Attitude and Perception towards Shopping Malls 1.1 BACKGROUND: The organized retail industry in India stands at a booming Rs.18,000 crores (2002-2003) which is just 2% of the entire retailing industry. It is currently growing at a rate of 10% per annum with the fashion and food industry escalating at 20% per annum. A study by Knight Frank shows that total retail space is expected to rise to about 25 million square feet (2.3 million square meters) in the next three years across 50 cities from 8-9 million square feet now. There are 200 malls in planning or under construction. Shopping, entertainment and food will accelerate and will be the next major buzzwords in the industry. Traditional retailing has existed in India since time immemorial, what is being talked of is the organized retail sector which consists of large format stores, shopping malls/arcades and huge chain stores. The entire industry is heavily customer centric. For the organized retail segment to grow and gain success, it is essential to break the inertia and ignorance amongst the potential customers about the new retail formats, the advantages of shopping in these new stores and the value for money that these new formats offer. All this, in light of the dynamically changing industry, market and consumer psyche. Alliance Business Academy, Bangalore 1 1. INTRODUCTION
The organized retail industry in India stands at a booming Rs.18,000 crores (2002-2003) which is just 2% of the entire retailing industry. It is currently growing at a rate of 10% per annum with the fashion and food industry escalating at 20% per annum. A study by Knight Frank shows that total retail space is expected to rise to about 25 million square feet (2.3 million square meters) in the next three years across 50 cities from 8-9 million square feet now. There are 200 malls in planning or under construction. Shopping, entertainment and food will accelerate and will be the next major buzzwords in the industry.
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Attitude and Perception towards Shopping Malls
1.1 BACKGROUND:
The organized retail industry in India stands at a booming Rs.18,000 crores
(2002-2003) which is just 2% of the entire retailing industry. It is currently growing at a
rate of 10% per annum with the fashion and food industry escalating at 20% per annum.
A study by Knight Frank shows that total retail space is expected to rise to about 25
million square feet (2.3 million square meters) in the next three years across 50 cities
from 8-9 million square feet now. There are 200 malls in planning or under construction.
Shopping, entertainment and food will accelerate and will be the next major buzzwords in
the industry.
Traditional retailing has existed in India since time immemorial, what is being
talked of is the organized retail sector which consists of large format stores, shopping
malls/arcades and huge chain stores. The entire industry is heavily customer centric. For
the organized retail segment to grow and gain success, it is essential to break the inertia
and ignorance amongst the potential customers about the new retail formats, the
advantages of shopping in these new stores and the value for money that these new
formats offer. All this, in light of the dynamically changing industry, market and
consumer psyche.
The retail industry is divided into a number of segments like garments, music,
books, pharmaceuticals, quick service restaurants, malls etc. In India, the retail sector is
the second largest employer after agriculture. The retailing sector in India is highly
fragmented and predominantly consists of small independent, owner-managed shops.
There are some 12 million retail outlets in India. Besides, the country is also dotted with
low-cost kiosks and pushcarts. There has been a boom in retail trade in India during the
past few years owing to a gradual increase in the disposable incomes of the middle class
households. More and more players are coming into the retail business in India to
introduce new formats like malls, supermarkets, discount stores, department stores and
even changing the traditional looks of bookstores, chemist shops, and furnishing stores.
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1. INTRODUCTION
Attitude and Perception towards Shopping Malls
1.2 SOME OF THE ASPECTS OF RETAILING WHERE CHANGE HAS
OCCURRED ARE:
Medium of transaction - from currency to plastic money to virtual transactions
Store format – from tents to concrete structures – from mom & pop stores to
departmental stores to malls and multiplexes
Store Layout – from small stores of about 250 square feet to malls covering an
area of nearly 1,50,000 square feet.
Strategy – from push to pull.
Focus –from being retailer centric to being customer centric
Technology – customized software packages are now being designed to run a
retail chain or a mall
In context to all this, malls were a new emerging format in India with a totally
different business model. It started in the year 2000 with a Spencer’s at Chennai,
Crossroads at Mumbai, Ansal’s at Delhi and a few non-metro malls, mostly in the South.
Investments – a world-class mall in India typically commands an investment of Rs. 3000
per square feet. Malls are not merely points of sales for different retailers but it is a place
where several brands build their equity in unison.
