Many people I know treat shopping centres or malls as a new phenomenon, a progressive development of recent times or a modern blot on the traditional cityscape (depending on your point of view).

However, Grand Bazaar (Istanbul, Turkey) is the earliest known mall, with the original structures built in 1464, with additions and embellishments later.

In India, if one were to include open arcades, Chandni Chowk in Delhi is reported to have opened around 1650, with its speciality shopping streets. (Of course, more traditional bazaars have been around many thousands of years around the world.)

But even if one were to get more “traditional” about the definition of a mall, possibly India’s first mall was founded in the hottest city in the country then, Kolkata (New Market) in 1874.

In more recent history, Delhi’s municipal pride, the air-conditioned underground Palika Bazar was a novelty in the mid-1980s, while Bangalore’s Brigade Road saw several early pioneers with their shopping arcades in the late 1980s.

Then came the mall-mania beginning with Ansal Plaza in Delhi and Crossroads in Mumbai. Everyone started looking at malls as the new goldmine, being pushed ahead by a “retail boom”.

The early stage of any such gold rush usually has several experiments missing their mark, which is what has happened with the hundreds of mall-experiments that have been launched in the last 7-8 years.

Some of the significant and common issues are starting to be addressed, but many others remain.

Catchment-Based Planning is Needed

The top-most issue in my mind is “oversupply”. While this may sound absurd to many people, given the low figures quoted for modern retail, I am referring to the over-concentration of malls in a small geography. If 8-10 malls open 4-5 million sq. ft. of shopping in a catchment that can only support 1 million sq. ft., everyone knows that some of the malls will fail. But everyone also believes that their mall will succeed (otherwise, they would obviously not have invested in the mall).

What happens to the malls that fail? Depending on the design of the building, many of them can be repurposed into office space – another area where a lot of investment is still needed. So in the end, actually, most people win, one way or the other. Yet, there will be some losers. Does anyone “plan” on being one?

The second key issue in my mind has been that mall developers have been thinking as “property developers” rather than retail space managers. The successful shopping centre operators worldwide (now also in India), are actually as concerned about what and who is occupying that space as a retailer would be. They are concerned about the composition of the catchment, the shopping patterns, the volume of sales, the shopping experience. Therefore, the tenant mixes as well as adjacencies are factored into the earliest stages of planning the shopping centres.

In fact, if I were to identify the most critical operational problem for many of the malls, it is the lack of relevance to catchment and, therefore, the low conversion of footfall into sales for the tenants other than the food-courts. Customer flow planning within the mall is another factor that can make a tremendous impact on the success and failure of the tenant stores.

Once you start looking at these factors during the planning of a mall, another obvious aspect that jumps out is “differentiation”. Currently, there is little to choose from between malls (other than possibly the anchor store). However, with more clarity in terms of the target audience, the potential strategies for differentiation also become clearer. The visitors also become segmented accordingly, and there is a natural benefit to the tenants occupying the mall.

If, as a mall operator, you want to be in business for long, and also develop other properties in the future, the success of your tenants is probably the most critical driving factor for your business.

Integration into the Urbanscape

When we gauge malls from the perspective of integrating within the urban landscape, there are obviously some glaring errors being made. Instead of aesthetic design that reflects the heritage and culture of the location and its surroundings, or some other inspirational source for the architect, most malls that have come up are concrete and glass boxes.

Beyond the looks, some of the malls are a victim of their own success. They attract more crowds during the peak than they have planned for. Not only does the parking prove to be inadequate, there is no holding capacity for cars entering or exiting the mall. The result is a traffic nightmare – not just for general public, but even for the visitors to the mall. Someone who has spent 45 minutes stuck in a jam waiting to get into the parking of a mall will certainly not be in the best frame of mind to buy merchandise at the stores occupying the mall.

Some of the problems lie outside the mall-developer’s control – for instance land costs are a major driver of the cost of the project (and, therefore, the lease costs to the tenants), and land is a commodity which is independent. Real estate is available within the cities as brown-field sites (former industrial locations), but the regulations are convoluted and the strings are in the hands of too many different departments of the government (city, state and central). This needs joint creative thinking on the part of developers, the government and the public, if our cities are to develop in a more sane fashion than they have in the past.

