Archive for December, 2011

Safety First – Shopping Centre News, Sep-Oct 2010

Tuesday, December 13th, 2011

Are 6.6 million daily shoppers safe in India’s shopping centres?

Almost 200 shopping centres (or malls) are already up and running across India and another 600 are in different stages of development.  Indian shopping centres get about 700 million annual visitors today and this is slated to go up to 2.2 billion annual visitors by 2015. That’s a whopping 6 million daily visitors, 15% more than the entire population of Singapore and more than three times that of Dubai.

Are we really prepared for this?  What I am really worried about is that more than 80% of the current and planned shopping centres in India fall woefully short of international standards in terms of safety and security. With lack of proper safety standards and measures, Indian shopping centres have already started witnessing a number of accidents, some even resulting in deaths or severe injuries to children and adults alike.

In 2008, a series of accidents affected the operations at a popular Bangalore mall and had forced the state government and the city authorities to rethink safety standards to be implemented by all existing and upcoming shopping centres / malls in the city. Even the mall in question has adopted some measures, but the question remains, “Why do we always take corrective actions and not preventive ones?”

On 26th January 2009, Republic Day, a major fire accident was prevented at one of the most popular malls in Bangalore. The fire started at the food court on the fourth floor. Thousands of people were evacuated in minutes, and the fire was controlled. But will luck be on our side forever?

In May 2010, an early morning fire at the Shangri-La Heera Panna shopping mall at Oshiwara, Mumbai, highlighted the fact that it is not enough for shopping centres just to have fire-fighting equipment. It is absolutely crucial that the equipment is well-maintained and ready for use, and that staff are adequately trained on the use of the installed equipment and other fire safety measures. A non-functional water-riser system, coupled with the badly maintained fire-fighting equipment at the Oshiwara shopping mall, made it very difficult for firemen.  It took them nine hours to douse the fire.  They had to bulldoze a basement wall, and 15 fire engines had to be deployed to control the fire.  As per the media, about 15,000 TV sets were stored in the basement, which was actually meant for car parking. No water was stored in the static fire water storage tank.

When Indian mall developers are too keen to make a lot of mall from this business, why do they just copy paste glitzy finishes from developed markets, instead of also copying public safety and hygiene standards?

Is it because there are no strict guidelines or proper safety norms?  Or because there isn’t anyone to monitor any standards?  Or simply because we just don’t care.   After all, with a population of 1100 million, how does it matter if 1100 were to lose their life?

Copying international safety standards will not serve the purpose, because most developed markets with successful shopping centres have little experience of handling the large numbers of visitors that many popular Indian malls get, especially on weekends.  Managing such large crowds needs an altogether different approach, especially when it comes to safety and security.

In India, parents lovingly let their children move up and down in an escalator, for the sheer fun of it and even enjoy the sight with ultimate parental satisfaction; pedestrians simply walk aimlessly in parking areas, being blissfully oblivious of where the pedestrian walkways are (if there are any), or where the driveways are.

The need of the hour is to put in place very strict safety guidelines.  It is high time that we start working towards creating our own safety norms for shopping centres, taking the necessary inputs from international standards and experience.

The nine most potentially dangerous areas in the Indian context are:

  1. Pedestrian vs. Vehicular movement, inside and outside mall buildings.
  2. Lifts
  3. Escalators
  4. Parking Areas
  5. Fire Safety
  6. Health & Hygiene – specially in Food Preparation & Service Areas
  7. Railings & similar fixtures around atriums and cut-outs
  8. Public Restrooms and other common facilities
  9. Children Play Areas and other Entertainment Zones

Lifts

In the 2008 case at the popular Bangalore mall, where an elevator crash landed three floors down after moving up to the first floor from the lower basement, officials from the Karnataka Fire & Emergency Services Department, who inspected the elevator, found that there were 13 people with an estimated total weight of 925 kgs, while the elevator had the capacity to carry only 8 persons with only 544 kg weight.

Under such circumstances, why can’t we have automated safety measures which ensure that the lift will not operate if it is overloaded?  Also, realizing that the average weight of the human on this planet has gone up in the past few decades, the western world is making and installing lifts with a weight carrying capacity of 75 kgs per person, while our malnourished nation continues with the age old norm of 68 kgs per person. Are we in Ethiopia?

We need a law that elevators in shopping centres and other public buildings should have a minimum weight carrying capacity of 750 kgs, and each elevator should have latest safety approvals in USA, Japan and the EU.  If we can follow this principle for vehicle emission standards, why not for elevators?  If five-star hotels can install the latest generation elevators, why not shopping centre developers?

Escalators

At Varanasi in May 2008, eight-year old Annu fell to his death while stepping off the escalator on the second floor of a shopping centre.  Indians are not used to using escalators. So, shopping centre owners and managers need to have volunteers to train people on their use, at least for six months after a new centre opens.

A number of factors affect escalator design, including physical requirements, location, traffic patterns, safety considerations, and aesthetic preferences. The ability of the building infrastructure to support the heavy components is also a critical physical concern.  Furthermore, up and down escalator traffic should be physically separated and should not lead into confined spaces.

