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TECH TALK: India Rising: Malls Everywhere

January 18th, 2006 · No Comments

Ah, Malls! They have become the new Temples in India. With fancy malls sprouting all over the place, they have become magnets for youth with money and families seeking to spend some time away from home. Most malls have incorporated multiplexes and restaurants.

I still remember being fascinated by the malls and huge shopping complexes in places like Bangkok, Dubai and Singapore. No longer. Not only are the Indian malls equally big and good, most international brands are available here. It seems only a little while ago that I had excitedly gone to Crossroads in Tardeo in Mumbai it was our first mall in the city. I used to take friends from abroad there and show off the changing Mumbai and India. At that time, the joke was that only the parking lot and McDonalds there made money. People came, saw, enjoyed the air-conditioning, and never shopped. All that has changed. Now, Phoenix Mills (renamed High Street Phoenix) is building a multi-storey car park to cater to the growing clientele. Malls have been the new weekend destinations for those choosing to stay in town.

A September 2004 story in TIME captured the essence of the mall mania and is still as true: Both for locals and for visitors from abroad, nothing seems to symbolize India’s transformation from a stagnant third-world country into an emerging economic super-power as much as its sparkling new malls. American brand names like Levi’s and McDonald’s clutter the air-conditioned interiors, teenagers in low-cut jeans hang out in groups, cappuccino is sold at kiosks, and everyone appears to be having a great time. Eager to cash in, India’s real estate developers are in a frenzy: up to 600 malls are likely to be up and running in India by the end of 2009up from 20 malls this yearaccording to KSA Technopak, a New Delhi-based consulting firm. The capital is the epicenter of the boom, with as many as 100 mallssome estimates put the number at 150planned for New Delhi and its vicinity in the next three years. There’s only one hitch: many of these malls will struggle to make money.

Malls are the visible face of the dramatic change in retailing thats going on in India. From the incumbents like Pantaloons (which also owns Big Bazaar seen as Indias Wal-Mart) to heavyweights like Reliance which is planning a big entry into the retail sector in India, selling in India will no longer be the same. For customers that means good news in the form of choice and discounts. For retailers, it means that they need to get to scale rapidly.

A story last May in the International Herald Tribune highlighted mixed early results from the mall expansion:

Shoppers are spending a lot of time and not much money here, and profits are beginning to fall. In short, India’s retail revolution, which began with the arrival of the first shopping mall less than six years ago, is having teething troubles.
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Retail analysts remain optimistic that the appetite for this form of shopping is just developing. The statistics look positive: Although 300 million people still survive on less than $1 a day, India’s middle class is estimated to number 250 million.

About 65 percent of the population is younger than 35, the right age for the mall experience, and designated as a powerful consumer force, having grown up without the shortages and self-denial that older generations lived through. Just 22 million Indians are credit-card users, but the number is expected to triple by 2008.

Ajay Khanna, executive director of DLF, a development firm, is relentlessly positive about the future of the shopping complex – a business in which his company has invested millions of dollars.

“India has a huge middle class, 60 to 70 percent of whom live in the big metros,” Khanna said recently. “They have large disposable incomes and through television are being exposed to what lifestyle is like in the rest of the world, so aspirational values are appearing. We think that the retail revolution is going to be bigger than the IT revolution in India,” a reference to information technology.

“In a way the mall experience is not new to the Indian psyche,” Khanna continued. “Like Europe, India always had a lot of village fairs; Indians like one-stop shopping.

“In a mall, you have entertainment, you have food, you have product retail – a very similar experience to a mela, an Indian fair. We see the phenomenon as set to grow dramatically,” he said.

Along with malls, there is another m-word which is changing India.

Tomorrow: Mobiles for All


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