The Covid-19 pandemic has been hard on the shopping malls in India. With the economy showing very limited signs of recovery, these shopping malls are mainly depending on the upcoming festive season in India to experience some positive headwinds. According to data from the Shopping Centres Association of India (SCAI), around 650 malls contribute over `180,000 crore in sales per year and the pandemic has made a significant dent to those sales figures.
Online retail challenge
Even before the pandemic, the situation was not very optimistic. Malls were facing stiff competition from online retail players who were offering a wider array of products at the customer’s doorstep and without the need for any cash transaction. The variety of products were so large that it was impossible to be matched by any physical store. The percentage of online shopping was steadily increasing even before this pandemic. According to one estimate, the number of digital buyers were expected to be around 330 million in 2020.
In Indian malls, the number of retail shops are quite high. Due to the booming online retail industry, the percentage of non-rented spaces rose and many malls began to struggle. The pandemic arrived when malls were in the middle of strategising to contain the online challenge.
The Covid-19 pandemic tilted the balance prominently towards the online retail sector. It ensured an exponential boost to online shopping. During the initial phases of the pandemic induced lockdown in India, the surge in demand in online retail spaces was so huge that prominent players like Amazon and Big Basket too found it difficult to cope with. Big Basket, an online grocery business, broke down and even Amazon had to prioritise its services separately. It focused on supplying essentials such as household staples, health care, hygiene, personal safety and other high priority products and put a provisional halt to the supply of lower-priority products.
Will the festive season make a difference
The central government allowed the malls to reopen from the second week of June, 2020 – as a part of its ‘unlocking’ process. However, weak consumer confidence and questions on observance of social distancing ensured that most customers stayed away from the malls.
However, as the festive season approaches, there seems to be some improvements. According to Harshavardhan Neotia, Chairman, Ambuja Neotia Group, “These are unprecedented times for the world economy and India is one of the hardest hit countries due to Covid-19. The retail industry in Kolkata is showing gradual signs of recovery with malls registering increase in sales and footfall particularly on weekends/holidays. It appears people are beginning to accept the new normal and step out to visit places they consider safe while taking adequate precautions. With customers gradually spending time at luxury and fashion stores, at restaurants and food courts, mall operators expect some increase in footfalls and sales in the upcoming festive season. Besides the festive season optimism, mall owners are hopeful that the government may soon allow theatres to reopen, which could further boost footfall.” The Ambuja Neotia Group owns the City Centre malls in West Bengal - apart from having a significant presence in the state’s real estate and hospitality sectors.
The retail fashion segment has also been hard-hit in the pandemic period. According to an estimate, in July, fashion retail outlets in malls witnessed a massive 20% drop in sales. With the festive season round the corner, mall owners and fashion retailers would be looking to push ahead.
For Indian malls, there is a serious need to strategise at the moment. The pandemic has made it clear that malls cannot compete with online players who have the benefits of enormous product selection, price comparison and 24-hour operation. The need of the hour is to offer differentiated services and product offerings. Reorienting mall into centres of leisure and entertainment seems to be a viable option. Malls may also look at focusing on creating spaces that allow people to come together and spend quality time. And as the pandemic rages on in India, malls have a distinctive advantage over high-streets as they can provide regular sanitisation of customer touch-points and fumigation, limit the number of people entering the mall and have them thermal screened and ensure proper adherence to the standard operating procedure by visitors, mall staff and retailers.