The carrying capacity of escalators in a shopping centre must match the expected peak traffic demand, presuming that passengers ride single-file.  Staircases should be located adjacent to escalators, if escalators are the primary means of transport between floors.  It may also be necessary to provide an elevator adjacent to an escalator for disabled persons, senior citizens and babies in prams.

Parking Lots

In India, there is usually only 1.5 to 2.0 parking spots per 1000 square feet of retail space, which is 30-40% of what is required by international standards.  Also, while parking lots in many shopping centres abroad have a well-defined pedestrian pathway, this is absent in India.  Even ramp widths in Indian malls are sometimes inadequate.  Lighting, either too little or the wrong kind, is often a problem in parking lots.

Pedestrians should not be allowed in to  parking lots. Only shoppers with parking ticket or pass should be able to enter the parking lot from the main retail area of a shopping centre.  There should be proper signage to lead visitors to the right cluster of bays within parking lots.

How many times have you found yourself in a multi-level parking lot (or MLCP), hopelessly looking for your car, “was it on the 3rd or 5th level, was it F or D row??

The speed limit for cars and bi-wheelers within parking lots (and even other external places within the compound of a shopping centre, where pedestrians could be walking about) should be restricted to 10 kmph.

Fire Safety

A fire hazard can be caused due to multiple sources of origin – electrical wiring, cooking at food courts or restaurants, carpeting at multiplexes, smoking, etc.  Even though we have fire safety rules as per the National Building Code, and have seen fire extinguishers hanging on walls or lying in some corner in malls, we are not sure whether:

  1. The fire safety systems are in working order.
  2. The fire extinguishers are refilled as necessary.
  3. The sprinkler system works.
  4. There is regular maintenance.
  5. There is a Fire Safety Officer in the mall.
  6. Security personnel and other staff members are adequately trained on how to act in a fire emergency situation.
  7. Anyone really cares?

Brihanmumbai Municipal Corporation (BMC) issued notices to 22 malls in Mumbai on 29th March 2010, for violation of fire safety norms. The civic body reviewed fire safety norms in 55 malls in the city and has asked 22 malls to comply.

Regular unannounced mock fire drills need to be part of any fire safety system in a public building, so that public is aware of what to do and the staff are always on their guard, apart from being adequately and practically trained.  Let us also put clear signage on each floor showing where Fire Exits are.

Unless we want another tragedy like Upahar cinema in Delhi or the school in Tamil Nadu.  After all, like I said before, what’s 1100 fatalities in a country of 1100 million.

Railings & Similar Fixtures

The Telegraph, reporting on the death of a 6-year old boy in a Bangalore mall, who slipped four floors down through the gap where the handrail ends, observed that this incident “may have shed light on a possible lethal flaw in shoppers’ havens, though it isn’t clear if every mall has a gap between the escalator handrail and the floor railings. … Even the balcony railings of the mall have huge gaps, more than a foot high and about a foot and a half wide. Some of these gaps, big enough for very young children to slip through, are covered by glass sheets but many are open.”

The Hindu, on 3rd July 2007, quoted a retired town planner, who said that “such safety lacunae in buildings were mainly because of absence of appropriate knowledge about the delicate issues of engineering and architecture, among the town planners, who approve the building plan. Also to blame is the failure of constant inspections during construction of such buildings and before issuing NOC. Even post-construction inspections were not adequate”.

Such accidents are also an eye-opener for parents who let their children run about the malls while they shop till they drop.

Public Restrooms

In a study by Kimberly-Clark, 39% of survey respondents in USA feared picking up germs in a public restroom more than any other place. Nothing can be truer than this in the Indian context.  Foul odors, lack of supplies and puddles on the floors can all be signs of improper maintenance. A modern washroom should have the following features:

  • Chemical-lined dispenser bin in each of the ladies’ WCs.
  • Door-less entry (labyrinth entrance)
  • Sensor operated fixtures
  • In the Indian context, a health faucet (bum washer spray)
  • A countertop changing area

Hidden restrooms are perfect spots for robbers, because they are away from the view of other customers. Further, they may become areas for people to gather, and in some cases even use drugs.

Other potential accident areas

Children Play Areas:  Kids’ play areas should always be enclosed properly.  The interiors of these areas should not have any things with sharp edges.

Food Court: Have proper fire safety systems and garbage disposal systems.  Ensure regular food-grade disinfectant use to prevent bacteria. Regular pest / rodent control is a must.  Operators who do not dispose off garbage properly need to be severely penalized by centre management.

Last, but not the least, it is high time for us Indians to realize and understand that, although providing safety and security is an integral responsibility of shopping centre developers, owners and managers, as well as the retailers who operate in the malls, it is also our individual responsibility to take ownership of our own actions.

