Mill to Mall: Rising from the ashes!

In the late nineties India’s first mall, Crossroads opened within a distance of five kilometers with fanfare where the mill premises in Parel, Mumbai was struggling to become a shopping and entertainment centre. The textile manufacturing business dwindled with time after going through its revolution in the early seventies and it was time to realize returns by deploying the factory space for retailing. The mill-turned-mall had a bowling alley when the sport was very new to Indian customers. The game was introduced to many neighbouring offices as a corporate sport, much like the five-a-side football game that was introduced a score years ago to companies in Bangalore for conducting inter-company tournaments during week-ends, to see that footfalls are maintained. When the state-of-the-art mall in the neighbourhood opened, many in the industry opined that the death knell has tolled for the mill premises and its desire to become a successful mall has ended as a far-fetched dream. Perseverance paid at the end of it all. The Phoenix mill at Parel has not only emerged as a mall but it has proved to be a successful model for scaling up with its progressively extended formats. The Phoenix Market City mall is today a brand to recon with, in the industry characterized by its multi-locational rollout.

Phoenix inherently had a lot of inadequacies though. The location was considered a low profile one which only allowed narrow access to the newly mill-turned-mall. The premise was an open one with a towering mill chimney that yet stands testimony to the fact that it was a mill once upon a time! There were no takers initially until a few anchor store organizations tried to bargain their own de-risking by taking up space facing the main Tulsi Pipe Road so that even if the mall would fail, these stores may have their captive footfalls from the high street side. The mall began to ‘rock’ and space utilization became very efficient as days went by. The extended part of the mall is appropriately targeted as a premium and luxury retail mix, christened ‘Palladium”.

The younger generation of people managing the mall from the family ownership team did not have any pre-earned experience of operating a mall but they had a good deal of experience as legacy in managing a mill. They learnt the ropes of managing the new business with a 100% commitment to make it a huge success. There was no big professional name to run the business initially, though a few came in later and even now there is no big professional name that one can recollect or one can mention as someone who led the business to meet with success. The ownership team Atul and Gayatri did it all, with its strength and perseverance. The immediate vision of the business was to turn the mill space around into a productive mall space for some financial returns. But the entire business was perceived with a visionary perspective to establish the mall brands as something significant to roll out across India in future.

Galleria in Hiranandani Powai and Spencers in Chennai are the first few 'malls' made in India in the mid nineties. Both have a very clear real estate returns based business accountability. Space ownership is a diluted multiple, as many people own retail spaces in these malls. The tenant mix has undergone frequent changes in the past as ownership and tenancy agreements changed. Malls were then known to have smaller unit spaces as otherwise occupancy gaps were feared. These spaces today maintain status quo in terms of their small unit formats as multiple ownership may render it difficult to do any kind of redevelopment. The Haiko mall in Powai, Mumbai has undergone a few significant changes in the last decade to bring it to what it is today. The Powai surroundings have become clean and accessible and hence the new high streets within Hiranandani Gardens and the malls have been doing booming business.

The lessons are clear:

ü If you want your mall to be successful, have perseverance to develop and maintain a winning tenant mix over a period of time

ü Your own location need not necessarily be a limiting factor to develop a different profile of business but if you develop the right infrastructure and its surroundings, sky is the limit to achieve success.

ü People can make a great difference but the ownership team needs to put its passion forward and its own skin in the game first before relying on its professional team’s talent and experience.

Given the right commitment, any dead space can rise from the ashes, like Phoenix!

- Dr. Gibson G. Vedamani

The retail economy!

When the economic reforms of our country were discussed by the American President who recently tried to suggest that FDI in multi-brand retail could usher in the next phase of big economic development for India, eyebrows were raised. While many sections of the media reacted, the Prime Minister’s office reacted by tweeting its responses that our economy is better off than what he thought it was, quoting UNCTAD report on how attractive a destination is our country for investments. The angry opposition parties reacted more vehemently and attempted to justify our stability saying that no financial institution in India has failed unlike the situation in the USA where many have collapsed.  The US President had added that FDI in retail would not only create jobs in both countries, but it would help India grow.

