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Shopping
malls have become a way of life in America. Now it is conquering
India. There are more shopping centers than movie theatres,
school districts, hotels or hospitals in USA. In India they
are gradually penetrating the smaller cities, but most are
not yet earning profits. SPAN writers Sudipt Arora andAshish
Kumar Sen report .
In much of the world, the local marketplace
has evolved over centuries from open-air stalls in the town
square, to stand-alone shops, organized high streets, and
then the huge shopping centers and malls that erupted across
the American landscape in the 1950s and spread to Europe,
East Asia and Latin America.
In India, however, the development of shopping
malls has literally been a revolution. The opening of the
Indian economy in the early 1990s brought a wide range of
new household appliances, stylish apparel, and other consumer
goodies, along with plenty of media exposure. But what the
Indian consumer still lacked was a world-class shopping experience:
a pleasant, open, relaxing, air-conditioned place to compare
prices, quality and styles without other customers trying
to squeeze through the shop doorway or shout over one’s
head to the proprietor.
“A good ambience is important to inspire
a desire for shopping,” says Sunil Chander, vice president
for marketing operations at Crossroads, India’s first
operational mall that opened in Mumbai in 1999. The same year
Ansal Plaza was started in New Delhi. Crossroads, built by
the Piramal Group, set the pattern with a stunning 150,000
square feet of retail shops, displaying branded gadgets, clothes,
home furnishings and luxuries behind huge glass walls, as
if the visitor had just walked into a television advertisement.
Over the past six years, those first malls
have grown into six million square feet of operational shopping
mall space in Mumbai, New Delhi, Bangalore and Hyderabad.
Construction is proceeding so rapidly that the New York City-based
International Council of Shopping Centers (ICSC) predicts
India will have 26.2 million square feet of malls by the end
of the year, with 40 percent of it in the “national capital
region” of New Delhi, Gurgaon and Noida.
“Nothing seems to symbolize India’s
transformation from a stagnant Third World country into an
emerging economic superpower as much as its sparkling new
malls,” says Nidhi Benipuri, who works for American Express’
business process outsourcing center in Gurgaon. Benipuri and
her husband are typical of India’s growing population
of workaholic city-dwellers who only find time to relax and
have fun when they go shopping at the local mall on their
day off.
“Malls are fast identifying customer
needs to serve them better,” and changing Indians’
buying behavior. “I don’t mind spending money on
branded, good quality stuff,” says Benipuri. “Malls
provide a composite shopping experience and save a lot of
time as we get almost everything under one roof.”
With their roomy, stylish and glittering
interiors, a wide range of stores in one place and handy fast-food
outlets, malls are becoming the ideal place to hang out, in
the view of millions of urban Indians, particularly the young.
The problem for retailers and mall operators
is that those crowds of youngsters and family groups strolling
along and gazing at all the pretty things are often not buying.
India’s malls generally are not yet making a profit.
Developers, retailers and brand franchisees
are betting that will change. There are about 250 modern shopping
centers, including malls, under construction now and another
250 being planned, says Amitabh Taneja, the Indian director
for the ICSC. “As India rushes into middle class consumerism,
shopping centers have grown at an exponential pace, a pace
unmatched anywhere at anytime in history,” says Taneja.
The overall size of India’s retail market
is estimated at Rs. 5.88 trillion, according to Mahendra K.
Sanghi, president of the Associated Chambers of Commerce and
Industry (ASSOCHAM). But almost all of that is unorganized,
he says, noting that the organized market’s share is
just Rs. 50 billion, including the Rs. 6 billion in the food
and grocery trade.
But by 2008, say ASSOCHAM and other experts,
organized retailing is expected to reach Rs. 1.6 trillion,
and malls will have a big share.
“Initiatives of the central and state
governments in the form of land allocation at concessional
rates, grants of loans at liberalized interest rates to promoters
of shopping malls, and rationalization of state levies are
prime factors that will aggressively inspire organized retailing,”
says Sanghi.
Real estate developers and corporations are
building, or developing plans for
construction of malls in large and mid-sized
cities across the country, even where malls already exist.
Mumbai has 10 malls, plus two dozen shopping centers and department
stores. Yet another 25 malls, measuring 90,000 to 600,000
square feet, are under construction as old, defunct textile
factories in the suburbs are being converted.
