‘Bubble burst impending; pricing to be deciding factor’
Consultant Arvind Kochar recently conducted research on the malls in Gurgaon. He speaks at length about the good, bad and the probable bubble burst of the ‘City of Malls’. Himabindu Reddy reportsgurgaon Updated: Jul 21, 2013 03:17 IST
Consultant Arvind Kochar recently conducted research on the malls in Gurgaon. He speaks at length about the good, bad and the probable bubble burst of the ‘City of Malls’.
Gurgaon began to evolve into a City of Malls between 2001 and 2003. What made malls come up here in such large numbers?
It all started when Gurgaon was set up as a National Capital Region (NCR) town. Property and land were available at cheap rates. The location of the city, too, was of strategic importance. This made people from Delhi, Chandigarh, Jaipur, Noida and Ghaziabad come to Gurgaon just to see its upcoming malls. The IT industry was booming as well and many migrants flocked to the city.
There been no new mall in the last five years? Has the market fizzled out?
There are two reasons for this trend. First, the expensive pricing structure in the malls has to be seriously altered. With people in Gurgaon being well-travelled, they know the global rates of international brands. Moreover, when it comes to international brands, the prices are hiked as compared with the actual global rates.
I was at a mall on MG Road, where an international brand store was selling a T-shirt of $50 for $100. After a point of time, people prefer to shop from high-street stores and not from malls. And second, because of this, malls are in dire need for consumer product stores for them to run successfully. With branded chain stores not doing too well, utility stores and food joints are the only saviour for a mall to run. But again, repetition will not attract consumers.
What is the reason for the low occupancy at several malls?
In most cases, the mall owners have sold the spaces and have kept a few with the hope of selling them at a premium rate. The rentals in Gurgaon are very high and as the area grows, the rentals increase. This has made many shy away from this mode of business. Also, there is too much supply but very less demand.
Have the recent safety issues decreased the footfall at the malls?
Yes, this is a reason. Gurgaon used to be very safe even a few years ago. We could watch movies till late night. But after the Sahara Mall incidents, there has been a sort of fear. The mall business has been affected severely due to this.
Do you think the bubble of the ‘City of Malls’ will burst very soon?
There is severe competition in Gurgaon as it is home to more than 20 malls. People are well-travelled and highly brand conscious. The infrastructure has to be attended to. Creating a mall is easy, but maintaining it is difficult.