SCAI Virtual Roundtable IV: Retail & Shopping Centres – Dealing with the New Normal

The fourth of SCAI Mondays, a weekly, custom webinar series, titled ‘Retail & Shopping Centres: Dealing with the New Normal’ took place on May 18, 2020. The discussion focused on global experiences of re-opening shopping centres amidst restrictions, implementation of stringent SOPs and stakeholders’ reactions (consumers, staff, partners, tenants).
The panel deliberated on the key takeaways experienced by retailers as they reopened in shopping centers and high streets across India, China, Australia, USA, Europe, the Middle East, SE Asia and USA. A slew of new challenges and scopes for improvement were highlighted so that brands and retailers across India and other parts of the world could work to not only ensure a safe environment but to also create new experiences for consumers as normalcy returns.
Moderated by Yogeshwar Sharma, CEO & Executive Director, Select CITYWALK, the panel included industry captains like:
– Arjun Gehlot, Director, Ambience Mall
– Mukesh Kumar, Chief Executive Officer, Infiniti Malls
– Sanjeev Mehra, Vice President, Quest Mall
– Shibu Philips, Business Head, LuLu Shopping Mall
The Current Scenario & New Normal
The current situation of the shopping centre industry is grim. If mall developers are to bounce back after the lockdown lifts, it will only be through establishing their premises not solely as experiential playgrounds, but also as trusted and transparent safe havens.
Talking about the new normal for shopping centers, Sanjeev Mehra, Vice President, Quest Mall said, “Nobody could ever imagine that businesses would be upended like this. We were totally unprepared. We, at Quest, had to keep the hypermarket open during the lockdown and it was very difficult for us to manage the chaos of the situation. We worked hard to help our consumers, with very limited manpower. As far as the new norms are concerned, it is going to be a huge challenge. Although the government is trying to help everyone, shopping centres across the globe has been subjected to massive transformation and post lock down it is going to be a huge challenge.”
He further added that once the lockdown is completely lifted and the market comes back to life, overcoming the following concerns will prove to be a huge challenges for the entire industry:
– Operate malls as a whole amidst the new normal
– Choosing segments of the mall to keep functional
– Maintaining social distancing at food courts and cinemas
– Sanitizing merchandise after each and every trial
Even after the pandemic ends its impact will continue to haunt businesses in terms of restrictions and regulations, which, Mehra believed can potentially take away the whole fun of shopping in a shopping centre. “We have got the hypermarket open since the lockdown, now we have QSR doing delivery. We expect to open few fine dining restaurants in the coming weeks for delivery,” he stated.
As soon as the lockdown was announced in March, it was quickly learnt that hypermarket and supermarket will be the only formats that would be operational. That prompted malls to develop measures to let consumers order online.
“By the third day of lockdown, we had developed an app, so that ordering became easy. We started with 100 deliveries a day and it picked up to 4,500 deliveries, with our staffs becoming drivers and delivery agents for the orders. We signed up with aggregators and all the norms (sanitizers, temperature checking and masks) were in place to make things convenient for the consumers. Since March 24, we have had around 65,000 deliveries from the mall in the F&B section. We had put enough restrictions for people coming to the mall for takeaways for their benefit and safety. Not more than two persons were allowed in the car and we tried to arrange and cover every possible angle and it worked out well,” said Shibu Philips, Business Head, LuLu Shopping Mall.
The lockdown period was also educational for LuLu Shopping Mall. The mall’s Live Loyalty Platform, which had more than 2 lakh members, saw a steady rise in the number of loyal consumers.
“The platform was operational 24*7, and customers could always call to place an order. As the app was the center point of attraction, we realized that there was a hefty increase in the number of loyal customers,” Philips added.
The state of Maharashtra has registered the highest numbers of contagion and malls are anticipating a comparatively bleaker future stricter measures in the times to come. “In Mumbai, the situation is currently grim as the number of cases have been on the rise. I think Mumbai will take more time to return back to the phase of fewer restrictions. Our mall was shut with only BigBazaar operating and all the required safety measures were followed on a very serious note,” explained Mukesh Kumar, Chief Executive Officer, Infiniti Malls.
Arjun Gehlot, Director, Ambience Mall said their situation was also the same with only the hypermarket operational at Vasant Kunj mall.
Return to Normalcy
If there is one question that has haunted retailers and malls since the spread of the pandemic and the subsequent lockdown, is that how much time it would take for shopping centres to open and the situation to normalise?
According to Mukesh Kumar, it will take at least three to four months to get back to 70-80 percent of the erstwhile momentum of the shopping centre once open.
“Looking into the demographics of the people visiting the mall, there are several categories on the basis of age group. The first category of the consumers, aged 15-40 years, will start coming to the mall in three to four weeks’ time, and they constitute about 40-45 percent of footfalls that we used to get daily on a normal day. The 40-60 years category will take a bit longer to come out and visit the mall. We assume that they would be taking 6-8 weeks of time to gain confidence. The consumer section above 60 years will hopefully be out to shop in 4 months. Electronics, home and fashion will return to normalcy a bit faster whereas F&B will take little bit more time,” said Kumar.
“Currently hypermarkets are doing around 60 percent of their original business. F&B stores are making around 30 percent of what they used to. We strictly feel that there might be some categories which may take more time to return to normalcy, but I feel that business for established brands will be back to normal in a couple of months,” said Philips.
Gehlot however said that the F&B sector would recover quickly and would take the lead in no time. “People would love to return back to their favourite restaurants and food habits since they have been away from them for such a long period,” he stated.
Sanjeev Mehra also shared similar sentiments but highlighted his concern for the upcoming festival and occasion season. “From an East India perspective, I have a feeling that we would find everything difficult till the month of October although I am hoping that the festivals — Durga Puja in East India, Diwali in North India and Onam in South India followed by Christmas and New Year – will provide some impetus to sales. My biggest worry currently is that marriages are not going to happen now in the scale they used to be and that is bad news for the retail industry,” he said.