Similarly, land deals are still not clean enough for foreign investors to be comfortable participating in many developments. This obviously is holding back a tremendous source of capital and domain expertise that could contribute to the growth of this sector.

Many other operational issues exist – manpower, systems, health & safety – some of them can be managed or controlled by the mall developers, and it is a question of time (and of their gaining experience). Other issues are more in the domain of the government, and need a visionary push to make “urban renewal” a true mission.

New Life for the Cities

In my opinion, one of the most interesting areas which would be in the joint interest of almost all parties (that I can think of) is the possibility of revitalizing the high streets and community markets, and reinventing them as the true centres of shopping.

Many of our markets are rotting (a strong word, but let me say it anyway). The individual stores are owned by individual owners who are not all equally capable of maintaining the same look and feel throughout. The infrastructure in and around the markets are owned or managed by several different agencies. To make matters worse, there is often no cohesiveness and no synergy in the interests of most of the members of the market association. None of these individually have the power or the mandate to recreate the shopping centre. But what if they could get together and take the help of a re-developer?

If an example is needed, New Delhi’s Connaught Place provides the example of one stage of redevelopment. Connaught Place had lost its pre-eminent position as a shopping centre, due to the spread of Delhi’s population and the new local markets that had come up. Further disruption was caused by the construction by Delhi Metro. But DMRC has reconstructed an “improved” centre, and the Metro connectivity has made the customers come back into CP, as it is affectionately known in Delhi.

There are clearly many such opportunities around India’s cities. These need to be looked at as a commercial opportunity for all concerned (revenue for the redeveloper, better sales for the store owners / tenants, more tax revenue for the government from additional sales and consumption). But it is also a broader social opportunity to breathe a new life into our cities, and to make them proud beacons of a growing India.

It would be a mission that would truly prove the worth of shopping centre developers, urban planners, regulators and the retailers themselves.
Any takers?

It’s quite amazing that “store productivity” doesn’t grab the attention of most people in the retail trade in India, despite the fact that real estate costs are riding an all-time high. It’s become quite typical for rentals to range 20-25% of sales, and in many cases even higher than that. (In those instances, a retailer could only hope to make money out of illegitimate activity or illegal merchandise, which is not part of the business plan of anyone I know!)

Many brands will (and possibly can) justify paying absurdly high rentals with the rationale that in the store portfolio, some locations will never make money, but are needed as marquee locations for “must-have” visibility. This can work if you do have a balanced store portfolio. The question is whether the low-rent locations actually have the capability to generate enough margin to support the unprofitable locations.

While some of the rentals are comparable to expensive real estate in the developed markets, gross margins in India are typically thinner than in Europe, USA etc., reducing the spread a retailer has for its operational expenses. Add to the mix over-estimation of consumer demand, and the scenario looks even gloomier.

In this context, to my mind, each store needs to be made as productive as it can be. There needs to be fairly sharp focus on store performance and category performance data.

However, in the last 18-months or so, conversations with Indian and international brands and retailers operating in the Indian market, showed that topline (sales) growth and new store openings were the focus for most retailers (even till a few weeks ago).  Most branded suppliers have also shown unprecedented sales growth on the back of new store openings – their own exclusive stores, as well as new sites being added by department store chains carrying their brand.

For instance, in March 2007, one (new) brand said that their business plan called for 50 stores by the end of 2007, and 100 by the end of 2008.

When sales growth can be achieved just by opening more new boxes (stores), productivity and efficiency don’t appear to be important.

I believe 2008 will see a change in management priorities. I don’t think the unnamed brand above will open its 100 stores. It is very likely that they will want their already opened stores to work harder.

Productivity is obviously linked to store operations (people, process, technology) – when the merchandise and the customer are both in the store, you need to make sure the two are matched quickly and effectively, and that there is a focus on conversion, average transaction values and efficient inventory management. But that is only one part of the story.

Support functions, such as marketing, supply chain, buying and merchandising have a huge role to play as well.

