A recent report in a financial daily says that the additional mall space in India is going to double in 2010 from the current levels. The additional availability in Bangalore, Hyderabad, Pune, NCR, Mumbai, Calcutta and Chennai is 16.2 mn sq feet in 2008. This is going to become 19.1 mn sq feet in 2009 and 32.4 mn sq feet in 2010. Does demand exist for all this space?
In the US, the first mall in the world came up in Minnesota (Southdale Shopping Centre) in 1956.Victor Gruen, a refugee from Austria, conceptualized this to provide the experience of a European city centre. He made the structure covered and air-conditioned to enable people to visit it round the year. This also helped the whites perfectly well to have a cloistered environment in the suburbs. Today, the rich whites are going back to city centres and the suburbs are getting more mixed. This is taking away the principal customer segment for the malls - the affluent, white women. The conventional mall is also facing troubled times. The US has about eleven hundred malls today and no new mall is coming up.
Contrast this with the supply situation in India- NCR alone has close to seventy malls (albeit smaller ones). A back of the envelope calculation will show that the incomes, demand and availability of space are not even remotely matched. The cities are also full of vibrant open markets and shopping complexes. No wonder, the malls are faring badly and some charge exorbitant rates to break even. But that is a suicidal game because the tenants suffer and eventually leave.
The industry now needs to have a deeper understanding of demand and supply. The viable demand is much lesser than availability and the supply of space needs to go up far more slowly.
In the US, the first mall in the world came up in Minnesota (Southdale Shopping Centre) in 1956.Victor Gruen, a refugee from Austria, conceptualized this to provide the experience of a European city centre. He made the structure covered and air-conditioned to enable people to visit it round the year. This also helped the whites perfectly well to have a cloistered environment in the suburbs. Today, the rich whites are going back to city centres and the suburbs are getting more mixed. This is taking away the principal customer segment for the malls - the affluent, white women. The conventional mall is also facing troubled times. The US has about eleven hundred malls today and no new mall is coming up.
Contrast this with the supply situation in India- NCR alone has close to seventy malls (albeit smaller ones). A back of the envelope calculation will show that the incomes, demand and availability of space are not even remotely matched. The cities are also full of vibrant open markets and shopping complexes. No wonder, the malls are faring badly and some charge exorbitant rates to break even. But that is a suicidal game because the tenants suffer and eventually leave.
The industry now needs to have a deeper understanding of demand and supply. The viable demand is much lesser than availability and the supply of space needs to go up far more slowly.
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