Retailers in malls are also being optimistic that once malls start opening the fear factor will start receding. “Right now, consumers are skeptical and there is fear in their minds. Once this factor will start decreasing in a month or two from now, positive shopping sentiments will return,” said Kumar.
The pandemic has propelled digital commerce to the fore. Experts believe that even after the pandemic is over, consumers will show a greater propensity to shop digitally. “I think digital is going to pay a big role, especially mall-apps. People today like and want to shop smart. They will come to the mall particularly and shop for whatever they want, and an app will supplement the whole shopping process. They can select products from different stores through this one app making the whole process faster, safer and seamless. Loitering in mall is going to go down,” said Gehlot.
According to Mehra hanging out and strolling in malls is very essential for the incremental sales. “It accounts for 10-15 percent of the sales and hence these people are very important to us,” he said.
Shopping Centre-Retailer Relationship
Gehlot said that the shopping centre-retailer relationship was the biggest concern of the retail industry as a whole at this point in time.
“For now, this is one of the most important aspects which we have to deal with. It is a critical thing for both of retailers and mall owners. Our retail partners have supported us through thick and thin and we have to reciprocate now. If we get enough support from our financial obligations, then we can also extend our support to the retailers. We have to sit and talk on the concerns. There cannot be one solution for all in any case,” he added.
“We understood the problem and for the month of April, we waived off the rental for all the retailers. We are in further discussions with them as we understand everyone’s problem and are looking into it. We are also shifting focus to ensuring that the mall opens soon and therefore we are discussing every aspect of the rent situation with retailers individually to find an amicable situation. The pain is on both sides,” explained Philips.
In the initial stages, the relationship between shopping centres and retailers took a tumultuous turn, with the latter seeking rent waivers since earnings took a hit due to the coronavirus-induced lockdown. “By the end April, we all realized that we need to switch gears and instead of working against each other, we need to work together. There are different leases, different relationships. Each mall has different challenges and it is necessary to have collaboration between both parties so that we can come out of this crisis together,” said Kumar.
Mehra explained the broader angle of the retailer-shopping centre developers’ relationship, saying, “We are very mature people doing hundreds of crores business together. Without a retailer, the mall is nothing and vice versa. It’s a symbiotic relationship. All of us know and understand that there are no free passes, and most retailers have agreed towards a working relationship.”
Using Technology to Bring Consumers Back
The corona virus pandemic has been a catalyst for technology adoption across industries. Post the pandemic, industries will be compelled to increasingly bank on technology for most of their needs and operations.
When asked how to bring back consumers to malls, the panel unanimously agreed that technology will make all the difference.
“Technology is going to help us in the long run. Quest was the first to have automated parking in the whole country. Today, contactless payments in car parking have become a norm, everyone is doing it. Going by the current situation, there are high chances that we might be instructed by the government to allow only a certain number of visitors in the mall in a day. In such a case, we will have to use our app to pre-book visits. We will have to be technologically prepared, because no one knows what guidelines we will be given in future,” Mehra explained.
Are Shopping Centers Safe?
Since early February, malls and retail stores witnessed a huge dip in footfall because of the fear of contagion with nearly 20-25 percent drop in revenue. Even after the lockdown is lifted, public anxiety can be expected to persist compelling malls and retailers to double check their efforts of safety and sanitation.
“Most malls have hypermarkets and supermarkets, which have been in operation for the last two months, and we are yet to hear any negative news from there. The mall AC is working, safety measures are in place, employees are coming and working, and everything is well maintained and safe,” Kumar pointed out.
“Of late, there are several reports doing rounds that claim that using air conditioners can lead to an increased spread of novel coronavirus. Kumar stated that the following precautionary measures could be followed to ensure safe usage of air conditioners in malls:
– Need to increase the treated fresh air by 30-40 percent
– The temperature should be maintained in between 25-30 degrees.
– The exhaust in the washrooms must run twenty four hours.
Currently, many offices and even special trains are running with ACs on. Shopping malls are much more cautious than these places, following strict measures for the upkeep of all their equipment and technology. We clean the AC filter on more frequent basis in comparison to the rest. We are more organised and have better equipment to keep a control on all these measures. As far as social distancing is concerned, we have taken a norm that each 75 sq. ft can take only one person at any time. Going by this rule, a shopping mall having one million sq. ft space can have around 15,000 people in one time. If we take out the staff including those of the retailers, we can still take up around 10,000 visitors in the mall on daily basis,” he added.
Gehlot agreed, saying, “The kind of effort we make in sanitizing various points and controlled entry, no other retail model can do. From parking, entry, movement in the common area, managing the store and merchandise, everything is well organised and safe. The mall management’s daily security measures are more organised and safe in comparison to those present in the high-streets.”
Technology Initiatives
Ambience Mall is currently exploring making tunnels for the entry to mall and are looking into the challenges associated with it. “We have also tried on giving cars a quick wash as they enter the mall parking. We have also been working on implementing safety measures in the food court and F&B outlets,” explained Gehot.
LuLu Mall is sanitizing every car entering the mall premises down to its wheels. The mall has also placed disinfectant mats at the entry. “For the food court, we have tied up with an operator who can ensure that the customers can order their food without going to the counter. Consumers can do this by scanning a code and the order details are delivered on their WhatsApp number. They can pay their bill in the same way,” said Philips.
“Sanitizing the mall is the new norm. When people will come to the mall, there will be lots of changes. Sanitizing of bags, shoes, social distancing and waiting patiently for your turn – all this will be a necessity. People are going to get used to these things and will be happy to co-operate in the process,” concluded Mehra.