Many global retail organizations have a strategic intent to grow internationally by opening up their operations in new economies. Everyone eyes the Indian subcontinent, as FDI in retailing is not yet allowed in full swing and there is large opportunity spotted in an economy that is supported by strong internal consumption from a large consumer base. Ticket sizes may be small as compared to developed economies, but the consumer visit repeats have been creating multiple ripples on the topline of the retail business. In developed economies we have heard about ‘stock-up’ buying and ‘top-up’ buying but in the case of India for the majority of customers it is only ‘daily’ buying. More than 12 million retailers are said to operate in India and in almost 90% of these retail stores, more than 70% of each store’s customers visit the store everyday for making purchases.  Will these ‘daily visit’ customers walk into a Wal-Mart or a Tesco every day in India if at all FDI fully opens up and these organizations would set up shop? The actual purchase patterns and their baskets would easily defy any researcher’s attempt to understand them! 

The very fabric of Indian retailing is different. This evening I had two experiences.  One, as a petty shop in the Velachery area was about to close I rushed towards the store asking for a Diet Pepsi can, the store owner switched on the lights, served me and then downed his shutters. I could understand that the sale of every SKU in his store is important to him.  The need to grab a drink on the go from a petty shop as one walks through the narrow streets in any Indian city is never going to vanish and as long as these needs would drive people to stretch out their arms to the petty shops, they will thrive well, come what may. The other - as I was observing shopping in fresh vegetables and fruits stores in Chennai, I was amazed to see the zest and zeal of the customers who were seen vying with each other to fill their shopping baskets. The two stores I was observing (and purchasing from them as well) were very well organized and supported by extremely customer-friendly staff. The product mix ranged from mangoes to mangusteen! The prices too were very reasonable. In a country like ours, managing wide and deep assortments of multiple fresh categories is a humongous task. How on earth is anyone going to understand easily the game of the ever-changing diversity of customer off-take and the dynamic ‘basket behavior’ of a typical Indian housewife without the help of our own retailers?

Investments both in retail and infrastructure are the need of the hour in India for its growth. If we don’t bring investments at the right time to the sector, our consumers may get frustrated paying more all the time consequent to inefficiencies resulting in wastage of money and resources as well.

FDI in retailing with developmental conditions can truly bring into existence new alliances and relationships in efficient combinations – like the collaborative accomplishments of the tissue roll and the health faucet found innovatively together only in Indian washrooms!

- Dr. Gibson G. Vedamani

Digging in Disbelief!

Almost fifteen years ago when the Electronic Article Surveillance (EAS) gates were new in our retail stores in India, the EAS tags would come in different shapes and sizes and many retailers did not know how to handle the challenges that came with them. I remember once when an alarm went off at the EAS exit gates of the store the security guards checked the customer’s purchases in public, as though the store succeeded in nabbing a shoplifter!  The mistake was the cashier’s as he had overlooked the EAS tag on one item among the many articles she purchased. The customer happened to be the wife of a large Indian private sector bank’s chairman and I know that she never returned to the store in spite of our repeated efforts to apologize to her personally to bring her back into the store. Customers once insulted are unforgiving forever! 

The narrow margins on food and grocery in India render electronic security tagging unviable and hence most of the modern supermarkets in India do not have any EAS systems. Instead they have security staff, who check every bill out and stamp it too to ensure that the payment has been made. If the items bought are less in number, they ensure that a detailed reconciliation of the quantity against the bill is done! My friend Malcolm Stephens while speaking about customer distrust in service cites an incidence: The customer complains to the waiter that the dosa he served was not warm enough and the waiter promptly took it back but placed his hand in front of the customer on the dosa to check if it was not warm at all – showing sheer disbelief on what the customer said! When every item is seen and reconciled by the security, customers may just wait and smile for the moment but may not like to come to the store again. Efficient checkouts can save a lot of embarrassments to both the retailer and the customer. I have seen many times in apparel stores security personnel calling exiting customers, to dig into their bags to check if the payment has been made.