……………………………………………………………

Amit Bagaria is founder Chairman of three companies. Award winning Asipac Projects is India’s leading mall planning, development and leasing consultant, which has conceptualized and marketed six of India’s 15 largest malls.  Asipac Mall Services is a new mall management company.  Arus Retail has promoted Men&Boys, India’s first retail chain exclusively dedicated to men’s cosmetics.  Amit has been a speaker or anchor at many Indian and global events, co-authored a college textbook on planning and published several articles on malls and real estate.

Posted in Articles in Shopping Centre News | 3 Comments »

Yesterday Once More – Images Retail, Sep 2010

Tuesday, December 13th, 2011

This is the first in a new series of stories initiated by Images Retail about successful local retailers spread across urban India, who continue to expand and grow, despite tough competition from national (and in some cases, even international) retailers.  If you know about such a retailer in any Indian town (including Tier-II and Tier-III towns), please send the name of the retailer and the city (with contact details, if available) to ab@asipac.com.

“Our top management does not change every 1-2 years.”  This emphatic statement by Niyas K.N., Chief Information Officer and one of the owner family members of M.K.Retail, a `80 crore Bangalore grocery store chain, sums up (according to Niyas) the key difference between local family-run retailers and national corporate chains.

The original M.K. Ahmed & Sons was founded in 1927 at Bangalore’s Mysore Road by Niyas’ grandfather, Late M.K. Ahmed, who originally belonged to Kerala.  Although Ahmed died in 1947, his sons managed and grew the business.  Son Abdul Rahman, current Chairman of M.K.Retail, set up a kiraana store in Malleswaram in 1963.  The business was split up in 1983 between his five sons, and Abdul Rahman, inherited the kiraana shop on Bangalore’s CMH Road.

In 1985, when Foodworld (then a JV between RPG Enterprises and Dairy Farm, part of the Hong Kong headquartered Jardine Matheson Group, which also owns iconic grocer 7-Eleven) opened right next door with a modern, international ambience and feel, Rahman soon realized that customers were changing their loyalty, and converted his CMH Road store to replicate the supermarket experience.  In the next 15 years, Rahman only opened one more store and the two-store chain did a business of `4 crores in 2000.

In the early 2000s, Rahman’s five sons joined the business in quick succession. They changed the name to M.K.Retail and began expanding. The 17,000 square foot flagship store opened further up on the same road, in 2002.  This store even stocks stationery, appliances, crockery and furniture. Today, M.K.Retail has six stores (the seventh is opening soon) occupying total retail space of about 60,000 square feet.

Each of Rahman’s five sons looks after a vertical.  While the oldest, Shakir, looks after finance, Anas runs operations, Niyas handles IT, Shamim heads purchases and Hishan, the youngest, is responsible for marketing.  The brothers meet once a month to discuss strategy and take important decisions by consensus. There are no external board members or advisors.  Niyas says that MBAs can’t so the job as well, as they are not flexible and can’t take quick decisions, as everything has to be analysed.  He argues that their six family members (including dad Rahman) in the business, is what differentiates them from the national corporate chains.  “We have a common vision, mission and goals,” he says.

This point could be easily argued.  Future Group today has as many as seven Biyanis involved with different functions within the group. In less than one fourth the time as M.K.Retail, Future Group has grown to over 1000 retail stores spread over more than 16 million square feet in 138 cities and rural locations.

So what really is the difference?  Niyas argues that, while retail is the core business for his family, for many of the corporate retailers, retail is just one of their businesses.  According to him, the sale of eggs from his six stores equals the combined sales of eggs from all 40 stores of a corporate-owned competitor.  He is proud that M.K.Retail has never shut a store. Each one of their stores is individually profitable and sustainable on a standalone basis. Their focus is more on profitability than the number of stores.

Niyas reminds us that retailers such as Aditya Birla Group’s More, RPG’s Spencers and Reliance Fresh have been forced shut several underperforming stores.  He says that focus on growth rather than profitability is most likely to lead to another Subhiksha story.

Subhiksha, founded in 1997 became a 150 store company by the year 2006. Then, with infusion of private equity, and the irrational exuberance witnessed at the time across businesses and sectors, it grew unmindfully into 1600 stores by 2008. Within a year, the company went bankrupt and had to close down.

Another notable difference is that employees of national retailers stay with one employer for an average of less than three years, while M.K.Retail’s employees have an average career span of 15 years in the organization.  They provide accommodation to most of their long-serving employees, which results in loyalty.

The most important difference is obviously in consumer perception or acceptance. From the consumers’ perspective, while an average Food Bazaar stocks 40,000 SKUs, M.K.Retail’s flagship store has 60,000 SKUs.  According to Rasika Lumba, the wife of Kabir Lumba, Managing Director of department store chain Lifestyle, who shops in M.K.Retail on a regular basis, “their fresh produce is always very fresh, they stock good quality fruits, vegetables and flowers, including exotic items, offer the widest varieties of mangoes in the season, they have a wide range of Indian mithaais and gourmet foods, they sell unique and usually high-quality bakery products and desserts, they are usually first to launch new branded food products in the market, carry a good range of crockery and other household gifts and also carry an excellent variety of gifts for all budgets.”

