India’s Malls Struggling

India’s malls are struggling amid weak consumer sentiment and poor planning, with up to 80 per cent of retail space lying vacant in more than 250 shopping centers that have opened in the country over the past couple of years, according to a survey.

“Vacancy levels are due to poor location, poor design and poor parking facilities,” said the Associated Chambers of Commerce and Industry of India (Assocham), which carried out the survey.

“The mall magic seems to have disappeared in a puff of smoke on the back of the economic slowdown, poor revenue model, low footfalls-to-sales conversion and lack of special purpose malls.”

More than 47 percent of total mall space across nine cities in India covered by the survey was vacant. In Delhi, 55 per cent of malls were vacant. Mumbai’s malls were 52 per cent empty, followed by Ahmedabad at 51 percent and Chennai at 50 per cent.

A number of malls are shutting down because they unable to justify the rents they are charging tenants, Assocham said.

“In order to lure retailers, many developers started giving a rent-free period for up to six months for big brands,” the industry body added.

Analysts blame poor design, signing up the wrong brands, and high property costs in cities such as Mumbai for the failure of many of the country’s malls.

Kumar Rajagopalan, the chief executive of the Retailers Association of India, told The Times of India that many shopping centers were developed and opened without the appointment of a mall manager or mall management company.

“Customers do not like malls that are half empty or ones that seem to have a lot of new store set-up happening during shopping hours,” he said.

The dramatic increase in shopping malls in India in recent years has been the result of developers trying to tap the country’s growing spending power.

“With India’s growing per capita income and a rising middle class, the retail sector has the potential to be the real growth engine of the country’s economy,” according to Jones Lang LaSalle India. “Growing consumerism, changes in consumers’ tastes and preferences, and heightened brand consciousness has been fast replacing traditional mom and pop stores with organised retail malls that house lifestyle and luxury brands from national and international retailers. As part of its retail transformation, India has seen substantial increase in mall space in recent years.”

Assocham said that other factors hurting the industry included multiple taxes and a shortage of experts in areas including store management.


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