HT Estates

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

- Anuj Kejriwal, letters@hindustant­imes.com The author is MD & CEO – ANAROCK Retail Madhurima Nandy madhurima. n@ htlive. com

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.

CONCLUSION

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.”

 ?? WIKIMEDIA COMMONS ?? Kochi’s Lulu Internatio­nal mall ranks among the largest malls in India
WIKIMEDIA COMMONS Kochi’s Lulu Internatio­nal mall ranks among the largest malls in India

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