There could not be a better testimonial, coming from none other than the wife of a seasoned retailer, whose parent Landmark Group also runs Spar Hypermarkets and Supermarkets in India under license from the Dutch retail giant Spar.  Founded in 1932, Spar had worldwide retail sales of `168,000 crores (€28 billion) in 2009, from their 12,169 outlets occupying 65 million square feet in 33 countries.

One thing does strike me here – despite operating in a low cost economy such as India, M.K.Retail’s average per store sales of `13.33 crores equals that of Spar’s global average and is 80% higher than Spar’s UK average of `7.41 crores per store, or 36% higher than the `9.81 crores average in Spar’s home country Netherlands.

Viney Singh, Managing Director of Spar’s Indian operations, says “M.K. Retail is a classic example of a home grown convenience store which has built up a reputation of catering well to the needs of the local catchment. Apart from the convenience, I hear a lot of positives on their service levels. My Malayaali friends living in the Indiranagar area tell me that they get a lot of their Kerala delicacies at M.K. Retail.”

So, can M.K.Retail ever become a Spar?  Maybe not, if one goes by the current ambitions (or plans) of the owners.  Niyas only sees M.K.Retail as a 30-store chain with a `500 crore turnover by 2027, the year when it celebrates its 100th anniversary.

“The variety of products they offer is amazing. Their billing is super fast and there is always a pair at the counter, one to bill and the other to fill up the bags,” says Priya, another frequent shopper, “The staff is always talking a lot, but a supervisor keeps an eye on everything.”

“They are a good bunch of people. They try hard and they have a good offering,” said a senior official of an international supermarket chain who did not wish to be named.

Younger brother Shamim attributes superior merchandising to the fact that people in his sourcing team have been with the retailer for 15-20 years, and so understand the consumer pulse, compared to national retailers, whose sourcing managers keep changing. “We do merchandising based on what customers demand, rather than based on margins or profitability,” he says, “Many of our SKUs don’t make money, but they still make business sense because our customers want them.”

“What is unique about them is their personal touch with customers, something which is missing in modern organised retail. They are faster in adapting to customer trends and habits,” commented a senior official of one of India’s biggest supermarket chains who also did not wish to be named.

“Any retail experience can be measured on four counts,” says Anas, “how long one waits in the check-out queue, the attitude of the shopfloor staff, the product mix, and pricing. As long as you succeed on these four fronts, the rest takes care of itself.”

One of their biggest weaknesses seems to be on the shrinkage front – Niyas claims that they have 6% pilferage.  That translates to almost `5 crores per annum, a very high figure for any local retailer.  Globally 2% is the norm, and Spar averages less than 3%.

M.K.Retail’s seventh store at 4000 square feet will be the smallest in the chain.  They are experimenting with this size because they believe that this is the size that could be its growth engine for the future.  A smaller sized store can be replicated across several more locations, either on their own, or even through franchising.  It is difficult to set up 15,000 to 20,000 square feet stores, or even to run them, says elder brother Anas.

As things stand today, M.K.Retail does not see itself expanding beyond Bangalore and Chennai, a city it is eyeing very closely. The metros offer far greater potential than smaller towns such as Mysore or Mangalore, they feel.  They also prefer to continue with the high street route, rather than malls, as they feel malls charge very high rentals.

This 6-store chain is open to growing by acquiring other chains, even standalone shops.  Although they have tried many acquisitions, no deal has gone through, because of unrealistic valuation expectations of the owners, according to Shakir.

M.K.Retail is open to external funding and could even consider an IPO for growth capital.  However, despite several offers from various PE funds, they have not really moved forward on the funding front. They are worried that Nilgiris ran into trouble after the family sold its stake to private equity investors.

Nilgiris is a Bangalore headquartered supermarket chain, with 90 stores across South India.  It was founded in 2005, near Ooty, in the Nilgiri hills of Tamil Nadu. The flagship store on Bangalore’s Brigade Road opened in 1936. Nine years later, in 1945, this store was converted into what was (perhaps) India’s first real supermarket.  By 1982, it had a presence in five cities, including Chennai.  In late 2006, UK based PE Fund Actis had acquired a 65% controlling stake for `300 crores and started running the chain with professional management. In 2008-09, the second year of operations run by Actis, Nilgiris made a loss of `22 crores. This led to a spat between the original owner family (which still has a 35% stake) and Actis, which is ongoing for 18 months now, and has thus restricted any further growth of the chain.

“For family run businesses, survival is more important than valuation,” says Niyas cheekily, “We cannot afford to operate on a business model that allows breaking even after two or three years.  Each store has to make money from day one.”

M.K.Retail does not subscribe to Kishore Biyani’s theory of “is se sasta aur sasta kahi nahin”.  The cheapest price is not important, according to them. Their experience across different neighbourhoods of Bangalore, with different mix of SECs, shows that economy brands do not last long and premium brands are far more sustainable. Even with their private labels, they have had better success with premium priced (and high quality) products than low budget offers.