Malls typically work on a catchment area philosophy. They concentrate on
providing convenience, variety and experience. They are trying to converge the
classification of products on the utility and involvement basis. Malls are at an
introductory stage in their life cycles exception being Crossroads, which has been there
for three years. However, malls are burgeoning at every possible location. There are two
hundred malls under planning or construction. Their main focus is on:
Introducing the concept to the target audience
Encouraging the footfalls within the malls
Concentrate on the stores as they build up the mall.
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Attitude and Perception towards Shopping Malls
The year 2003 was important in the history of mall development in India, with the
number of operational malls reaching double digits. At the moment, most malls can boast
of large numbers -- the MGF mall in Gurgaon gets over 25,000 footfalls a day, while
Ansal Plaza gets up to 65,000 on weekends. The conversion rate is 10-12 per cent. But
with new malls coming up, these numbers are sure to thin. Also, the traffic from
neighboring towns is projected to dip sharply once malls come up there. This could see
erosion in the handsome profits retailers in malls are currently reporting.
Malls evolved not with a motive of evolving a new retail format but with the idea
of developing a community center for people where they could converge for shopping,
cultural activity and social interaction. However, slowly, they increased in such huge
number that they became the center of the universe. They replaced the street shopping
centers and became shopping communities themselves. This gave rise to a need of
studying the customers in order to decide the mall patronage and not simple real estate
and revenue alone. In an overmalled market, when consumers have choice of variety and
several shopping center options for multiple purpose trips, the need arises for a measure
of attraction, which grasps the essence of consumer’s liking and can also be practically
applied. Meoti, Feignberg and Westgate discuss the plausible factors responsible for the
attraction of consumers towards malls. According to them, there is a basis for assuming
that consumers may be attracted to a mall by feelings evoked by qualitative aspects of a
particular amalgamation of stores rather than a variety of stores with a limited depth and
width. This basis, they have taken to be Byrne’s behavioral learning theory and term it as
the reinforcement-affect model. Stores, which a consumer likes or prefers shopping in,
represent reinforcing stimuli that contribute to the attraction response towards the mall.
Shoppers undergo important changes in their lifestyle in terms of their lifestyles,
spending habits, shopping tendencies and strategies. Stoltman, Gentry and Anglin view
mall shopping as a relative choice phenomenon i.e. a consumer chooses to shop at malls
over other outlets and chooses some malls over other malls where this choice is given –
patronage is contingent upon the choice alternatives. Furthermore, mall patronage does
not occur in abstract, it is a context driven choice. A consumer may (prefer / expect to)
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Attitude and Perception towards Shopping Malls
shop at malls for clothes, but not for home electronics; they may shop at malls when
many purchasing needs exist but few solutions have been identified (e.g. gift shopping);
or, they may shop at malls when pressed for time. In addition, those who have certain
shopping orientations may prefer to shop at malls, as in case of the browser. Mall
shopping can also reflect more economical, or functional, shopping orientations because
they provide a convenient / efficient way to compare shops across a variety of goods
and/or a way to complete several purchases in one trip.
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Attitude and Perception towards Shopping Malls
New shopping-malls having become operational in many cities across India, it is
interesting to observe how the shopping-behaviour of consumers in the vicinity of these
malls has changed and thereby draw some lessons that could be of some use to the
developers of hundreds of new malls that are currently under planning or construction
across India.
It is still not too long ago that the operators of a particular new shopping-mall at
Mumbai had to contemplate restricting entries of visitors by imposing conditions that
such entry was limited to those having mobile phones or credit cards a.k.a., the income
tax department's one in six criterion for filing a tax return.
Delhi and Gurgaon saw some of the initial mall developers become parking lot
operators as well by charging exorbitant parking fees from all visitors. Rentals, rather
than going down with more malls coming up, started moving up even as the quality of
services within the malls started deteriorating. In this context, therefore, it is somewhat
surprising that questions are already being asked, albeit in whispers, whether shopping-
malls can survive and operate profitably in India. Many tenants lament about the low
percentage of conversions from those who walk through the portals of these malls, and
casual observers routinely find shopping-bags missing in the hands of the supposed
shoppers visiting these malls as an indicator that the initial euphoria about shopping in
the malls is already on the wane and that consumers are reverting to their traditional
shopping-destinations.
There are some myths and some realities about these observations. It is, indeed,
true that many Indian retailer tenants in the shopping-malls have now become familiar
with terms such as footfalls, conversions, average transaction value, and repeat
customers.
