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March this year, they fell by six to eight per cent in Ahmedabad.
This is a far cry from 2007, when Ahmedabad got the country’s first, and largest, hypermarket — a 1,65,000-square-feet Reliance Retail store that housed 95,000 products, at the Iscon Mega Mall. More than six years on, the hypermart has shrunk to one-third of its original size.
A similar fate has met stores run by Promart, Subhiksha, More and Spencers, among others. Malls, too, are closing down. Fun Republic, the city’s first “mall-cum-multiplex”, downed its shutters in July 2011. Piramyd mall and Gallops mall followed suit.
Why is Ahmedabad, one of the richest cities in India, witnessing the most drastic retail slowdown? Piyush Kumar Sinha, professor of marketing and chairperson of Centre for Retailing at IIM-Ahmedabad, blames it on the “the real-estate model of retail”. “It is killing the industry. Between 2000-07, when big names like Birlas, Reliance, Adanis, etc., entered retail, everybody suddenly started seeing gold in the sector. Developers got into a race to build bigger malls and were more inclined to sell space to investors, rather than focus on developing their properties as suitable retail destinations,” he says.
What goes into making a suitable retail destination? “The location, the sizes and positioning of stores, and the brand mix,” says Neeraj Tomar, head of Ahmedabad operations of JLL. A good example of the right brand mix, he says, is to house apparel and clothing-related accessories stores on the ground floor, footwear, children’s apparel and toys on the second floor, and food courts, gaming zones and multiplexes on the top floor, “as it helps improve accessibility and ease movement of customer traffic”. But most malls in Ahmedabad were sold “piecemeal” to investors, without a brand-mix plan in place. “There were instances where a painter (selling his personal creations) occupied space between two footwear brands. Or where a chemist and an electrical appliance retailer were parked between international apparel brands,” says Tomar.
Such inadequate planning led to fewer footfalls, thus forcing stores to wind up. Malls such as Dev Arc, 10 Acres, Balaji Agora and R3 Mall wear a half-empty look. They began