How Online shopping keeps consumers away from malls
While some malls are operating at 40 per cent occupancy, others are struggling with less than 20 per cent, mainly due to poor location, poor design and poor parking facilities
The nationwide growth in smartphone and Internet penetration has fuelled a jump in online shopping, which e-commerce players like Flipkart, Snapdeal and Amazon are tapping into with attractive offers and discounts, luring consumers away from offline retailers.
Shopping malls in the Delhi-National Capital Region are projected to see a decline in footfalls of about 55 per cent in the current festival season this year as a result of the surge in e-commerce, according to a study by the Associated Chambers of Commerce and Industry (Assocham).
According to the survey by the industry body, Delhi-NCR has recorded the highest decline in footfalls at city malls. About 120-150 malls were opened in the past two years and close to 65-70 per cent of the spaces in many of the region’s malls still remain empty. Several malls, which have been unable to attract an adequate number of retailers, are even shutting down, according to the study.
The major factors contributing to the situation are the economic slowdown, online shopping, high interest rates and inflation, Assocham said in the study. Assocham said its research team interacted with about 720 leasing managers, representatives of malls’ management, strategists, marketers and supervisors in Delhi-NCR, Mumbai, Ahemdabad, Chennai, Kolkata, Hyderabad, Bangalore, Chandigarh and Dehradun. In the nine major cities, more than 59 per cent of the total mall space remains vacant, with Delhi-NCR topping the list with 68.5 per cent, followed by Mumbai at 65 per cent, Ahmedabad at 61 per cent and Chennai at 60 per cent. According to the survey, several developers have already started giving rent-free period of up to six months for big brands to lure retailers.
While some malls are operating at 40 per cent occupancy, others are struggling with less than 20 per cent, mainly due to poor location, poor design and poor parking facilities, the survey found. Both retailers and consultants seem convinced that the mall magic seems to have disappeared in a puff of smoke on the back of the economic slowdown, poor revenue model, low footfalls-to-sales conversion and lack of special purpose malls, adds the survey. For some malls, even the design and construction quality is poor. The remaining malls lie somewhere in between good performing and bad performing malls – average performers, adds the survey. A meagre 8-10 per cent of these shopping malls are running successfully in India and facing tough competition from online retailers, who hand-deliver goods to the front doors of consumers.
The festival season this year has triggered a huge incease in online shopping and may cross the Rs. 55,000-crore mark, resulting in the halving of footfalls in malls in places such as Delhi, Mumbai, Chennai and Ahmedabad, according to Assocham. The study reveals that there may be a fivefold increase in the revenue clocked by the e-commerce websites in categories such as mobile phones, electronics, designer furniture, home decorations, apparel, accessories, jewellery, footwear etc.