How shopping centres can analyse market & consumer trends
The pandemic period has been a testing time for retailers and the mall developers not only from the business, revenue and footfalls perspective but from consumer behavior as well. Due to COVID-19, the industry is witnessing a series of changes and trends on regular intervals and there is no pattern on which one can rely upon. Shopping mall developers and retailers are still figuring out to analyze the market and consumer trends as they look forward towards revival of the industry. The most common approach to tackle the aftermath of the pandemic, which was adopted by nearly every player in the field, was technology and digitalization.
In an attempt to understand the consumer trends and the market analysis, the Phygital Retail Convention (PRC) hosted a session titled ‘How To Analyse Market & Consumer Trends?’ from the shopping mall developers perspective. The idea of the discussion was to find the impact and approach of tenants and consumers towards the shopping mall in coming months.
The session was moderated by Sanjeev Mehra, VP, Quest Properties. The other panelists included:
- Shibu Philips, Business Head-Malls, LuLu International Shopping Malls
- Sunil Shroff, Head – Property Management (Malls), Lakeshore
- Yogeshwar Sharma, CEO & ED, Select Infrastructure
- Manoj K. Agarwal, Former CEO – Malls, Sheth Developers & Realtors, Viviana Malls
- Benu Sehgal, Former CEO, Freeport Retail India
How Mall Developers Reacted to the Lockdown
The shutdown was an absolute bloodbath situation for us. We, being service providers, were unable to provide services to retailers, consumers and neither to the property holders. The question and the situation here was to save life or livelihood – Benu Sehgal.
It was the most shocking incident for the industry as the time period of the lockdown was not known. The industry had never been closed down for such a long period and the situation was quite bad – Sunil Shroff.
When the announcement of lockdown was made, the first thing which came in the mind was the safety of everyone. The second thought was that of the hardship which the industry will have to face due to the shutdown. We thought of initiating a quick plan to handle various things, which included shutting down the mall, controlling the number of employees, security and other aspects with limited manpower – Manoj K. Agarwal.
In January and February, we took it very lightly and were not serious about it. The first reaction was denial as it was a very chaotic situation for all of us. Then there was rental issue which plagued us. The second reaction was that of shock but slowly we adjusted to the situation – Yogeshwar Sharma.
It was really shocking for us and the most important thing in our minds was when the mall reopened, what were the challenges which we all were going to face. We were not sure how retailers were going to perform, when the customers are going to come back to malls, and we didn’t even know then how we were going to service the customers – Sanjeev Mehra.
Change in Consumer Behaviour & New Trends
The lockdown caused uncertainty and complete confusion, with mall developers clueless on when their establishments would reopen and, what were the government directions that they would have to follow and how shoppers behave, what they buy.
Highlighting the analysis from the first phase of Unlock, Yogeshwar Sharma, CEO & ED, Select Infrastructure, recalls, “The first lockdown got over on April 15. Taking the learning from that situation, we had a meeting to analyze and discuss the next step. One idea was that there would be a steep rise in the revenge shopping, and we should be prepared to manage the queues. The second theory was that there is a situation of fear and chaos all around and nobody will come at all. There were case studies and examples from China of revenge buying and we too also wanted to be ready for a similar situation. However, on the other side, we also didn’t want to rush into things and were wondering whether we should move ahead in a more conservative fashion. Finally, we decided to order queue managers only if we got permission to re-open and people returned for shopping and after observing consumer behaviour.”
Sunil Shroff, Head – Property Management (Malls), Lakeshore added to this, saying, “We started our first mall in Gurgaon in February and had to shut it down in March and we actually didn’t know what to do really since this was a brand new project. To start a new mall and then shut it down for an unknown period was a challenging situation to say the least. At that time, we had a few very retailers in the mall as most shops were in the fit-out phase. The fit outs work were pending, and due to the migration of workers, there was a huge shortage of manpower. However, we kept communicating with retailers and we looked forward to creating a communication with the consumers as well. The situation was chaotic, but we were hopeful that the industry would re-open soon and we would get back the shoppers in the mall along with the new retailers.”