Category management, efficient and responsive supply chains, optimising store-footprint and catchment to ensure maximum walk-ins … these are some of the issues I believe top management needs to look at carefully in the coming 24 months.

If you are in a senior management position in a retail business, what are your priorities this year?

From a simple tower to human-sized figures of cartoon characters – we’ve seen a whole range of creative expression using a simple plastic brick. (Well, to be accurate, a wide variety of plastic bricks – but all developed around the same principle.)

An icon in a child’s world, the LEGO ® brick has just turned 50-years young.

According to the company, “there are actually more than 900 million different ways of combining six eight-stud bricks of the same colour.” Ample room for creativity!

The company itself is about 75 years old, and was named LEGO after the founder Ole Kirk Christiansen put two Danish words together – “Leg godt” – meaning “play well”.

The company has had its ups and downs, the brand has been extended to include other product / service offerings, and the group also includes other brands today. But the power of the simple LEGO brick lives on, even in this wired (or increasingly wireless) world.

The time the brand has been around just re-emphasised the point about consistency and time being very important building blocks for brands.

“Play Well!”

Last year in an impassioned memo, Starbucks’ Howard Schultz identified several strategic and operational decisions that, according to him, were responsible for a deteriorating customer experience at Starbucks.

Starbucks faced the classic problem of any company scaling up (especially a retail brand) – how to be large without being bureaucratic, how to be efficient without losing the soul of the brand, how to be consistent without losing the differentiation edge.

The problem created by Starbucks taking the certain decisions was compounded by the fact that competitors have not stood still either. Competition has improved its core products (coffee), as well as the augmented product (store ambience, service, wait time etc.), and in comparison Starbucks has possibly stood still or slipped back.

Now, almost a year after that memo, Starbucks begins 2008 with Schultz stepping back into the CEO role. It’ll be interesting to see how his passion for the brand is infused back into the stores and the operations in the coming months.

On a separate note, the classic “founder vs. professional” conundrum also comes to mind, along with the notable examples of Apple (Steve Jobs), The Body Shop (Anita Roddick) and others. (Though Howard Schultz was not strictly the founder of Starbucks – the company was founded in 1971, and Schultz bought the company in 1987 when there were less than 20 stores in the chain – he is pretty close to being one.)

The question is: for iconic brands that are more than just the physical product or service being sold, can a ‘professional CEO’ ever take the place of the founder(s), replicate their passion & vision and maintain the integrity of the brand? I believe there are examples to support both answers: ‘Yes’ and ‘No’.

What do YOU think?

At a faux “pubby” restaurant, I asked a friend why she didn’t order fries with the fried fish she had asked for? (I was looking for a carb-fat fix, but couldn’t legitimately order a whole portion just for myself.)

A withering look accompanied the dismissal, “You and your excesses!”

Undeterred, I went on, “But if I suggested having fish and chips?”

“Well, that would be a fine. That’s standard British fare.”  That clinched it for me. “So it’s okay to have it when you call it fish and chips, but not if you ask for “fried fish and fries”?!”

[After all, the Brits call French fries chips. The stuff that the Americans call ‘chips’ are actually called ‘crisps’ by the Brits – more logical, isn’t it? After all, the fries are not really crispy so it wouldn’t do to call those crisps!]

This kind of dilemma generally doesn’t bother the rest of the world – they either pick British English, or American (more and more), or just dispense with English altogether. But for Indians it can be quite puzzling and troublesome, especially those that have pedigreed “convent-education” – i.e. whose teachers were also ‘convent-educated’, and have drilled in the “proper” (i.e. British) spellings and names – and they run into Americanized environments such as food courts.

That led us on to a profound discussion about one of the most global and globally visible businesses – fashion – and how it binds the world together.

One would think that, as a globalised business, at least the fashion arena would be more inclusive and speak a common language. It does, mostly.

Till you hit ‘Sportswear’. It is a little strange.

I’m sure there is a conspiracy afoot – though I’m not sure who’s behind it, or who’s the target. All I know that it gets very confusing.