Future Group’s value formats Big Bazaar and Food Bazaar together have more than 510,000 square feet of retail space in Bangalore.  Many other national retailers have between 100,000 to 250,000 square feet each. M.K.Retail has just 60,000 square feet, but has same store growth of 30% per annum.  Only time will show who is right, and who will sell more eggs.

While M.K.Retail is definitely one of the most well known, trusted and successful local retailers in Bangalore, I must say a few words about some other successful “local” Bangalore retailers. While I have already written about Nilgiris (which may not even fit into the classification of “local”), here are a few others definitely worth a mention:

C.Krishniah Chetty & Sons is a 141 year old fine jewellery retailer with three outlets in Bangalore and one in Hyderabad, with a turnover of more than `160 crores.  Three family members run the business.

Favourite Shop Group comprises three retail formats Favourite Shop (multi-brand unisex apparel), FS Man (men’s apparel) and Soch (ethnic fashion), which together have 20+ outlets across South India and a turnover exceeding `125 crores. The chain, run by a father and his two sons, is expanding rapidly (with new stores mostly in malls) and will perhaps be the subject of an article in this series in the future.

Showoff is a unisex western fashion apparel MBO with five outlets in Bangalore and a turnover of more than `40 crores. Run by four brothers, this chain is now fast expanding, mostly in new malls.

Girias is a CDIT retailer with 20 stores across Karnataka and Tamil Nadu, occupying more than 180,000 square feet of retail space and a turnover of almost `500 crores.  Four family members run the business.

Pai International, established in 2000, is a CDIT retailer with 25 outlets spread across Karnataka, with annual turnover in excess of `200 crores. As many as seven family members run the business.

Mirrors & Within is a growing chain of beauty salons, run by two sisters and a brother.  They have seven outlets across Bangalore, including several major five star hotels and a flagship opening shortly in The Collection at UB City.

Amit Bagaria is founder Chairman of award winning Asipac Projects, India’s leading mall planning and leasing consultant, which has conceptualized and marketed six of India’s 15 largest malls, Asipac Mall Services, a mall management company and Arus Retail, which owns Men and boyS, India’s first retail chain exclusively selling men’s cosmetics, skincare & hair care products, fragrances, which also provides specialized treatments for men.

Posted in Article in Images Retail | 201 Comments »

NCR & Bengaluru to get India’s first new age Shopping Centres – Shopping Centre News, Mar-Apr 2011

Sunday, December 11th, 2011

The popularity and success of West Edmonton Mall (“WEM”) in Edmonton (population 850,000, Canada’s sixth largest city and the capital of Alberta province) is the story of how a handful of visionaries took an ordinary idea like a shopping centre and turned it into a world-class destination. WEM’s stores, attractions and services combine to form the most comprehensive retail, hospitality and entertainment complex on earth. As the prototype for mixed-use entertainment facilities, WEM, with a GLA of 5.3 million square feet, more than 650 shops, 100+ F&B outlets, nine attractions and two hotels, is a place where people come to shop, play and stay.  WEM’s concept was inspired by the traditional urban bazaars of Persia, where shopping and entertainment were plentiful and operated in tandem, fulfilling a variety of consumer needs at a single location. At the world’s third largest shopping centre by GLA and the largest fully operational one (the two largest, New South China Mall in Dongguan, China, and Golden Resources Mall in Beijing, both failed), there is always something to do.  WEM has six of the world’s largest attractions, including the largest indoor amusement park, largest indoor rollercoaster, largest indoor lake, largest indoor wavepool, largest indoor bungee tower and the largest parking lot.  With 29 million annual footfalls (seven times the population of Alberta), WEM is the province’s No.1 tourist attraction. Almost 5 million annual visitors are foreign tourists, mostly from USA.  A study revealed that the direct incremental expenditure by visitors to WEM was $12.9 billion. WEM generated incremental collection of $3.5 billion in federal taxes and $1.62 billion in provincial & local taxes which the government would not have collected if the shopping centre did not exist. For every dollar spent in WEM, $1.25 is spent by the same tourists outside the shopping centre.

SM Mall of Asia (“SMOA”) – the world’s fourth largest shopping centre by GLA at 4.38 million square feet – is located 45 minutes away from the Makati CBD area of Philippine’s capital Manila.  It successfully draws shoppers and tourists from a 1½ hour travel distance – mainly due to its attractions. The San Miguel – Coca Cola IMAX Theatre has one of the world’s biggest IMAX 3D screens.  The Director’s Club Theatre has 30 La-Z-Boy seats.  SMOA’s Olympic-sized ice skating rink, at 19,700 square feet, is the largest in SE Asia, and offers recreational and competitive figure skating, as well as ice hockey. A sea-facing open-air Music Hall holds events, contests and concerts.  The 2nd World Pyro Olympics were held in January, 2007.  The mall also hosted Lovapalooza 2, where >5300 couples kissed in February, 2007, breaking a Guinness World Record.  The SM Science Discovery Center features a digital planetarium and a wide range of technology/science-themed exhibits.  Other attractions include a Life Clock (where visitors send emails to the future), Smart Media City (computer games including a full-body motion-controlled game system), Transportation Nation (features the history and future of transportation, including displays of Sinag, Wheelsurf and Segway), Nestle Spaceship Earth (a motion-game venue), Virtual Reef (marine/underwater life), City Science (replicas of some of the world’s tallest skyscrapers, plus an interactive earthquake experience), Digistar Planetarium (with 3D screens atop seats) and LEGO Mindstorms Robotics Center). SMX Convention Center (part of the SMOA complex) is Philippines’ largest private exhibition & convention center, with an area of 213,000 square feet and a capacity of 6000 people. Also connected via a bridge is a 775,000 square feet, 10 storey, office building known as OneE-comCenter.