While southern metros such as Hyderabad,
Chennai and Bangalore have always had big shopping complexes
(Spencer Plaza in Chennai, for instance), new ones are coming
up.
The trend is spreading to smaller cities
such as Jaipur, Ludhiana, Pune and Indore. The half dozen
malls in Ahmedabad attracted huge crowds during the last Diwali
season, with lots of freebies, discounts and lucky draws.
Unlike American malls, Indian malls are also
generally more crowded inside, with less space left unused
to allow the customer a sense of openness, although many of
the newest centers have play areas for children as part of
the “family outing” appeal.
It’s going to get more crowded, too.
Gurgaon alone will have 15 malls by the end of 2007, says
Ajay Khanna, chief executive officer of DLF Retail, which
runs the city’s biggest mall, DLF City Centre.
A large, young working population; nuclear
families in urban areas; growing numbers of working women
and opportunities in the services sector are the key growth
drivers of the organized retail sector. The number of Indians
below the age of 34—the malls’ chief hope for the
future—is 728 million, almost 70 percent of the population,
according to the Indian government. These youngsters meet
up with friends at casual restaurants in the malls such as
Café Coffee Days and Barista, each vying to be the
Starbucks of India. More young people also view shopping—or
“window-shopping” without buying—as an enjoyable
pastime.
Meanwhile, India’s middle class is exploding
in size. It is good news for the future of malls. ¨
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The Genesis
The opening of the Southdale Center in the Minneapolis
suburb of Edina, Minnesota, in October 1956 heralds
the beginning of mall mania in USA.
Southdale, the brainchild of Austrian-born architect
Victor Gruen, was the first fully enclosed, climate-controlled
shopping center with a two-level design.
A refugee who had fled the Nazis and arrived in New
York in 1938, Gruen was regarded as a pioneer in modern
store design. His plan for Southdale, which would serve
as a blueprint for future malls across the United States,
encouraged shoppers to spend more time at the center.
By 2000, there were more than 45,000 shopping malls
in the United States, with 5.47 billion square feet
of gross leaseable space.
Nancy E. Cohen, author of America’s Marketplace:
The History of Shopping Centers, writes that between
1860 and 1910, “such merchants as John Wana-maker
in Philadelphia, R.H. Macy in New York and Marshall
Field in Chicago built multi-story retail palaces, where
attentive sales clerks fit calfskin gloves, cut yards
of lace and fetched an array of merchandise for the
carriage trade.” But the modern shopping center
had its genesis in the 1920s, according to the New York
City-based International Council of Shopping Centers
(ICSC).
The concept of developing a shopping district away
from a downtown is generally attributed to J.C. Nichols
of Kansas City, Missouri. His Country Club Plaza, which
opened in 1922, was constructed as the business district
for a large-scale residential development. It featured
unified architecture, paved and lighted parking lots,
and was managed and operated as a single unit.
In the 1930s and ’40s, Sears, Roebuck and Co.
and Montgomery Ward set up large freestanding stores
with on-site parking away from the big cities. In 1976,
the country’s first urban vertical mall, Water
Tower Place, opened in Chicago on Michigan Avenue. To
many industry experts, this mall with its stores, hotel,
offices, condominiums and parking garage, remains the
preeminent mixed-use project in the United States.
During the 1970s, a number of new formats and shopping
center types evolved. In 1976, the Columbia, South Carolina-based
Rouse Co. developed Faneuil Hall Marketplace in Boston,
which was the first of the festival marketplaces—a
mall created in a historic location. Four years later,
buoyed by its success in Boston, the Rouse Co. opened
Harbor Place in downtown Baltimore, Maryland, with new
buildings constructed along a historic waterfront. In
Washington, D.C., Union Station is an example of a festival
marketplace.
The 1980s was a period of unparalleled growth in the
shopping center industry, with more than 16,000 centers
built between 1980 and 1990, according to the ICSC.
By the 1990s, factory outlet centers—like Potomac
Mills on the outskirts of Washington, D.C., and a major
tourist attraction in Virginia—were among the fastest
growing segments of the industry.
The ICSC reported that in 2000, America’s shopping
centers served 196 million customers a month. They employed
more than 10.6 million workers, which is about eight
percent of the non-farm workforce in the country.
After 9/11, residents in Everett in Washington state,
gathered at the Everett Mall, where an open space was
converted into a memorial to those who died in the attacks.
(AS)
(In arrangement with SPAN)
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