However, it is also true that for many of these tenants, it has been their first
expansion beyond their traditional high street locations and hence, they have expectations
born more out of hype than by any real experience.
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1.3 SHOPPING MALLS: MYTHS & REALITIES
Attitude and Perception towards Shopping Malls
For instance, the daily or weekend footfalls in traditional shopping high streets of
India such as South Extension and Karol Bagh in Delhi, Linking Road in Mumbai,
Commercial Street or Brigade Road in Bangalore, or for that matter, T Nagar or Anna
Nagar in Chennai would easily exceed the more carefully estimated (or measured)
footfalls in any of the malls in the country. Similarly, if one were to carefully observe the
ratio of visitors having "shopping-bags" in their hands in these high streets versus those
in the new malls, it is not going to be very different.
As far as individual retailers' performance is concerned, even in the traditional
markets some established retailers do extraordinarily well while many other shops see a
change of "shop boards" very frequently. There is no reason to believe that it should be
any different in a shopping-mall, which, in any case, is fundamentally no different from a
traditional shopping-high street, except that a mall has a more modern and compact
structure, in most cases a single roof. Local retailer tenants who move into a new mall for
the first time should not expect any customer loyalty being built up overnight.
For example, in Delhi's case, it is possible for a retailer to be very successful in
Karol Bagh or Lajpat Nagar shopping-districts but he would have to start from scratch in
terms of building up brand recognition as well as generating customer conversions in a
new location such as Gurgaon or Noida.
In contrast, national retailers such as Shoppers Stop, or national exclusive brand
outlets such as those operated by Madura Garments, Arvind Brands, Raymond, and
Zodiac, have national brand recognition and hence the performance of their outlets in
shopping-malls is usually comparable (or even better) with their outlets in traditional
shopping-markets.
Secondly, with most mall developers having blindly opted for a questionable
winning formula of shopping, entertainment and food, it is no surprise to find many mall
visitors having no shopping-bags since they have been enticed to visit only for watching a
movie and/or having a burger or a pizza or even a cup of coffee.
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Attitude and Perception towards Shopping Malls
The situation pertaining to shopping, for instance, would be no different in
locations such as Saket or Vasant Vihar in Delhi, which are better known for their movie
theatres and eating options.
What is the lesson for mall developers and for the prospective tenants? For the
developers, the critical lesson is to invest some quality effort in understanding the
shopping-needs of customers in their targeted "catchment" areas and then build a
carefully planned portfolio of retail options that can meet the needs of these targeted
customers.
In many instances, customers would only need shopping and eating options rather
than a multiplex as well. The developers also have to understand that their retailer tenants
have to earn a profit and hence the rentals have to be aligned to what the retail business
can bear (usually 5-8 per cent of gross revenues).
Mall developers also have to create distinctive identities for their specific malls,
much like the identities that have developed over time for major shopping-high streets in
various cities in the country.
Their work is not done just when the mall has been commissioned! As for the
would-be retailer tenants, it is important to realise that merely moving into a mall does
not guarantee business for them.
They have to work as hard to draw consumers to their own stores once the latter
have entered the mall, and then have the right value proposition for them to get converted
into customers, and then become repeat customers.
The final, obvious, conclusion is that mall developers have to invest in getting a
better understanding about the retail business, while retailers have to get a better
understanding about the dynamics of operating at a new location.
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Attitude and Perception towards Shopping Malls
2.1 NEED OF THE STUDY:
Customer is the most important link in a service industry and the same applies to
retailing as well. Utmost care is now being taken to please the customers to retain and
expand the existing customer base. However in India, not many strategic changes in the
store formats seem to have taken place by identifying the customer needs upfront. It is
generally the retailer who comes up with a new format and the customers try it out
because of its newness. Most of the formats in India have been adapted from other
developed markets throughout the world. The success of one format springs up more of
its kind. One such format that has been successful and has lead to rapid growth of its kind
is a MALL. As mentioned above, there are nearly 200 malls under construction in 50
cities across India. However, the question is whether excess of anything would be
acceptable amongst customers? What would determine the success of these malls? What
would be their differentiating factor? If it is their product mix and layout, then a thought
has to be given to it. With malls housing stores of almost all product categories and with
little differentiation amongst these stores, it is important to determine what truly matters
to the customer so as to differentiate. Would branding of malls be successful? Malls work
on a catchment area philosophy i.e. 80% of a mall’s earnings comes from its catchment
area. Does this mean that it is difficult to cater to a heterogeneous locality in this era
where niche marketing is at its pinnacle?