For Viviana Mall, the task was more challenging as Maharashtra was a COVID hotspot. Manoj K. Agarwal, CEO – Malls, Sheth Developers & Realtors, Viviana Malls says, “When we were reviewing the situation in April, the first thing which we did was to put up an elaborate grid, and start working together via phone calls and WhatsApp. There was no fixed timeline on when malls would be allowed to reopen, so we decided to be very cautious in executing our plans. Our first few initiatives included communication with retailers and consumers and that could only happen via digital connect. We connected with consumers via digital and social media platforms and also took their feedback so we as a mall could analyse their approach towards their visit to shopping malls in the coming days.”
Shibu Philips, Business Head-Malls, LuLu International Shopping Malls took a different approach. “As a mall, we had to shut down like everyone else, but LuLu being a hypermarket too, we opened the next day itself. We were working normally, going to office, and were getting 8,000 customers on daily basis. The Kerala government allowed us to open restaurants for deliveries and takeaways in the next phase in April. In the third phase, we were allowed to open on Sundays and other consumer stores such as electronics, mobile shops and bookstores also got the green signal to open. We did observe a series of changes in shopping behavior of consumers. Apart from essentials, there were some categories which picked up very surprisingly.”
“We observed that retailers who had a good consumer connect program, robust e-commerce platforms and a functional management system benefitted from this situation. Others, including local FMCG brands tied up with delivery aggregators to stay relevant to consumers. They started doing WhatsApp and telephonic marketing thereby reaching more people and establishing a good, digital consumer connect program,” he added.
Impact & Consequences
However, Philips said that malls had to bear major consequences both during the lockdown and unlock phases. “Customers were too scared to come out of their homes. As soon as lockdown was announced, we realised that though the hypermarkets will remain open, consumers will not be coming to us as they did in the normal days. The hypermarkets of LuLu are predominately a brick-and-mortar model and therefore we needed to do something to take the service to the homes of the consumer. We started doing around 4,000 deliveries a day from the usual quota of 100 deliveries per day. We created apps, connected consumers on the digital platform and delivered the goods to their homes in large number,” he explained.
Benu Sehgal, Former CEO, Freeport Retail India took over, talking about the setbacks they had suffered when developing Freeport due to COVID. “We started the freeport structure in the month of October. The freeport structure is such that it is a better suit model where we pledged rental to the developers. Here, the rentals are based on time, and our projections are built accordingly. Our projections with the developers are quite simple, if they build a property for us, we assure them the business/rentals for a period of two years at a time. We signed two properties and were about to make the payment when COVID happened. We lost two key spots (in Hyderabad and Bangalore) due to COVID,” she says.
According to Sanjeev Mehra, VP, Quest Properties all malls were facing similar situations of re-negotiating rentals and wondering where money was going to come from. “We made stimulations on how sales would be happening during the time of re-opening. We were already engaging with all our retailers on what the market trends would be in the coming months. The key focus was on the change in consumer buying habits and how much will it sell in the coming months. We took the last three years data and worked it on various segments related to footfalls, conversion rates etc. We were very skeptical and believed that there has to be a similar pattern of how people will behave, after the reopening of malls. We believed that the sales initially will be very less say 25 percent and month on month it will go higher. As if now, we are back to 60 percent y-o-y monthly average business.”
Trends & Ideas: Current Scenario Week on Week
Viviana Malls reopened in the month of September, 2020. “The footfalls were 20-25 percent and the sales around 50-55 percent depending on the areas and format which we are allowed at that time. We had continuous connecting sessions with the retailers. We spend time on training employees on various models, conducted webinars and other promotional programs,” says Agarwal.
“The higher footfalls we have got so far in all these months is 24,000. The average footfall has been close to 18,000 and the highest car count we got in a day was 5,000. We used to relate the ratio between the car counts to footfalls as 1: 10. Currently, we are getting a footfall of 18,000 and the car count of 4000. Our sales reach is equal to 70,000 people today which means the sales which is happening currently in our mall is equivalent to a footfall of 70,000 people. The outperformer in this category is the consumer electronic goods due to the online schooling and work from home. The September month figures for the men’s category was 65 percent, footwear 63, womenswear 67percent, perfumes are 63 percent, sportswear which was very high in the initial month is down to 55 percent and mobiles have picked up to 79 percent from pre-COVID sales. The departmental stores are trading at 55 percent. Even the sales at the food court have also started to rise. Restaurants have started doing around 70 percent of the business. Therefore, we can say customers are finally coming back to the malls and are shopping,” stated Philips.
