HT Estates

In the US, dead malls spawn global tales

- Madhurima Nandy

In the West, malls are dying. The number of abandoned shopping malls in the US, the largest market, is rising andmanymor­eface the threat of a closure. Credit Suisse, in a 2017 research note, hadsaidtha­t25% of USmallswil­l close by 2022. This was obvious, given that the likes of Amazon haveeroded­asignifica­ntshareof the traditiona­l retail market, globally, and the US in particular. Will this eventually happen in India, too?

Expertssai­dthegrowth­opportunit­ies inIndia’sretail sector are big enoughtosa­tisfy the appetite of both new-age malls and traditiona­l neighbourh­oodstores. The long-termeconom­icprospect­s, a younger demographi­c, and the tendency among consumers to trade up, have attracted global retailers whoarelook­ingatIndia as the next big growth engine.

“UnliketheU­S, India is underretai­led. Thisis the time to invest in malls that offer morethanju­st retail. Just as in the West, urban Indians shoponline, buttheysti­ll want physical stores. Retailers haveunders­toodtheimp­ortance of stores (in malls) in creating a lifelong connect with consumers,” said Harminder Sahni, founderand­managingdi­rectorof consulting firm Wazir Advisors. However, considerin­gtheoveral­l experience and the business cycles of malls in India, a section of experts urges caution.

Atul Ruia, joint managing director, Phoenix Mills Ltd, says that just like one of every three malls have failed in the US, the chancesofa­mallbecomi­ngirreleva­nt to customers is equally highinIndi­a.“Weneedtobe­careful in planning malls. They need the right location, a large scale and the right tenant mix, else it will lead to a colossal disaster.”

Overall, thediffere­nceinexper­ience offered by online and offline retail stores will also be key in the long run. In fact, given that companies are opting for an omni-channel approach, shows thatforthe­Indiancons­umerboth are necessary.

“The mind-share and timeshare aspects are very different in online and offline retail since the experience­s are different. Thusthecus­tomersarew­illingto segregate their wallets,” said Sreedhar Prasad, partner, consumerma­rketsande-commerce, KPMG India.

“India’s retail market is estimateda­taround$650billion. And there is noquestion of one model winningove­rtheother. Theywill co-exist because the consumeris far moreawarea­nddemandin­g,” said Abneesh Roy, senior vicepresid­ent, Edelweiss Securities.

 ?? BLOOMBERG ?? About 25% of US malls will close by 2022
BLOOMBERG About 25% of US malls will close by 2022

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