A number of such questions have been asked and research carried out in markets
where malls are a developed phenomena. In India, where malls are still at a nascent stage
in a relatively newfound organised retail industry, very less research has been carried out
on shoppers consuming malls. This study is an attempt to understand the behaviour and
attitude of these shoppers towards malls based on primary research. It also looks in detail
at three malls in particular supposed to represent the city of Bangalore in a geographical
manner.
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2. DESIGN OF THE STUDY
Attitude and Perception towards Shopping Malls
2.2 RESEARCH OBJECTIVES:
To understand the behaviour of shoppers towards malls
To understand the attitudes of shoppers towards malls
To explore and determine the mall choice drivers amongst shoppers
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2.3 SCOPE:
The retail industry in India is facing the same situation as it was during the late
eighties and early nineties in the U.S.A. A lot of research work is beginning in the area of
malls just as it began there in the past. This study is one such initial step towards
understanding the behaviour and attitude of customers towards malls as they are
burgeoning and filling up the spaces in the cities. The retail industry in India has been
extremely dynamic in the past ten years. Not only have malls come up as the latest format
in vogue, but also attempts are being made to construct malls in new layouts. Such a
vigorous environment is definitely conducive to consumer research and their behaviour
and attitude towards the change. This study, being carried out at the nascent stage of
malls in India, has potential to be the foundation for future research work in this area.
2.4 BENEFICIARIES:
Beneficiaries of this research study would be:
Mall owners and mall managers : This study would give them a consumer’s
perspective in their business model and hence help them decide their strategies better.
Behaviour, attitude, perception and imageries have immense marketing implications
and these have gained importance in case of malls because of their sudden expanse
across the country.
Retail chain / store owners : Knowing the consumer’s perspective towards malls
would help them decide which malls or what kind of malls to place their stores in.
this study would also elicit information on the most popular stores amongst the mall
shoppers. This would help the retail chain/store owners in building their brand equity
or positioning themselves accordingly.
Researchers / Students : Malls is an upcoming sector in the retail industry at
present. This study would be useful in case of any further research or study being
carried out on any aspect in this sector. It would provide the researcher / students with
the consumer’s perspective on the sector.
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Attitude and Perception towards Shopping Malls
2.5 RESEARCH METHODOLOGY:
2.5.1 SAMPLE DESIGN:
Sampling Universe: People visiting malls
Sampling Frame:
Forum at Koramangala (South Bangalore)
5th Avenue at Brigade Road (East Bangalore) and
Sukh Sagar at Gandhinagar (Central Bangalore)
Sampling technique: Stratified sampling (according to age) followed by quota
sampling (on the basis of malls and gender)
Sample size: 120
Sampling Unit: Individual
Scope: Bangalore
2.6 SAMPLING GRID:
MALLS Forum 5th Avenue Sukh Sagar
Age –
Group
(years)
Male Female Male Female Male Female
15-20 4 4 4 4 4 4
21-25 4 4 4 4 4 4
26-35 4 4 4 4 4 4
36-50 4 4 4 4 4 4
50+ 4 4 4 4 4 4
Table No. 1
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Attitude and Perception towards Shopping Malls
2.7 RATIONALE FOR THE SAMPLE DESIGN:
The age groups signify
Teenagers (15-20 years)
Early earners (21-25 years)
Recently settled / Having small children (26-35 years)
With family (Having grown up children) (36-50 years)
Retired / Staying without children (50+ years)
Stratified sampling is used in order to cover all the age groups while within them,
quota sampling has been used in order to cover both the genders equally and because
of paucity of time.
The malls at which people would be interviewed are chosen according to their
geographical spread in order to cover the entire city of Bangalore.
Bangalore is one of fastest growing cities in the country. Popularly known as
“Pub Hub” and “Silicon valley”, it has become a central place for tech’s becoming
the sought out place for software professionals. It has experienced a population
growth of 3% p.a. over the past decade. Bangalore residents have a high propensity to
spend. Average annual household expenditure of 36% of the population lies in the
range of Rs. 50,000 – Rs. 1,00,000, according to the Central Statistics Organization.
This coupled with the fact that 36% of the age group falls under the age group of 20-
45 years, indicates a favorable situation for majority of the retailers. From the high