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Reasons behind the Failure of Malls

By : Kingshuk Mukherjee
Malls as we understand, is a form of organized retailing. They lend an ideal shopping
experience with an amalgamation of product, service and entertainment.

The story of great Indian mall boom started from the emergence of Gurgaon, an industrial
suburb of Delhi. In a development that surprised many town planners, Gurgaon transformed
itself overnight by first housing the headquarters of many multinational corporations and
banks, and then calling itself the "shopping-mall capital of India".

Then to join the bandwagon was Rajouri Garden with a number of world class malls coming
up within a short duration of time. But this Mall Clutter led to a gradual & continuing downfall
of some of the malls in Delhi which was accelerated by the economic recession affecting the
world with India & specifically Delhi as no exception to this impact. But that is a broader
picture; we will specifically talk about the failure of some shopping malls & big retail concepts
in Delhi. In spite of big brand names existing in those malls & good location, why these malls
failed? What can be the possible reasons?

On the basis of Market research & analysis, it can be inferred that the most important factor in
the failure of these malls is the mismatch of the brand & the consumer. The brands
selected for the mall should be consistent with the kind of demographic profile of that region
or location.

Now it is very difficult to attract the brands first before deciding or finalizing on the location of
the mall & without proper specification & layout of the entire real estate. So, the better & most
logical approach is to finalize the location first & then attract suitable brands very carefully. It
is very important to keep the consumer or client profile of that region in mind. The brands
should be in accordance with the type of customers in that region because they form the
majority of the footfalls. So in order to understand the client profile, their psychology, decision
making criteria, buying behavior, tastes & preferences & motivations or driving force behind
purchase decision should be carefully examined & inferred. For example, if the consumers of
that region are observed over time to have spent more on food than clothing, then a few good
restaurants & fast food corners are a must for the success of that mall.

A research was carried out in the region Shalimar Bagh in North-West Delhi, where a Mall
called Shoppin' Park resulted in a complete failure because from survey it is established that
the majority of the population prefer to spend more on food & they prefer to shop Apparel
from local markets & approximately 30% of the population as found to be fashion conscious.
The remaining population is not bothered about the brand name or the values associated with
the brand. They lacked motivation to buy Branded apparels.

Another example can be the failure of Spencer's store in Ring Road Mall in Rohini, where in
spite of an excellent store in terms of ambience & assortment mix, the store is failing to attract
customers.

Moreover, the presence of a strong Anchor store is also a very critical factor in determining
the success of that mall. Strong brands like Pantaloons & Shoppers Stop acts as a pillar to
protect the brand. They attract the majority of the customer through their brand names & it
results in the increase of footfalls in the malls & thereby generating more sales to other stores
also.

SHOPPIN' PARK witnessed the downfall of "Indiabulls" as a retail store & hence the entire
mall crumbled down.

Adding to the woes is the rising prices of real estates. The real estate developers interests are
not matching with the retailers interests as the retailers are paying heavy rentals on real
estate & their monthly sales is not covering their rentals for months in continuation.
So the picture depicted for future of the Mall Culture is that the competition is fierce among
the malls to survive & only those malls will survive which will successfully go through a
detailed research on the consumer decision making process of those regions in particular.
This means taking a microscopic view of the consumer behavior including the study of
consumer psychology & studying their tastes & preferences & the factors which can influence
their buying behavior in a positive direction.

The idea is to add a regional touch to the malls keeping in mind the regional variations
in buying behavior of the target consumers.

About the Author

The author is Course Coordinator for Fashion Management Studies at JD Institute of Fashion
Technology.

Turning data into information for intelligent retailing

By : Alan Morris
Every business needs to gather information and to make informed decisions based upon it.
In-house systems can provide an operational insight from the data they produce if this can be
consolidated, analysed and presented in the way that the business needs.

If data can then be turned into meaningful information, it can highlight areas of success and
failure, and reveal whether the business has its supply and demand in balance. Most
importantly, the right information can reveal where improvements can, and need to, be made.

Our experience of working with retailers reveals that they fall into two camps: those who
require only top-level detail, and those who want to know the DNA of everyone and everything
that makes up the business.

Some retailers are highly season-driven and others run with more stable stock lines.
Differences apart, they are united by the need for flexibility and responsiveness and by the
imperative to understand their business and react to change appropriately.

Getting information right is a challenge. Businesses invariably generate too much or too little.
The starting point should be some corporate soul-searching. Retailers need to define what
type of business they are and what they need to know about themselves. Having established
their wants and needs (not an easy task, as business functions and IT often work to different
agendas), only then can they build a consensus view of what is required.

Whilst Business Intelligence represents the only reliable basis upon which to make decisions,
(provided it is reacted to and used effectively), expectations need to be realistic. Just as
systems dont make a bad retailer good, the right business information will not be generated if
the business doesnt know where it is going.

Todays systems can create a wealth of data, but this will only become meaningful information
if it is aligned with the processes that the business has erected to support its key performance
indicators. We often come across a lack of clarity at all these levels: the KPIs, the processes
to support them, and the information to report on them.

So how does data turn into information, and then into Business Intelligence? Retailers often
believe that they have the tools they need to produce Business Intelligence, whereas in fact
they are simply generating data. In-house applications such as supply chain and
merchandising may accurately record point-of-sale transactions and stock movements, but
this is not enough.

Where a number of systems are operated, each will independently produce reports. To get a
true picture of the business, its important to integrate different data sources and consolidate
the data and reports that each produces, at the same time filtering out unwanted elements.
Retailers seem to be at one of three stages of development. The first is where each function
relies upon a plethora of paper-based reports and spreadsheets that have evolved over time.
Often build to meet specific needs, they rarely keep pace with the business. Their flexibility is
their downfall and they can be the source of disconnects and misunderstandings as
individuals model data differently and arrive at different answers.

At a more sophisticated level, the retailer may have created interfaces from In-house systems
to external Business Intelligence products, based on data extraction. Whilst this is an
improvement on the spreadsheet and paper-based model, system interfacing can absorb
management time and create confusion.

The third and most desirable stage is to embed Business Intelligence as an integrated and
universal function. This enables users to gain reliable data directly from their mainstream
applications.

Under this scenario, disparate data sources are brought together and programmed to produce
a true snapshot of business performance, across the piece. By eliminating data fragmentation
and providing answers based on correlation, cross-referencing and number-crunching in a
way that no human can, Business Intelligence offers clear pointers to performance
improvement in a quick and easy way.

About the Author:

Alan Morris is Managing Director of retail-only solutions and service provider, Retail Assist.
He can be contacted at alan.morris@retail-assist.co.uk