One-stop Shop

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DQI Bureau
New Update

Shop till you drop, seems to be the
mantra for mall owners to rake in moolah. With multi-specialty theme malls
fading into the background, specialty or theme malls are acquiring center stage.
The new buzzwordspecialtyhas already pampered the Indian shopaholics, further
spoiling their habit. Are theme malls more popular than the simple shopping
malls? The answer to that is both a yes and a no, as one is spoiled by the
number of options under one roof. But in case one is looking for the entire
months shopping, then a simple shopping mall is the best choice. The wave of
specialty mall first started with the opening of Gold Souk dedicated to jewelry,
in Gurgaon. The mall offers a wide array of some of the finest brands of jewelry
from India and abroad.

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The Concept

Retail business has undergone a lot of transformation from the days of
kirana stores to the new model of specialty malls. Specialty mall is the perfect
example for the never-ending thirst of developers to attract customers with
their array of ideas. The concept of a specialty mall is woven around a
particular product category offered in a mall. For example, electronics,
furniture, jewelry, health, etc, or having a target segment such as women, kids,
western wear, ethnic, etc.

Taking into consideration that there is a higher rate of
conversion of footfalls (approximately 50-65%) to sales at a theme based mall
compared to an average of 15-25% at a simple shopping mall, the future for a
specialty mall is bright. According to the Retailers Association of India,
specialty malls are expected to make up nearly 10% of the total malls in India
in the near future. Traditionally, such malls offer exclusive and expensive
merchandise, but they are expected to benefit from the spending habits of the
people with rising disposable income.

Right now,
multi-speciality theme malls like these rule the roost and it is extremely
difficult for specialized IT malls to make their mark; the closure of the
one at Bengaluru within six months of opening illustrates the challenges

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The success of theme malls is based on a wide array of
factors like tenant mix, premium real estate, diversity in product category,
brand penetration, number of brands available, demand of brands, and the
particular product category in the city where the mall is located, etc. A
specialty mall also highlights the importance of conducting a detailed study
before foraying into the market as it caters to a niche segment of customers.

Riding the Mall Wave

In 2005, Bengaluru made waves in the IT world with its first mall dedicated
to IT. The mall offered computer consumables, peripherals, spares, accessories,
stationary, etc, along with laptops, branded PCs, original software, and CDs.
Bengalurus first exclusive IT mall, was built on an area of about 19,000 sq ft,
and had approximately sixty-four units. The mall was built to target users who
head to different places for their requirements. R Sridhar, founder, Triangle
Technologies who owned one of the shops at the IT mall felt that the time and
place concept would be the favorable factors.

In 2006, Gujarat based Sai InfoSystem (SIS) forayed into IT
retailing by opening an 8,000 sq ft e-mall in Ahmedabad, which showcases
products from desktops, laptops, computer peripherals, and accessories. SIS then
planned to set up e-malls in sixteen cities across India like Pune, Bengaluru,
Chennai, Mumbai, Delhi, Goa, Jaipur, Ahmedabad, Surat, and Rajkot to target
consumershome, SOHO, corporates, and channel partners. After tasting success in
Patna, even Astric Computers decided to tap the markets of Bhagalpur, Gaya,
Muzzaffarpur, and Saharsa by setting up e-malls. These stores would be spread
across 1,000 sq ft and would offer PCs, telecom products, peripherals, external
storage devices, after-market supplies and accessories, home networking products
and digital lifestyle products like digicams, media players, and office
automation products. Acer India has gone a step ahead from being mere showrooms
to becoming full-fledged IT specialty stores offering a variety of IT offerings.
An e-mall is a website that displays electronic catalogs from several suppliers,
and charges commission from them for the sales revenue generated at that site.
An e-mall can also be a small electronic outlet offering a wide array of IT
products. Industry experts feel that factors like saving of time and efforts,
wide array to choose from, convenience of shopping, good discounts, detailed
information of the products, ability to compare products and brands, etc, will
motivate shoppers to buy online.

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With so much
unbranded products available in the market, it is a difficult task to find
the right kind of tenants. So, it will be a big task to make these specialty
malls a success

Kumar
Rajagopalan,
CEO, RAI

The idea for
opening Bengalurus first IT mall was good, but the promoter was interested
in selling the mall as a real estate and not marketing it as an IT hub.
Therefore, it closed down

RS Sridhar,
founder,
Triangle Technologies

Not to be left behind in the story of specialty malls for IT,
Mumbai will soon be having an IT mall offering a wide array of IT products and
solutions. The IT mall is being built by Ackruti Builders and the concept is
being marketed by Mumbai based IT sub-distributor, Ortek Computers. It is
currently in the advanced stages of being built and is named Ackruti Sapphire.
The Rs 340 crore ambitious project will cater to the interests of IT channel
partners, who can set up stores at the first five levels, and business houses
who can set up their sales offices on the sixth level. There will also be demo
centers, gaming zones, and coffee shops. Additionally, the mall will also make
available banquet halls to IT companies for conducting product launches,
seminars, and training sessions. The mall will offer a wide variety of IT
products, ranging from desktop PC servers, PC components, peripherals,
accessories, networking products, and solutions, etc.

