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New lease of life: Retailers flock back to malls

Analysts caution that rising Covid-19 cases could once again scare away the shoppers.

Analysts suggest malls ramp up their advertising presence through events or promotions, and adapt online strategies to sustain the resurgence of footfalls.
Analysts suggest malls ramp up their advertising presence through events or promotions, and adapt online strategies to sustain the resurgence of footfalls.

Witnessing an accelerated rebound, malls across the country are now registering occupancies similar to pre-pandemic levels. Nexus Malls, which has 17 malls spread across 13 cities, is helping its portfolio of retailers clock almost 100% of their pre-Covid sales. Meanwhile, as Select Citywalk in New Delhi nears recovery, the mall has added new brand stores to its portfolio.

Furthermore, malls are expected to profit from increased retailer revenues. According to Pankaj Renjhen, COO and joint managing director of Anarock Retail, several high-end malls are proposing at least 10-15% hike in rentals, especially from fashion, beauty cosmetics, and electronics stores.

Anand Kulkarni, director, Crisil Ratings, says that once the third wave of the pandemic ebbed, retail sales recovered quickly in February. He predicts that rental revenue for malls in May 2022 will remain marginally higher than pre-pandemic levels.

While sales at retail stores housed in malls are increasing, footfall is still rather low. Inorbit Mall, with four malls across four cities, has only returned to 70-80% of its pre-Covid levels in terms of footfalls. Analysts caution that rising Covid-19 cases could once again scare away the shoppers.

Crowd pleasers

Malls are hoping that the reopening of multiplexes and the full restoration of restaurant and QSR activities will bring back the crowds. Due to the extended end-of-season sales (EOSS) and the change in weather, both Select Citywalk and Inorbit Malls are investing in developing engaging experiences for shoppers in order to maintain strong footfall.

Naviin Ibhrampurkar, head of marketing and corporate communications, InorbitMalls, shares that a superior customer experience, assortment of brands, and enticing offers are key profitability levers. The mall is witnessing month-on-month growth in footfalls and hopes to reach pre-pandemic levels before the festive season, he adds. Popular brands Biba, American Eagle and Peter England have set up shop in the Vashi (Navi Mumbai) edition of Inorbit, whereas Puma has  opened a store in the Malad mall in Mumbai. Several more brands, especially within the electronics arena, are likely to be launched soon, starting with Hyderabad.

Select Citywalk has also increased the number of category stores for athleisure and beauty. “Around 8% of our space is under fit-out already for new stores, as we plan to add a few international brands, too,” shares Yogeshwar Sharma, CEO and executive director, Select Infrastructure.

Nexus Malls, which has a stronghold in smaller towns, is confident of reporting growth numbers by the end of this month, on the back of the new collections, movie releases and events, says Jayen Naik, senior VP, operations and projects, Nexus Malls. It has initiated workshops to engage with children and started movie promotions, concerts, stand-up comedies, and youth-focussed activities to ensure high traction.

Ibhrampurkar adds that the overall rentals have gone up and demand for premium retail space is also back. “We have 99% occupancy in all our malls,” he says.

Hoping against hope

Since demand is strong and buying capacity is high among the consumers after the long lull, Kulkarni of Crisil expects mall revenue growth to be 5-10% higher than pre-Covid levels by the end of the current quarter. “Malls have streamlined a lot of their cost structures, which will benefit them in the long run. They are also better prepared to restart and stop activities in the event of government restrictions,” he notes.

However, according to Tushar Shah, director, CareEdge Research, the pandemic-driven faster shift to online purchasing may continue to be a headwind for brick-and-mortar stores with online marketplaces’ discounting model continuing to be an alluring proposition. Rising oil prices could also act as a spoilsport, as it could push up costs across retail and logistics, warns Sharma.

Analysts suggest malls ramp up their advertising presence through events or promotions, and adapt online strategies to sustain the resurgence of footfalls.

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First published on: 02-05-2022 at 07:51 IST
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