Sunil Shroff touched upon the crisis of less manpower and labour saying, “The shortage of manpower impacted our mall. The anchor store was the one to get back on track first and today we are closed to 43 percent occupied and the cinema is also ready. In the coming weeks, we hope to reach to 72 percent occupancy levels. The supermarket was operational thorough out the COVID outbreak which helped us in keeping communication window open with the consumers along with the digital initiatives introduced by us,” said Shroff.
“For Select CITYWALK, we have been witnessing 15,000 footfalls on weekdays and it increases to 22,000-25,000 on weekends. In the food court, due to the social distancing norms, we had to reduce the seating. We have reached 33 percent of the previous year numbers and the mall is doing 65 percent of trends. The fitness centres are now allowed to open so that is one of the anchor format for our mall which will bring in more footfalls,” added Sharma.
New Business Model
The panel also discussed the variants of the new business model which has come into play due to the pandemic.
- How are the malls going to deal and support the retailers?
- What are the categories witnessing maximum stretch, mainly FEC?
- How do the malls expect to see the trends in coming months?
- How to evaluate and implement new points for recovery?
Sharma explained: “The first factor is transparency. Every business model has to be reworked around the principles of transparency. There were many cases of people taking benefit of the situation. The second factor is the agility and third being the reasonability.”
“We still haven’t billed rent to the retailers and neither have a clear stand on how the billing of rentals will happen. We are waiting and watching. We have given them a rebate but haven’t spoken of a particular date on when we can restart the 100 percent billing cycle. Retailers are coming back and are doing well on the business front. So far they have been supportive in paying the CAM. We are keeping tabs on their businesses and have observed that the category business is going up. We have also changed the entire FEC model and have invested crores of rupees in implementing the new approach in this segment during this period. So, I can safely say that things have changed a lot over the last few months,” he added.
Technology: The Game Changer
The COVID period has been a boon for technology and digital solutions. As Agarwal explains, “On the technology front, I would say all the malls currently are evaluating various technologies solutions, but the last five to six months have accelerated the thought process and most people have adopted various technology solutions. The Occupancy Indictor leads the race in this section, used for the entry and monitoring the movement of consumers in the mall. Contactless Ordering is another technology solution which is in demand, a new norm. Using of Social Media Platforms in the form of digital marketing is another important tool which has proved vital to operations as have solutions like WhatsApp calling to interact with the customers. The Loyalty Programs are also tech driven these days. Finally, I think Artificial Intelligence is extremely important because it ultimately runs the system.”
“Apart from technology and digital initiatives, the other learning is from the designing prospect. In the coming months, we will see mall developers re-designing major essential services into contactless services. Also, converting the mall into an e-commerce platform is a basic need now,” says Philips.
“Customers and their dependency on technology is also a big factor that malls need to cater to today. Smartphones are going to be cheaper and the COVID scenario has converted consumers into tech-savvy shoppers. The physical touch of retail is now almost certainly going to convert into the ‘tech-touch’ in the current scenario and will stay so for the foreseeable future. So, malls need to go digital,” says Shroff.
SCAI to Engage the Government
The government announced heavy relief packages for SMEs and MSMEs in the country, but the retail fraternity believes that the industry didn’t receive the help which they should have got in this critical period.
“Overall, it is not an encouraging picture as far as the economy is concerned. Revenue has been falling in the last few years. There are many so many challenges and we expected some sort of support on larger issues – like loans, by way of restructuring and reducing the interest rates, moratoriums to reduce pain points. The state government should support us by reducing property taxes which can help us tide through this period. They should also subsidize electricity,” says Agarwal.
According to Philips, malls in Kerala got some on electricity from the state government along with rebate in property taxes as well. “We were talking with the government not shut down malls but to tell us how to manage the situation, even if the number of cases were on the rise in the state. As a shopping centre body (SCAI – Shopping Centres Association of India), we must be in direct conversation with the government. We are directly providing income and jobs to the lower middle class and the government must understand and acknowledge that.”
“SCAI involvement and taking up a stand has been a great achievement at regional level and national level, which has helped most of us in getting attention of the respective authority. We have been creating employment for a certain percent of the society, generating taxable income and revenue for the entire cycle. This should continue and be more focused,” concluded Shroff.