Meanwhile, the second smaller version of an IT mall is an
eZone that has been made hugely popular by the Future Group. The other popular
versions of eZone are Reliance Digital, Croma by Tata, etc. Youll find Croma
stores at Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, Pune,
Rajkot, Surat, and Vadodara. Reliance Digital was based on a unique concept of
consumer electronics mega store that offers the latest technology and
entertainment products and services. eZone is an electronics and consumer
durables specialty retail store offering a wide range of personal products like
computers, laptops, handy cams, MP3 players and mobile phones; entertainment and
home products.

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Success Factor

Shops can be opened and closed but what will ensure their success? Is an IT
mall a better option than its smaller versions? Or is an IT mall a much riskier
version for a market like India? Apart from these questions, there are other
facts that need to be considered, like the fact that there has been an
increasing demand of opening an outlet in malls by franchisees. The reasons for
this are the higher conversion rates and decent amount of footfalls in a mall.
Apart from this, companies set up stores in malls because they provide security
to the store operator in terms of convenience of shopping enjoyed by consumers
under one roof. Further, malls serve as a one-stop shopping destination, provide
convenience of parking, and food courts. These factors promote the business of
these outlets.


IT Malls in a Nutshell
  • IT malls are a
    type of specialty or theme based malls

  • The concept of
    IT malls is at a very nascent stage

  • The IT mall in
    Mumbai is in advanced stages of development

  • The idea to
    develop an IT mall in Kolkatta is at a nascent stage

  • More than
    building a specialty mall it is more important to rope in the best brands

  • Filling 100,000
    sq ft with the relevant brands is the biggest challenge for a mall owner
    than filling 30,000 sq ft of space

Highlighting the success of small versions of IT malls, Kumar
Rajagopalan, CEO, Retailers Association of India says, "In the last three to
four years, many smaller versions of specialty zones catering to the interests
of IT, electronics, etc, have been set up like Croma, eZone of Pantaloons,
Reliance Digital, etc. These operate on an individual retail sort of basis and
are successful too. But this idea is a different concept and IT mall is a
totally different ballgame altogether where brands are more important."

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But the success of a specialty brand depends on various
factors. Talking about the success of specialty malls, Rajagopalan, says, "It is
important to build these malls in areas where there are established brands.
Currently, with so much unbranded products available in the market, it is a
difficult task to find the right kind of tenants. So, it will be a big task to
make these specialty malls a success."

The Road Ahead

Indias first IT mall in Bengaluru closed shop approximately five to six
months from the day it commenced business. Sridhar reasons, "The basic idea for
opening the mall was good, but the promoter was interested in selling the mall
as a real estate and not marketing it as an IT hub. This is a totally different
marketing strategy that proved detrimental to the interests of this mall. As a
result of the bad marketing strategy, IT companies that set up shop in the mall
could not leverage on the reasons for which they set foot there, and therefore
started incurring losses. Since many of the shops started making losses, the
mall had to be closed, and apparently that made history, as the first IT mall no
longer stood tall."

The wait and watch policy is adopted by Pravin Dhoka, CEO,
Ortek Computers when asked about their future plans. "The mall is in the
advanced stages of development and it is only after six months that we will
decide on setting up new IT malls. We will be offering spaces for display at Rs
15,000 per sq ft. The mall has taken two years to be built."

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Talking about IT malls, Rajagopalan, says, "It is too early
to comment on the trend of IT malls as malls have not penetrated the Indian
market with the right kind of brands. Theme malls are a specialty type and
establishing a mall catering to specific tastes could prove to be a huge task as
there are not enough brands in the market to fill the space. When it comes to
filling 100,000 sq ft with relevant brands then it becomes a challenge for a
mall owner, which is the case for specialty malls. The general public has been
appreciative of the offerings made at a simple shopping mall but even the larger
malls are trying to establish their foothold. It is also proving difficult for
them to convert footfalls to revenue and make mall visits a habit among the
public. Considering this scenario, we are still far behind when it comes to the
success of the model of specialty malls. Currently, a wait and watch policy is
the best choice."

Talking about the road ahead, Rajagopalan adds, "It will take
approximately three to five years for specialty malls to establish their
identity in the Indian market because by then there will be enough brands vying
for customer attention in the market." If there are specialty offerings then
there is a demand for the same on the consumers side. This demand and supply
scenario is surely expected to change the concept of shopping in the future.

Shilpa Shanbhag

shilpas@cybermedia.co.in