Parimala S. Rao, Catalyst (The Hindu Businessline)
Chennai, 9 October 2014
“Amma, can we whatsapp the photo to Pramod in Dubai?” asks the youngster excitedly, after his mum has taken a picture of him in front of a towering grey-and-yellow model of a Transformer. She nods, and he grins happily, proud that he can show off his very own bit of high-end retail to a friend in the Gulf. It’s this spirit that seems to imbue the hordes of shoppers and visitors to Kochi’s retail mecca – LuLu Mall.
Opened just over a year ago, the complex covers a sprawling 17 acres near an intersection of three highways and houses over 215 retail luxury and lifestyle brands, including those in the food court and entertainment areas, with more waiting to set up shop in the 25 lakh sq ft of leasable space.
Owned and managed by the EMKE group, the LuLu retail chain has had a strong presence for over two decades across West Asia, with over 90 malls and 110 hypermarkets in 34 countries, including Dubai, Abu Dhabi, Doha, Bahrain, Kuwait and Saudi Arabia. Setting up shop in Kochi in early 2013 was a considered decision based on the recognition that, with rising disposable incomes, shoppers in the region had more cash in hand, not to mention the ennui that had set in with the sameness of merchandise on offer at all the glitzy retail spaces nearby.
Typically, malls need to target the population within a few kilometres’ radius. However, due to the large square footage, a mall such as Lulu needs to build its brand as a destination catering to a highly mixed profile of customers, says Devangshu Dutta, Chief Executive at consulting firm Third Eyesight. “A destination mall’s viability depends on a large enough pool of customers with a high discretionary income and a positive spending outlook, as well as infrastructure that supports ease of travel to the mall. Economic conditions in recent years have been conducive to large shopping-entertainment developments like the Lulu Mall,” he adds.
On a humid Sunday afternoon, the enormous and cool interiors draw swathes of visitors, generations of families out to shop or just to have a good time — for instance, among the many wonders at the packed Sparky’s fun and games zone. This is a fantasy land of golden roundabouts, bump-a-cars, a 5,000-sq ft ice-skating rink and a 12-lane bowling alley, as well as a games arcade.
But this is Kerala, and any mall here would have to be different in one key respect – jewellery stores. There are about half a dozen of them in the mall, traditional old-world stores jostling for attention with others offering trendy, offbeat designs.
At 4 pm, they are already full of shoppers. There’s an NRI family buying wedding jewellery at Bhima’s, while a group of chic Kochi ladies is inspecting a new line of gold-and-silver necklaces at Avatar Diamonds.
The 25-year-old Avatar brand has branches across the State and abroad. There is a big spike in sales to locals during the wedding season, a salesperson says, but over the next few months, the main shoppers will be NRIs visiting for the holidays. There are customers from Bahrain and Saudi, for whom the brand has created special lines.
Across the corridor are designer Western wear outlets. Business is good, especially during vacation time, say the store managers at Vero Moda and Jack & Jones, while the manager at high-end leather goods store Calonge says discerning clientele seek out its trademark braided leather products. Everyone’s on the lookout for promotions and offers, though, and there are plenty of those.
LuLu Celebrate, the mall’s three-storeyed flagship store, specialises in bridal wear but also offers a wide variety of sarees and salwar sets. If luxury is in focus, quality and affordability are also important, says Ajmal, a floor manager at Celebrate. This is why the shop is so popular with people from Kochi and nearby. Looking to pick out a traditional Kerala saree for a friend, I find the offerings range from the simplest mundu with a plain-coloured border for less than ?500 to a beautiful cream-and-gold designer affair for about ten times that.
Nearing 6 pm, the crowds are so thick that there are small queues near the escalators — though there are 18 of them! Shoppers can take breaks at the many facilities on offer. There are water fountains, baby-rooms, rest-rooms, ATMs, even a bank that is open 365 days from 10 am to 11 pm. Prayer rooms, first-aid and ambulance services are on offer too. A 300-room JW Marriot hotel is located within the complex, and PVR Cinemas runs a busy multiplex.
The most crowded part, though, is the 2-lakh sq ft LuLu Hypermarket, India’s largest. If we thought getting into the mall was difficult (car lines were three abreast and about 300-m long), this would be even more challenging, with a surging wave of people trying to get in. Queues at each of the 27 check-out counters were about 10-people-deep each, forcing us to reluctantly give up the idea of sampling its fresh and frozen delicacies and the diverse cuisine at its hot food counters. There was also no time to check out the 2,000-seater food court with 22 kitchens, nine restaurants and many coffee shops. Lulu Mall Kochi’s Marketing Manager Aiswarya Babu later says the hypermarket not only stocks international foods but also believes in sourcing local and encouraging growers of organic produce.
Brand-aware shopper Madhulika Menezes, who lives in Chennai, says she spent a brief but interesting time at Lulu Mall some months ago. All she had time to shop for was some deliciously flaky and flavourful baklava at the hypermarket, but it gave her a taste of what to expect. When she goes back, she will allot at least a day to tour the mall.
Built at an investment of over ?1,600 crore, the mall, which now has an occupancy of 95 per cent, is operating at a trading density that is among the top 10 in the country, says Shibu Philips, Business Head, Lulu Mall, Kochi. As mall developers and their investors realise, this is a long-haul business where no one expects to start earning profits before 8-10 years. For a group that has been operating malls for over 20 years, the primary concern seems to be to put customer delight on par with the profit angle. One cannot happen without the other, as it has shrewdly recognised.
About the impact such large malls have on smaller counterparts in the vicinity, Third Eyesight’s Dutta says: “A destination mall that comes up within the catchment of other existing malls certainly reduces the footfall into those malls – this impact is the maximum in the first two years after the launch. However, smaller competitors can survive and thrive if they differentiate and focus their offerings to be highly relevant to the local population, many of whom still frequent smaller malls, the high street and traditional markets, and visit the larger mall as an occasional outing.”
Aiswarya Babu says that, on an average, 60,000 visit on weekdays, and the number goes up to 95,000 on the weekends.
Given its success, will there be a rush to emulate the Lulu model? As Dutta says: “Successful destination malls do inspire other developers to consider similar projects. However, the overlap of high population and high spend, and the ability to consistently drive footfall, is a difficult combination to create. At this time, the number of large malls that can be supported is limited. So, while new destination malls could cannibalise traffic from the older mall, a lot depends on how well they are planned and executed, and how Lulu Mall handles itself in the face of such future competition.”
A vision statement on the Group’s web site quoting Managing Director MA Yusuffali commits to making the world a harmonious place to live in, in every way possible. If the Group’s vision is to go beyond the merchandising to create a fun and happy space for families or a hangout for the young, to offer all sections of society a global experience, as it were, it has certainly achieved this. Big retail, it seems, is the new equaliser.
(Published in Catalyst – The Hindu Businessline.)