As the second wave of Covid slowly subsided, shopping malls began to recover faster than the first wave, supported by a rapid easing of restrictions and also pent-up demand.
“Retail is back to normal and business is rebounding. Almost 70-80% of it is back, ”says Abhinav C Ajmera, President (Leasing), Omaxe Ltd.
Echoing the same thoughts, Prashant Gaurav Gupta, Vice President and Head of Luxury Shopping Centers, DLF Limited says: “At DLF Emporio and Chanakya, we have had the highest footfall in the past 13 years. The sales of most of our partners have gone from 50% to 300%, depending on the brands you are looking at. In the current scenario, the consumer is ready and you have a shortage of products to sell now; it could also be due to the change in consumption pattern. Previously, people who bought luxury items preferred Dubai, Singapore, London or Paris, which were the top four destinations outside of domestic shopping. Today, due to travel restrictions, they do not have this comfort and have to buy everything in the country. It might be different for different segments, but when it comes to luxury it works extremely well after the second lockdown. “
Changing consumer behavior
Retailers see a confidence in consumer behavior which ultimately turns into a purchasing decision.
“Before the pandemic, the fashion industry was optimistic in 2019. We thought 2020 would be a good year for us as all the inventory and cost planning was complete, but when we entered the pandemic everything was ‘stopped. We were under enormous cost pressure; 2021 gave us a sigh of relief. At the same time, if you look at the recovery of 2019, which is unfortunately an industrial benchmark of performance but in terms of cost, you cannot use 2019 as a benchmark for your sales because, for me, my input cost, the cost of fabric, labor, logistics, rentals are from 2021. We face challenges to recalibrate the business, but from a recovery perspective I see hope, unlike 2020. We are 70-80%, but there is a long way to go, ”says Vivek Srivastava, Business Development Manager, Benetton Group.
The effect of the pandemic has been severe on all brand categories and all sides of the retail business; developers and executives have suffered huge losses.
“I think we’re on the road to recovery, and there are a few things we need to keep in mind; First, whether we like it or not, we need to embrace technology in terms of apps, tech shopping, because all of these things are now a part of our lives and are here to stay. Second, the last few weeks have been brilliant in terms of footfall, sales, in fact, on average, some brands are reaching 80 to 90 percent. The road to recovery will take another 6 to 8 months. At the same time, things will not return to normal like before COVID. The expectations and experience of customers in the mall or individual stores have changed, the way they will consume, the categories in which they will spend and the share of wallet by category have also changed; these changes are here to stay, ”shares Rehan Huck, vice president of retail, The ILC Group, co-founder and CEO, Propel – A Venture of ILC Group of Companies.
How are level II and level III cities evolving?
According to a few reports, in 2019 it was predicted that the supply of malls is expected to reach around 65 million square feet by the end of 2020 and that ambitious Tier II and Tier III cities will flock more to these types of destinations. shopping. .
Cementing his beliefs in predictions, Gupta says, “I think those expectations will hold true. According to research from one of the reputable companies, by 2030, around 40 Indian cities of Tier II and III alone would account for $ 1.5 trillion of the economy. If this kind of growth is coming from Tier II and Tier III cities, there’s no chance that retail will be left behind. We’ve had a bump because of the pandemic, but the two will coexist when it comes to online and offline sales. From organized retail to large corporations, everyone is interested in the omnichannel way of doing business where you have a seamless transition from online to offline and how a hybrid model can work.
“The focus on Level II and Level III cities began even before COVID. The transition had already started, and the main reasons are the cost of occupancy and profitability per store. Rents in metropolitan cities are skyrocketing and increasing exponentially every year. Therefore, most of the brands have realized by doing their numbers that their stores in level II and level III cities have relatively low operational storage costs because the wages are much lower, the cost of electricity is much. lower. As a result, the rental is less, which is an essential component of the store’s profitability. As a result, Level II and Level III stores are more profitable, although the numbers are drastically different in terms of a particular store’s turnover. During the pandemic, subways were the most affected by curfews and closures. Level II and Level III cities were able to recover and bounce back a bit faster than subways. There are many Tier II and Tier III cities that are unexplored, and 80 percent of brands with premium or mass appeal are seriously considering Tier II and Tier III strategies, ”Huck adds.
“Aspirations are much higher in Tier II and Tier III cities. We, as a developer, have a lot of interests in level II and level III cities than in subways, because we see more potential there, ”adds Ajmera.
The consumer psyche, buying behavior, cost of occupancy, and overall business profile change dramatically as we move from subways to Tier II and Tier III cities. So if a mall is to appear anywhere where it’s a metro or level 2 and 3, it has to represent some differentiation. The USP must come out clearly.
The pandemic has changed the way consumers shop. And to meet their changing expectations, brands are introducing many technological innovations.
“When it comes to technology, a lot of brands have changed the way they work. AR and VR have become an integral part of the branding strategy. DIOR, for example, posted a B27 sneaker on Instagram with a filter where you can try the sneaker through Instagram and buy it. There are now Spring / Summer fashion shows taking place on platforms like Twitch, which is the first time that luxury brands have held fashion shows online. Even the FDCI edition, couture as well as fashion shows were online. I was reading a report that said that globally, if 30% of people are comfortable shopping online, that percentage in India is 57%. So I have a feeling that if technological advances will be made on all fronts, there will be a hybrid model; one way could be that retail stores can become distribution centers or other hybrid models. The technology will continue to advance, but the two will coexist, ”says Gupta.
“Neither model can completely kill the other model. Theoretically, if you have an online presence, your brick and mortar will only become a distribution center, but what we’re missing here is the experience. shopping. The experience of eating out, shopping, seeing the whole store, the ambience of the mall, expertise therefore plays an important role. There is no brand or brand. developer or aspect of real estate that doesn’t embrace technology or artificial intelligence or enhance the overall experience. The two will coexist profitably and peacefully, “adds Huck.