoin a pedestrian area, or an exclusively pedestrian street, that allows shoppers to walk without interference from vehicle traffic. Mall is generally used in North America and Australasia to refer to a large shopping area usually composed of a single building which contains multiple shops, usually "anchored" by one or more department stores surrounded by a parking lot, while the term arcade is more often used, especially in Britain, to refer to a narrow pedestrian-only street, often covered or between closely spaced buildings (see town centre). A larger, often only partly covered but exclusively pedestrian shopping area is in Britain also termed a shopping precinct or pedestrian precinct. The majority of British shopping centres are in town centres, usually inserted into old shopping districts, and surrounding by subsidiary open air shopping streets. A number of large out-of-town "regional malls" such as Meadowhall, Sheffield and the Trafford Centre, Manchester were built in the 1980s and 1990s, but there are only ten of them or so and planning regulations prohibit the construction of any more. Out-of-town shopping developments in the UK are now focused on retail parks, which consist of groups of warehouse style shops with individual entrances from outdoors. Planning policy prioritizes the development of existing town centres, although with patchy success. The Metro centre, Gateshead, is the largest shopping centre in Europe with over 330 shops, 50 restaurants and an 11 screen cinema

Shopping Center

To cater to the needs of the students and other residents, the institute has a shopping complex within its premises. The students can get almost everything they need under the sun here.

Departmental store:

An excellent store housing all sorts of goods be it stationeries or groceries.

Bank:

An interim branch of State Bank Of India is located inside the campus. It is fully computerized and is giving an exhaustive service to NITT.

An ATM has been installed and has been a great success.

Stationery Store:

A provider of high quality stationery goods.

Besides these we have two xerox shops,a medical shop,a phone booth, a cycle repair shop and even a cobbler.

Now thats why we say that nitt is a world in itself.