The first – most obvious and logical – image that springs to mind is that of athletes, active sports, and performance.  Caps, headbands, T-shirts and sweats, wrist bands, shorts, track pants, terry socks – you get the picture.

It’s quite clear.

You may be on the treadmill trying to lose weight, or on the court just keeping fit, or even on the fairways networking with your peers – there is an action-orientation as there is activity involved and a sporting game (whether team or individual).

There is a need for comfort and freedom of movement, a need for allowing sweat to evaporate and keep the body cool (but not too cold in case you are playing in the colder climes), and sometimes a need to prevent the odd wobble.

There is certain kind of clothing that fits the bill, and all of it is not appropriate to all sporting occasions or types of sport. For instance, swimwear on the tennis court may make the game more interesting to the spectators, but is of very little practical value to the players. (Having said that, “convergence” is a big buzzword nowadays, and some of the recent trends in women’s tennis apparel seem to be leading to the same conclusion.)

Good, then, you say – sportswear should be quite, quite clear – it is functional, and meant to enable specific performance.

Or is it?

Scan the websites, shelves or magazines, and the variety of merchandise that parades under the sportswear banner quickly dispenses with that image.  The category encompasses ‘sports-inspired fashion’ (and a truly inspired marketing person must have thought up that term) to casualwear, to clubwear, to the ‘I don’t know where-to wear’.

The sports-inspired look that grew big a few decades ago (think sweatshirts, track pants and sneakers) … and for some brands it seems to have become big again in recent times. The link back to active sportswear is quite clear in terms of styling, fabric and so on, so the use of the term is understandable.

The sporting brands also wanted new avenues to grow.

So you’ve got adidas, Reebok, Nike and their ilk doing casualwear or ‘leisurewear’, even as they plaster the billboards with sportspeople from basketball, football, cricket, and other games. But it’s not their problem – if someone with a ‘comfortable’ Body Mass Index wants to emulate the active image of Shaq or Air Jordan without really meaning to get down to the court, who is the brand to complain? Just make the ‘sporty’ clothes looser, bigger.

But somewhere along the way, sportswear seems to have become the ‘catchall’ category – a melting pot of styling (or the dustbin of style cues), depending on whether your perspective is inspired or inspiration-challenged.

For instance, it is easy to imagine that somewhere along the way, someone who did great T-shirts thought that actually he could increase his sales by selling jeans and chinos as well. And then others caught on to the trick.  Since these brands were already labeled sportswear, the definition stretched and then expanded to accommodate – just as sportswear does!

So now it is understandable to find some casualwear masquerading as sportswear.

But then you have menswear clearly targeted at the sport of ‘pulling birds’ and the womenwear geared for hunting at night. What should be clearly labeled clubwear is pretending to be casualwear and inching surreptitiously close to the sportswear label.

Then, there are these preppy types bringing on their University-team type look.

And the ‘ethnic’ print inspired skimpy halters and skirts whose only sporty function is to increase the heart-rate (the onlooker’s, not of the person wearing them).

The big thing about sportswear is ‘cool’.  Often it is about cutting edge.  So if the ‘cutting edge’ style looks like it won’t remain alive long enough to become a category by itself, it’s conveniently shoved into the sportswear category.

Sportswear is about slick and quick. It’s so fluid, so large, and so all-encompassing and messy (where are the boundaries?), that if there is a businessperson wanting to grow a brand fast, sportswear would be the category to follow.

It’s clearly a category for the Indian market, because there are plenty of bright young businesspeople who want to grow it big and quick.

I’m expecting a sportswear deluge. Just don’t ask me for figures or growth projections – let’s just say, they are elastic and accommodating like the category.

[Just to complete the story I began with – I got my friend’s fries, and wolfed them down, the waist elastic of the sports-inspired track pants expanding comfortably. None of that clubwear masquerading as sportswear for me – I was geared for the active sport of mall-crawl.

My friend meanwhile was going on about this particular store in New York, when I said, “I didn’t know they had shops for people interested is the social and historical study of mankind.” And that started a whole new argument – but that’s another story for another time.]

[This was the closing column “Checkout” for the inaugural issue of the Indian edition of Sportswear International.]