“Sorry Ma’m, may be our cashiers have forgotten to deactivate the tag on the merchandise” said the security at the customer exit point of a reputed department store in Pune recently as the alarm from the EAS gates went off in full fury. There was a very cordial interaction between the security and the customer there because the customer was made very comfortable in an embarrassing situation of the alarm going off in front of a large number of people in the store. Interestingly the customer replied, “Yes, amidst quite a few items I bought, may be there is one yet with a tag also. Let’s check it out”, and both moved quietly away from the place to reconcile the items against the cash memo. I did not know what exactly happened afterwards but I was sure of one thing though – that the staff were well trained to handle any situation, giving every benefit of doubt to the customer without showing an iota of a feeling of distrust.

In the technologies earlier used in the EAS systems, the microwave frequency was said to match its frequency with various other metals and it was consequently reported to raise false alarms, which inconvenienced customers a great deal. Jokes used to be afloat in retailing circles that a certain EAS frequency synchronized with some kind of ‘Copper T’ women used to wear and one can imagine the embarrassment it could have caused to both the customer and the retailer! Now with the advent of Acousto Magnetics, the EAS system is said to have become more efficient with its accurate detection capabilities. Coupled with the deployment of efficient and updated EAS system and well trained store personnel, even false alarms or alarms that go off consequent to overlooked tags can be handled efficiently without inflicting insults on customers. On the other hand such efficiencies can prevent store shrinkage as well and no one needs to dig deep into shopping bags in disbelief at all!

- Dr. Gibson G. Vedamani

Aisles of Joy!

It was taboo to work in a retail store, not too long ago. It was indeed a fact that in India many parents would not give their girls in marriage to boys working in the retail floors and vice versa. Service jobs have definitely been neither white-collar office jobs nor even blue-collar operative jobs but they have fallen in the middle order as  ‘gray-collar’ jobs. The gray collar jobs are those that engage service personnel like the security guards, waiters, quick service restaurant personnel, etc.  For a long time the corporate world has only known white-collar and blue-collar jobs! No one knew the middle order until the service economy started shaping up across the world in the last two decades! Sales associates on the modern retail floors I am sure are a shade better and they should ideally fall in the comfort zone of any shade of white and would not border on any gray areas! (Incidentally merchandisers in India discovered the off-white colour in apparel!) I am not going to dwell on any colour classification and get into trouble like Sashi Tharoor who discovered the ‘cattle class’ of flyers! And a retail job was perceived in the Indian society as an insignificant one and this was because of the reason that most of the traditional stores were run by family owners where employees too were often the members of the extended families who were not well-to-do and in the case of outsiders such stores were manned mostly by children – the school dropouts or the ones who had to support their parents who managed a large household.

Our retailers no longer need to have the infra-dig feeling they had yesteryears when attending to customers on the floors extending any kind of personal service was considered low profile! Even as many in the past have considered working in the retail floors not so attractive a career option, we find many in the current times finding their happiness working for modern retailing in India. Of course, modern retailing is now about an experience for the retail associates too, as much as it is for the customers! There’s good music on the floors while there is an opportunity to work as teams enjoying each other’s company. Often retail floor personnel enjoy their interactions with customers. Employees at Walmart begin each day with the Walmart cheer and in many of our Indian retail stores too the day begins with a lot of fun during the morning meetings even if there may not be a big cheer song! Our sales people invariably celebrate every ‘big’ sale by sharing with everyone how the achievement is made and how happy the customer is. At every opportunity they have jokes to share.  An irate store manager once saw a bucket full of water the housekeeper was using to clean windowpanes, left forgotten for a while and he kicked it with all his might. The sales person in the store quipped, “Hi! Our manager just ‘kicked the bucket’ and understanding the pun, all went beaming instantly! Sometimes it is amazing to come across the sense of humour on the retail floors! In this computer age the young sales associates and store employees willingly see sales figures and share the fun of discovering the benefits of business analytics – the majority of them are comp-geeks too, adopting a ready tech-savvy attitude! The promise of a fast career growth track in retailing is seen delivered within short spans of time as the industry grows rapidly. The sales associates and supervisors of yesteryears are now sales managers and store heads. Today’s sales associates can grow fast to become department managers and floor managers in the next few years and the retail growth that is proliferating into every lower tier town in India is enabling the delivery of such great career promises!

The perception of small jobs and big jobs is fading into oblivion and now that modern retailing has set its foot on the Indian retail floors, it has become the true game changer!

- Dr. Gibson G. Vedamani