The retail real estate industry is gradually maturing and going towards the next wave of evolution because of the increasing competition from e-tailing. Within this process, there is a need for developing shopping centres that provide a more specialized experience to shoppers with specific needs. Specialty Malls that emerged a few years ago to provide such services left a lot to be required. This is now changing, as well.
What Are Specialty Malls?
Specialty Malls cater to a particular retail category. Malls offering brands of a particular category such as gold, automobiles, wedding, furniture, lifestyle, home etc. are called specialty malls. Simultaneously, malls which offer products of a particular positioning can also be termed as Specialty Malls – for example, malls offering luxury brands can be termed as Specialty Malls. Currently, there are very few specialty malls offering focused categories and brands in the country. From the leasing perspective, it is quite difficult to fill in the entire shopping area with only one particular category and at the same time, achieve optimal rentals.
Also, there is lack of sufficient retail players belonging to a particular category who can contribute to achieving the depth and critical mass imperative for successful functioning of a shopping mall. While some of the high streets in the country offer specialty products such as ethnic wear or wedding apparel, they also host other categories working together with the niche categories.
The specialty retail real estate developments that are working successfully in the country belong primarily to the F&B and entertainment category. Such developments include DLF Cyberhub in Gurugram and Sangam Courtyard and Epicura in Delhi, which are dedicated exclusively to F&B brands. DLF Cyberhub not only offers gastronomic delights of various varieties, but is also acting as a cultural centre organising various art festivals and programmes. Some category-specific malls like jewellery malls have also worked well in India. However, a predominant number of consumers still prefer to visit traditional jewellers located in high streets.
In some cases, malls which were earlier developed to cater only to a particular category are repositioning themselves to include a more comprehensive trade and tenant mix. For example, malls which exclusively offer jewellery have also incorporated some element of F&B, leisure and convenience-oriented categories such as spa and gym. Globally too, jewellery malls that are part of a larger or integrated retail development are operating successfully. For example: an indoor souk is located inside the Dubai Mall.
The other type of specialty mall that has worked in India is based upon positioning – such as DLF Emporio, which offers many luxury retail brands under one roof. DLF Emporio is located in a cluster of malls that offer premium categories, and also serves as a bridge to luxury products. DLF Emporio is a unique luxury shopping destination which dovetails well with other nearby malls offering a more holistic shopping experience, such as DLF Promenade and Ambience mall. As consumers’ aspirations rise in India, they seek variety as well as depth in shopping experiences. Therefore, a specialty mall as part of an integrated retail development offering a niche, or products belonging to a particular category, would work well.
Also, integrated retail developments help add to footfalls of niche categories, and vice versa. With growing competition from online retailing, F&B and entertainment are the categories which many shopping malls will be focusing on.
Retail real estate developments that particularly focus on F&B, entertainment and niche fashion brands may be conceptualised in the future.
Shopping mall developers are particularly focusing on international food chains so as to increase the attractiveness of their retail spaces. F&B and recreation has now emerged as an important component of the trade and tenant mix for any retail development. Specialty malls attract targeted footfalls and a regular customer base; therefore, they should be lodged in an ideal location and catchment. If there is absence of the required commercial or residential population, then the success of a specialty mall would be doubtful.
The success of a specialty mall depends on an amalgamation of location, design, ambience as well as demand from consumers and supply of enough brands belonging to that particular category. The conversion rate in specialty malls is high, as a focused group of consumers who are guided by a planned approach visit them. The footfalls may be lower than in a general mall, but the conversion rate would be high – thereby generating enough sales for the incumbent brands.
Proper research and a structured approach is needed to develop specialty malls, as their success depends upon demand and supply dynamics as well as the financial feasibility of particular categories. Theme-based malls attracting tourists and residents alike may be conceptualised in the future, but they would require a unique offering or differentiated entertainment avenues for attracting large footfalls.
ABOUT THE AUTHOR: Pankaj Renjhan is Managing Director – Retail Services, JLL India
The views and ideas expressed in the article are his own.
Proper research and a structured approach is needed to develop specialty malls in India
Must Read