Mall of America (“MOA”) – USA’s largest and the world’s fifth largest shopping centre by GLA at 4.2 million square feet – is located in Bloomington, a suburb located about 16 km from downtown Minneapolis, USA’s 48th largest city.  MOA is one of the top tourist destinations in USA, with 400+ events each year. The first shopping centre to mix retail and entertainment, MOA is the model for combining signature retail and attractions to create an outstanding entertainment venue. It generates nearly $2 billion p.a. in economic impact for the state. Of the 40 million annual visitors, 16 million are tourists.  The walking distance around one floor is 0.91 km. It has 6.9 km of store frontage. There are 27 rides and attractions (including three roller coasters) in the seven acre Nickelodeon Universe FEC located at its centre, which also has 30,000+ live plants and 400 live trees, some 35 feet tall. MOA has a 4.54 million litre Underwater Adventures Aquarium. The Metropolitan Learning Alliance offers courses in visual arts, law enforcement, hospitality, retail management and business to high school students from four school districts. 8000 school groups visit MOA each year. Thousands are registered in the Mall Stars walking club. More than 5500 couples have exchanged vows at the Chapel of Love Wedding Chapel. More than 50 hotels have come up within a 10 minute drive since the mall was built.

It is often said by retail experts that the three most important factors for the success of a shopping centre are location, location and location.  The facts above show that this is not necessarily true. The world’s largest fully operational mall (WEM) is located about 12km away from downtown Edmonton.  With a population of just 850,000, Edmonton is the 19th largest city in North America.  Asia’s largest operational mall (SMOA) is located 45 minutes away from Manila’s CBD. USA’s largest mall (MOA) is located 16 km from the downtown of that country’s 48th largest city and yet attracts 110,000 ADFs.

In today’s day and age, it is very important for any large shopping centre to try and be everything for everyone. If the kids are happy playing or taking rides, it will increase family visits and average dwell time, and the parents will shop.

The two new Indian shopping centres that I am writing about in this article have many things in common – one of the most striking similarities being that they are not located in the typical highly populated catchments that most of our retailers ask for – perhaps this is one of the key reasons that they will succeed.

The Grand Venezia is a mixed-use development, with a GBA of 3.2 million square feet, located in Greater Noida, in NCR, about 50 minutes from South Delhi, 35 minutes from Connaught Place and 20-odd minutes from Noida.  The project comprises a retail-cum-tourism centre of 1.2 million square feet, 700,000 square feet of offices, a 252-key Hyatt Regency hotel, a 200,000 square feet Furniture City and 2200 parking spots.

Greater Noida is home to a large number of MNC campuses and plants, with a large number of residential projects either already ready, or in the pipeline. However, from a typical shopping centre perspective, it appears to have a relatively weak immediate catchment, especially for a shopping centre of this size.

When Pranay Sinha and Shilpa Malik of Starcentres (the people who had conceived and leased Select Citywalk mall in New Delhi) visited the under-construction project for the first time, they were awed by the scale of the scheme, and its distinctive Venetian architecture, but were also apprehensive due to the lack of an existing, immediate catchment. People wouldn’t, to their mind, choose a shopping destination over others (closer to where they lived), because of its Venetian style or the canals, much as it was superbly impressive. “We did not have a lot of hope, we must confess,” admits Sinha.

The shopping centres embedded in the two mega Venetian style casino hotels “The Venetian”, located in Las Vegas and Macau, have not really succeeded.

Upon deeper reflection, the Starcentres team soon realised that the project did have a few things going for it.  The expressway from Delhi was high speed, and of great quality. Additionally, the site also fell on the Yamuna Expressway (also known as the Taj Corridor). The F1 track was being built feverishly by Jaypee, not too far from the project site. Above all, Sinha and Malik saw a very committed set of owners from India and USA, who were determined to do all that it would take, to make the place succeed.

“That’s when we asked ourselves, what could ensure that people do visit this place?” says Malik. “We looked at a very fundamental but rather sad reality, that  Delhi/NCR gets over 15 million domestic tourists and 3-5 million international visitors per year, yet, the last time an attraction was created for the domestic tourist, was over 50 years ago (Rail Museum, Nehru Planetarium et al).”

