How malls are giving themselves a digital makeover in COVID times
COVID-19 so far has turned out to be one of the biggest setbacks for the retail and shopping industries around the globe. With lockdowns imposed in every country for more than 50 days, the industry had almost neared a state of total collapse without any idea of what the future had in store. The uncertainty of the lockdown and pandemic resulted in brands and shopping mall developers trying every possible way out to get back to normalcy as soon as economic activity began. The most common approach to tackle the aftermath of the pandemic, which was adopted by nearly every player in the field, was technology and digitization.
In an attempt to understand the preparations, objectives and parameters of shopping centre businesses in order to thrive in the current pandemic situation and also looking forward to new opportunities and approaches to sail through the phase, the Phygital Retail Convention (PRC) hosted a session titled, ‘How Shopping Centres Can Catalyse Digital Transformation’. Experts from the shopping centre industry discussed how technology can be a boon for malls, if used correctly, adding richness to real life experiences, while providing convenience to consumers.
The highlight of the discussion was how malls can ‘leverage mobile apps to give more power to the digitally driven customers. Creating more personalised shopping mall experiences will ensure that the consumers will be visiting the mall again and again.
The session was moderated by Pushpa Bector, Executive Director, DLF Retail. The panellists included:
Shift Towards the ‘New Normal’
Rating and addressing challenges and opportunities which malls have had to face in this new era of retail, Rajendra Kalkar, President – West, The Phoenix Mills explained, “Every time any disruption happens, it always creates a new wave of innovation. A lot of things have changed in the current scenario – how people socialise, how they go out, how they shop and work. A lot of changes will happen and we as a mall developers are looking to the new life and norms this pandemic has brought us to. There are so many things which retail industry saw in this period ad also prepared themselves accordingly.”
“The pandemic has given us lots of opportunities in past six-nine months but this approach to digitization was not a new move. The whole process started 7-8 years back, when the e-commerce business came in India. Today every retailer understands that to satisfy a customer whether offline or online, one needs to go digital. So, the change has been constant, but it increased by leaps and bound over the last 8-9 months. Many stores transformed themselves into Omnichannel and have been working to improve the customer experience, on both platforms, store and online. But one must not forget that it is not just about making the consumer happy but also to increase sales. From contactless payments to receiving orders and getting them delivered at home or stores, retail players have been trying everything. As a result, Loyalty Programs got a major boost. With digitization, retailers took the entire store to the consumer home, including everything from the inventory to new launches, as people were reluctant to come out of their homes,” said Kumar.
E-Commerce & the Digital Medium
One of the most common technological practices adopted by most retailers was the WhatsApp Chat, which helped them reach out to their customers, who could in turn view products available in store, order on the chat and hence, boost sales. On WhatsApp Chat, retail employees would be able to help consumers at that very time. However, according to Kumar, this idea was not great for mall developers, but mostly served to enable consumers. “From a mall’s point of view, I would want my customer to visit the premises. The idea is to make people not just visit one store but take a look at other stores and amenities as well,” he explained.
Explaining the growth of e-commerce in the last seven months and the threat it is to brick-and mortar stores, Pramod Dwivedi, President Real Estate Division, Ambuja Neotia Group, said, “E-commerce has been impacting store sales for the last 10 years, but I don’t see this as a threat. I believe that mall owners and retailers will have to create a strategy in such a way that they act as a joint force. Aside from this, we need to study and understand changing consumer behaviour – and that is that over 70% consumers are opting to shop online during the pandemic. Data consumption in last five years has gone by 5 times and it will grow exponentially. Our work is to find where the consumer is and evolve in such a way that we have an existence of our own. This a very big opportunity for mall owners and the retailers to evolve.”
Najeeb Kunil, CEO, PPZ (which offers holistic mall management solutions in the retail space with ideas and implementation tuned to maximizing an asset’s potential) agreed saying that the brick-and-mortar space and the experience malls create on the ground is what ultimately goes into creating customer loyalty.
“What we have seen in all the mature markets globally, including India that over the years, is that the penetration of e-commerce has been faster than our growth. But as we all know that brick-and-mortar space is more for the hyper local community. The mall customer base that we have built will effectively never go away. It is not only about e-commerce space taking the larger percentage, but the organised brick-and-mortar space taking a larger portion in the unorganised space in India, so percentage break point of view proves that even our industry goes on faster pace in comparison to the e-commerce. The complacency can hurt us if we do not evolve and emerge with the technology available.”
Digital Consumption: Short Term or Permanent?
No business, no market can stay away from technology today. The pandemic, as per Kalkar, has brought technology innovations to the fore, closer to users. “Some have already adapted to most of the changes, some have initiated this process while there are few who are still looking for new options as per convenience and necessity,” he said.
One great example is the partnership between Middle East malls and noon.com. They offer patrons the convenience from shopping either online or by visiting the mall.
“The combination of technology and brick-and-mortar can work together in this time of co-existence, but this doesn’t mean that technology will be the only one to survive and brick-and-mortar will eventually die. When you have a set a consumers, every individual has a choice along with a set of requirements and they will always be attracted to the channels fulfilling their demands. There will always be some customers who will want to choose multiple platforms for shopping, and we have to find a way to be present in all possible formats keeping the business in mind,” Kalkar explained.
