Affordable luxury -- the words roll off beautifully, but it is one of the most difficult business concepts to execute. A mall developer perhaps makes the most practical and realistic attempt with its design made to entice the rich, yet trying to cater to as wide a spending range as possible.
Till the early 2000s, malls developed in our country did not have multiplexes as regulations did not allow these and the owners too missed the potential.
Chandigarh's new property, the Rs 1,800-crore Elante Mall, however, has eight screens and a gaming hall, as it attempts to make tricity residents go wow. It brings us brands hitherto unknown to the region, the much-hyped USP.
"Chandigarh has little of the urban chaos characteristic of the country. We bought a dispute-free 20 acres from Pfizer and have provided for amenities, particularly ample parking space," says Awadh Vashishta, chief operating officer, L&T Realty, the owner-developer of the 8 lakh feet mall. The company will recover its investment in 7-8 years, depending on the business environment.
There is now less pressure (traders say a slump in business) on resources in Sector 17. The super-rich have also stopped visiting Delhi on weekends for their shopping high.
The average footfall of 15,000 ensures that tenants are doing well enough, though without making a profit yet.
'Making entertainment shoppable' guides an Elante retailer in wooing today's spenders. His operational cost, including an average rent of Rs 300 per sq ft for a 1,000 sq ft store, comes to approximately 6 lakh a month, which means he needs a daily turnover of at least Rs 30,000. Residents need to spend around Rs 70 crore a month at the mall to make it worthwhile, something that will need aggressive marketing and vigorous attempts to increase footfall.
One of the first steps should be to provide free water and get stairs, both hospitality prerequisites and easily affordable.
It is paradoxical that even as businesses invest in malls, internet shopping has increased in popularity. It is either shopping at the luxury malls or just plain click-of-a-button gratification for the average tricity resident. The daily grind of shopping seems increasingly remote and undesirable.
What I am unsure about is whether the business model of charging rentals in malls can work in the tricity 25-30 years ahead. Movement to revenue-sharing models might be an option.
Demographics will matter. The much-touted young India will not remain as youthful as people marry older and have fewer children.
As the Chandigarh resident (not including migrants) grows older, there will also be more competition to the mall model from online shopping.
When the government is intent on creating manufacturing jobs, especially scarce in the north, it seems unlikely that a service- and retail-dependent mall can alter the dynamics. Of course, a mall represents progress but, as a pure business model, exploration of more possibilities is in order.
However, for now, the Elante has hedged its risk by developing a business hotel (under construction) and an office complex at a stone's throw. This is an attempt to ensure that it can withstand the periodic slumps that plague organised retail.