Delhi gets the highest number of domestic and international tourists in India. Besides being a gateway to Agra, the Himalayas and Rajasthan, a stopover en route to Golden Temple, Vaishno Devi, Ajmer Sharif, Rishikesh and beyond in the mountains, Corbett, Ranthambore, etc., it is also a new-economy business destination, with large trade fairs, sporting events, fashion weeks etc. To top it all, Delhi is India’s capital, with over 2000 years of history. The Grand Venezia project sat squarely in the Delhi-Agra-Jaipur tourist circuit, and with the new expressways and metro connectivity planned, was a breeze of a drive away for the entire NCR population of over 20 million.

“We had found our solution to making the place work,” says Malik, “we looked at several concepts that would be attractive to tourists and finally homed in upon a modern aquarium, complete with shark tanks, mermaid shows, and perhaps even penguins – we had found our anchor, but we needed more.”

Starcentres simulataneously worked on retail planning and concept/content development. They created various zones (Go India, Go West, Go Global, Go Play, Go Fish, Go Eat and so on) and suitably amended the layouts and circulation.  They created 10 different zones, including a 150,000 square foot Aquaworld Aquarium, Dilli Haat with Foods of India, World Haat with Foods of the World, etc., and put an 80,000 square feet indoor air-conditioned amusement park on top of the mall, with roller coasters and other world-class rides. They connected with travel agents, embassies, government departments, and many of them got on board with even more excitement.  With all of India’s 1.2 billion people now the target, Starcentres had hugely reduced the shopping centre’s dependence on the 5 million strong Noida – Greater Noida poplulation.

Popular brands from Delhi (Big Jo’s, Shakuntalam sarees and Sehgal Brothers), popular national players (Pantaloons and Reliance), popular global brands (UCB, Esprit and Nike), F&B players, all came forward in support. Brands loved the idea of having double-level Venetian mansions, of 3000-5000 square feet each, to showcase themselves to all of India, and not just Delhi.

“We are now running short of space, given the number of players coming forward from each category, and wish we could have a Phase-2 to it as well.” Says Sinha, we hope to start opening it this year itself, given the commitment levels of the Bhasin Group (promoters), Shapoorji (contractors), Arcop (architects) and the professionals from across the world involved in putting this giant together.”

With just five percent of Delhi’s tourists, four visits per year from the SEC-A&B population of Noida and Greater Noida and just one visit per year from the rest of NCR’s SEC-A&B population, Grand Venezia can achieve 13.6 million footfalls per annum, or 37,260 ADFs, thus ensuring its success.

neoHub is a mixed-use development with a GBA of 2.65 million square feet located in Electronics City, Bengaluru, about 12 minutes drive from Koramangala and BTM Layout, 20 minutes from JP Nagar and 25-odd minutes from Brigade Road in Bengaluru’s CBD.  The project comprises neoMall (a retail-cum-entertainment centre of 1.35 million square feet), neoClub (a sports & recreation club of 195,000 square feet), a 130-key Hyatt Place hotel, about 29,000 square feet of small offices and 4150 parking spots. It is the heart of the 185-acre Neotown Bangalore South, Bengaluru’s biggest planned integrated mixed use development, which comprises more than 4500 residential units, over 2000 of which have already been sold.

The 900-acre Electronics City, established in 1978, has 150+ companies, who occupy offices and labs of >23 million square feet, employ over 190,000 professionals and generate about eight percent of India’s IT sector revenues of $88 Billion.  About 29,000 Infosys employees (including its top leadership) and 22,000 Wipro employees work here.

More than 130 residential projects, with over 45,000 residential units, are either complete or under development within a 20 minute drive time. The area is home to 18 educational institutions.  Some of the city’s best schools are located within a 20 minute drive from Neotown. Bengaluru’s largest healthcare facility, Narayana Hrudayalaya Health City, with five hospitals and 3200 beds, is located within 10 minutes.

With a GLA of 1.35 million square feet, neoMall will be the largest shopping centre in Bengaluru and the second largest in the country (after the 1.8 million square feet City Capital Mall in Hyderabad). It was originally planned by Asipac as a 430,000 square feet strip mall targeted at the 340,000 people who work in and around Electronics City. When leasing started in January 2010, the response was fantastic. This led Asipac (and the promoters – Patel Realty) to increase the size of to 720,000 square feet in May 2010. By mid-August, Lifestyle, Spar, Max, Satyam (10-screen cinema), Reliance Trends, Reliance Timeout and Reliance Digital were already on board as anchors.

Soon thereafter, the Government of Karnataka announced some infrastructure projects to improve connectivity to Electronics City. Until October 2009, it took  about 70 minutes to drive from Bengaluru’s CBD to Electronics City.  When a 10-km elevated expressway opened in February 2010, this drive time reduced to about 35 minutes.  The GoK announced that eight underpasses will be constructed between Vellara Junction and Silk Board Junction in three years to make Hosur Road (the highway that connects the CBD to Electronics City) a signal free corridor.  Additionally, the entire stretch would be widened to a minimum of 100 feet. What this meant is that neoMall would become accessible from the CBD within 20 minutes.  Obviously, this was a fantastic development, as this shopping centre would now become closer (in travel time) from the heart of the city than most other upcoming shopping centres.