Digitization & the Indian Mallscape
The trend of shopping malls going Omnichannel is not a new one. Many Indian malls had converted much before the pandemic hit. Malls like DLF had also come out with their own apps a fair time ago. The pandemic has simply served to hasten the process.
“Consumers have been changing, their behaviours have been changing, the way of shopping is changing. Even e-commerce models, shops and malls are changing. Every month a new pattern is emerging. The only difference today is that some categories are doing well while others are not in the pandemic. Apparel has suffered greatly, especially since there are no trial rooms. If trials are allowed, I feel people will start buying from stores. Aside from this, I feel that people who are used to using e-commerce don’t care about touch and feel. Their only focus is convenience. While a mall can be digitized on the service and payment front, this is only one aspect of technology. We have to focus on experience as well, because for us, everything entirely depends on service and convenience. Malls must implement digitisation keeping all these parameters in mind,” said Kumar.
FEC & Digitisation
Another sector which has yet to show any signs of recovery is the cinema. There are states which have opened cinemas and multiplexes with 50 percent occupancy but are getting very less footfalls. Apart from this, no big releases are happening, and most movies are being released on the OTT platforms. While this is concerning because preferences of the audiences are clearly changing, Kunil said that he is of the firm opinion that people just want to go and watch movies on the big screen. “In the past one month there have been a few movies which were released on OTT platforms, but most movies didn’t get a good response and that is mostly due to the experience factor. After the lockdown, we have been engaging with the consumers on a regular basis to get feedback on what they are missing in terms of experience and service and the one answer that stood out the most was cinema, closely followed by F&B.”
“If we adopt technology that is available to us, and we are able to able to cater both worlds (physical and digital) to consumers within our environment, I think we have a better edge than the online space. Online space gets restricted to just dump and engage whereas we have a lot more joy which we created by providing a platform to bring in more people together,” he further stated.
Kumar too welcomed opening cinemas, even if it was with 50 percent seating occupancy and social distancing measures. “I don’t think 50 percent of the capacity for cinemas is a problem if the content is good. There are consumers who are still not comfortable to go in a crowd or a place that is full. They would certainly want to go for movies on weekdays rather than over the weekend, so actually 50 percent seating capacity will be more convenient to them,” he said.
Cloud Kitchen: A Threat to Restaurants in Malls
Another major trend which was witnessed in lockdown was the rise in demand of Cloud Kitchen and delivery service apps for ordering food. Talking about the downfall in footfall and business of restaurants in malls, Dwivedi said, “I would not agree with this thought process that Cloud Kitchen will mark the downfall of restaurant industry. In this period, Cloud Kitchens are certainly doing well but if we see the performance of restaurants over the last two months, they have really picked up, reaching the level of pre-COVID sales. I think it is only for a matter of time now. Yes, people are ordering more today, but the habit of being accustomed to a beautiful ambience, experience and service in a restaurant is not going to go. The scheme of things the way I look will be the same. There will good cloud kitchens and bad too and same goes for restaurants too. Those who are completely focused on the product quality and service will have a better run than those who are focused on just expansion.”
Technology: The Way Forward
“At Phoenix, we are very seriously looking at technology, all set to introduce new benchmarks for technological innovations in the coming months. We have to ensure that we keep up with our peers. However, when we are building a platform, we must remember a few things, the most important being that humans are social animals, they need variety and experience and these last 10 months have been hard. Today, we need digital intervention – technology is like a sixth sense for us now. The mall app is just one part of this sixth sense,” stated Kalkar.
Brands like DLF have introduced more in addition to their app and services. One such service is the ‘Lukout Closet’, the feature which helps brands put their new looks out for the consumer via app.
“The consumer in the mall can browse through the LukBook to see new launches, collections etc and can go straight to the store to purchase them. “It’s very interactive. Consumers can check out collections, make a WhatsApp call from the LukBook itself and speak to the retail employee at the store. Technology helps us help the consumer as well as increase our sales,” said Bector.
Despite the economy opening up, there are some states which have still not given a green signal to open everything inside malls, including F&B and even takeaway in some cases. This has been a big setback for the industry according to Kumar, as F&B is one of the biggest footfall drivers for malls. In many malls, a lot of brands have opened counters on the ground floor where consumers can come and pick up food, but that’s not helping much.
While there has been a spike in the sale of digital equipment and gadgets – especially mobiles and laptops, there are other categories which have yet to pick up.
“Formalwear and ethnicwear are categories which area suffering. On the other hand, sportswear and home appliances are doing well. Accessories and gifting are slowly picking up, as is food and footwear. Despite the number of cases, the fear of COVID has been declining and we are hoping footfalls – which reached 30 percent for us by October 2020 – will pick up further as will sales which reached to 60 percent of pre-COVID levels by October 2020,” said Kumar.
Key Points of Concern
· F&B, one of the largest crowd pullers is still not 100 percent operational
· The Entertainment Zone including cinemas are still not functional
· People have lost jobs and hence there is a large section of the population, which is only into essential buying, and spending very less
· Malls are safe but till they are not allowed to open for a longer duration, sales and footfalls will remain impacted. For now, malls are being asked to close at 7 pm.