Piramal Capital Indian malls take the technology plans third-party route to woo customers REIT platform
A classic example of creating a differentiated experience for consumers is seen in Kochi’s Lulu International mall, which uses advanced technologies Automatic Number Plate Recognition (ANPR), geofencing and digital beacon technology to engage with visito
The e-commerce revolution and the upsurge in digital technologies are fundamentally transforming shoppers’ expectations. This is transformation also has a major bearing on the function of brick-and-mortar stores, which now need to render more useful and entertaining customer experiences. As trends advance globally, mall operators are forced to rethink and re-strategize as to how they must design, enable and operate their physical stores.
THE ADVENT OF ‘SMART’ STORES
In today’s digital era, physical stores are getting ‘smarter’ by using technologies like robotic intelligence, analytical data and consumer-centric platforms such as Augmented Reality (AR) or Virtual Reality (VR) to attract customers and give them an impactful experience.
By uniting conventional methods with key success elements of the digital ethos, brickand-mortar retailers, in fact, have an advantage over e-commerce, as they can offer mall visitors an experience that vastly surpasses that of online shopping. Information technology can be effectively used to tap into tech-savvy consumers’ predilections with appropriate tech-enabled in-shop ‘responses’.
Numbers suggest that consumer expenditure in India will rise to US$ 3,600 billion by 2020 from US$ 1,595 billion in 2016.
If mall operators and the retailer tenants get their strategy right, they are definitely poised for retaining and adding customers. Today, a tech-ena- bled retail environment equals repeat visits, increased footfalls and higher sales.
TECH ADOPTION DONE RIGHT
A classic example of creating a differentiated experience for consumers is seen in Kochi’s Lulu International mall, which numbers among the largest malls in India. This mall uses advanced technologies Automatic NumberPlateRecognition (ANPR), geo-fencing and digital beacon technology to engage with mall visitors and inform them of the latest promotional activities and deals available in the mall.
Consumer-centric tech platforms like AI (artificial intelligence), AR (augmented reality) andVR(virtual reality) addsimilar value by enabling personalized and engaging experiences. These technologies help in building malls’ connection with consumers via product visualization, behaviour analyses, communication with customers, creating real-time merchandising, marketing, advertising, and promotional opportunities.
Increasing demandforexperiential retail coupled with the stores’ ability to be different is, in a way, fueling demand for new technologies. In fact, we may soon start seeing holograms being used in malls, in place of the traditional promotional standees and flex boards. With the right kind of technology, holograms can even go from being mere static visuals to interactive ones.
RETAIL ON THE INFORMATION HIGHWAY
Already, we have at our disposal varied digital communication tools, frombots like KikBotShop and WeChat to voice-activated AI agents like Google Now and Amazon’s Alexa. Mall operators and tenants need to leverage these personalized digital ecologies when shoppers are either in or away from their centres.
For instance, DLF Cyber Hub offers a unique AI-based ‘Phygital’ experience with Huber, a virtual concierge, Shoppers can talk to Huber to find out about the next event, navigate through physical space while adding to the ‘discoverability’ of available brands and experiences, reserve a table, check out menus, etc. During the conversation, Huber gets to know about the customer and can make personalized recommendations.
Also, with shoppers’ mobile devices connecting to the mall’s Wi-Fi network, a new channel of communication has opened between the mall operator, retailer andcustomers. This ave- nue gives shoppers relevant information right from where to park the car to various offers and enticements like discounts. This makes the shopping experience more personal, convenient and enjoyable.
Interestingly, today’s techsavvy consumers are now open to sharing some personal data via digital interaction. According to Accenture, more than 50% of consumers are willing to divulge personal information in return for more customized offers.
The retail world today is nothing short of an ongoing war of sorts - the war to win customers over from the competition and to retain them.
As can be expected in any war, there will be victors and losers; and in the case of technology adoption, it is nolonger about the in-store use of innovative technologies.
While the dominance of technology is explicitly seen across modern brick- and- mortar stores, the winners will be those who can strike a balance across multiple platforms and create an omni-channel for tech-savvy consumers.
Mall operators and retailers who are agile enough to adapt and navigate their way through these changes will continue to grow and thrive.
And as we have seen in many other real estate verticals, players who are unable to overcome their change resistance (and make the necessary investments in technology) will eventually lose out. BENGALURU: Piramal Capital & Housing Finance plans to set up an aggregated platform comprising a portfolio of rent-generating, commercial office properties that could be listed through a real estate investment trust (REIT).
The rationale is that while there are a number of goodquality office assets developed by mid- sized developers, not everyone has the critical mass (in terms of portfolio size) to do a REIT on their own.
“Piramal will act as a sponsor to the platform and earn a management fee as a service provider,” said managing director Khushru Jijina. “As a third-party REIT, the valuation should be high. We will be ready to launch it next year. This adds to the bouquet of services I offer and gives me a significant fee income.”
It’s early days, but Piramal is targeting an enterprise valuation of ₹ 3,000 crore on listing, Jijina said.
Separately, Piramal Capital is also planning to aggregate non-real estate, rent-generating assets, across sectors such as road or logistics, under a platform and may l i st it through an infrastructure investment trust (InvIT).
REITs are listed entities that primarily invest in leased office and retail assets, allowing developers to raise funds by selling completed buildings to investors.
Norms for both REITs and InvITs were notified in September 2014.
Piramal Capital & Housing Finance has lent around ₹5,000 crore in construction finance to commercial office projects and another ₹ 5,000 crore in lease rental discounting (LRD). The LRD model of financing is a longer-term funding, where the project becomes rent-generating and developers repay from those lease rentals.
As of March 2018, Piramal had ₹ 48,000 crore of assets under management (AUM), of which ₹ 37,000 crore is in real estate and its relatively young housing finance business. The remaining ₹11,000 crore is from non- real estate business, including emerging corporate lending and lending arm Corporate Finance Group.
“An aggregated REIT platform makes sense because there are developers, who may not be able to do a REIT listing on their own, and it’ll be a good opportunity for them to align it through Piramal. If Piramal buys some of these assets, developers could even sell off part of their portfolio to get cash liquidity,” said Bijay Agarwal, managing director, Salarpuria Sattva Group, a Bengaluru- based developer that is building substantial office space in Hyderabad. It has also partnered with global investor Blackstone Group Lp for a couple of its office projects.
Despite the overall slowdown in real estate, the commercial office sector has fared significantly better.
Yet, Embassy Office Parks, the first to register a REIT with the stock market regulator last year, has delayed its application for a listing to August.
Shashank Jain, partner, transaction services, PwC India, said while the plan is worth evaluating, there would be challenges.
“For a REIT, especially an aggregated one, the quality of assets would be key along with the size of the portfolio and the tenant profile,” Jain said. “While we haven’t seen a REIT listing yet in India, there are plenty of mid- market office assets but aggregation will take its time.”