This led Asipac to think. “It was an opportunity to turn neoMall into not just another mega retail centre, but what could perhaps be Bengaluru’s most popular leisure and entertainment hub,” says Vinay Shenoy, Asipac’s head of leasing and marketing. The GLA was increased to 1.35 million square feet, mainly by the addition of a second “large” department store (now leased to Shoppers Stop), a mega furniture store and several leisure & entertainment attractions (a looping roller coaster, a laser tag / paintball field, a ropes course, an obstacle course, racing car simulators, a flight simulator, an OGOsphere, virtual sky diving, synthetic ice skating, rock climbing and several sports simulators).

The 195,000 square feet neoClub (India’s largest sports & recreation club) was added. The 2.65 million square feet mixed-use project was now named as neoHub. However, the character of the project would remain as an open-air lifestyle centre, instead of becoming an enclosed shopping centre.

“The attractions have been planned keeping in mind that we will not just get families with children, but also need to cater to the team building activities and leisure needs of the huge population of IT professionals who work nearby and are dying for things like these,” says Cressida Smith, Asipac’s leasing manager for neoMall, “even the club has been planned to accommodate 8000 members.”

The (local) architect who was originally selected to design a 430,000 square feet strip mall, could not do justice to this now mega project. A global search was undertaken. We were looking for similar large retail-led open-air projects. On scouting several around the world, we discovered Cabot Circus at Bristol, a two hour train journey from London. “We were amazed – the design of this open air shopping centre was exactly what we had dreamed neoMall’s to be like,” says Smith.

The architects were immediately contacted. London-based Chapman Taylor is the largest retail architecture firm in the world, with 400+ people in offices located in 14 countries, and has designed more than 200 retail & leisure centres in 50+ countries. The firm has won 38 awards in the last three years alone, including 3 from ICSC (International Council of Shopping Centres) and 8 from BCSC/other European shoping centre councils.

The developer and I air-dashed to Bristol. Our visit reconfirmed our belief – now we definitely wanted the very same architect who had designed this shopping centre.  The man – Chapman Taylor’s UK practice head – Adrian Griffiths – had never worked in India and was reluctant. We sold the India growth story to Adrian. By the third week of October, we had a new architectural design from Chapman Taylor – scores of retailers who have seen it have exclaimed that it is the best looking shopping centre in India. Some of the images are printed hereand any reader will immediately realize what I am talking about.

With 14 leisure & entertainment attractions (including an FEC and the 10-screen cinema), neoMall is expected to attract tourists from a 7-8 hour driving distance. The SEC-A&B population of this region (excluding Bengaluru) is about 27 million.  There is no doubt that the working population of Electronics City and surrounding areas will visit neoMall at least once in three weeks, if not more often. If it is also able to attract the rest of Bengaluru’s SEC-A&B population as well as 2.5% of the region’s SEC-A&B population just once a year, neoMall will get 15.77 million annual footfalls, or 43,200 ADFs.

While there are many differences between Grand Venezia and neoMall, there are also many similarities. First, the differences.  Perhaps the main distinction is that the former is an enclosed centre and the latter an open-air lifestyle centre. While neoMall’s primary catchment is wealthier than GV’s, the opposite is true when it comes to the secondary catchment.  neoMall has many more anchor stores compared with Grand Venezia.  neoMall and neoHub have been designed by the world’s leading retail & leisure architects with experience in designing 2000+ such projects, while GV’s architects have done a handful of similar projects.  Lastly, while GV’s GLA is about 1.4 times that of neoHub, it has only 2200 parking spots, compared to 4150 at neoHub.

So, what are the similarities? Even though both will rank amongst the 5-6 largest shopping centres in the country for some time, they are both located at a distance from the heart of their cities. About 22-23% of the GLA of both centres is dedicated to leisure & enterainment, compared to 9-12% in most Indian shopping centres. Both have unique features, which have been very successful in shopping centres abroad, but are being attempted for the first time in India. Both have a Hyatt hotel within the mixed-use complex. Both have been conceived and planned by specialty retail planing firms who have already successfully completed and delivered arguably the best malls in North and South India. What is perhaps most imporant is that both shopping centres are hoping to attract a large number of outstation tourists.

Only time will tell whether these shopping centres will attract the visitors/shoppers that they are targeting, and whether they will succeed. But what is more important is that both centres are taking the next step forward – of being distinctly different from the cookie cutter centres that India has got so used to seeing – 4/5 level enclosed shopping centres with a hypermarket/supermarket on the lower ground floor, a couple of anchors on the upper ground and first floors and a cinema with food court on the top floor.

What really surprises me is that it is not the established mall developers (such as Inorbit, Prestige, DLF and Phoneix) who are taking this step, but first time mall developers. Perhaps the established developers will pick up the cue from here on, or perhaps more first-timers will do more unique projects. Whatever the case, at least Indian consumers will finally get to experience world class shopping & leisure centres which will be refreshingly different from what they have gotten bored of visiting. The best part is that the Indian shopping centre industry has finally come of age.

Posted in Uncategorized | 223 Comments »