Nexus Malls, the Indian retail portfolio arm of the Blackstone Group which owns and operates 17 malls across 13 cities, says it has seen a 130% recovery in business at a portfolio-level compared to 2019. That said, Dalip Sehgal, CEO of Nexus Malls, believes consumer buying behaviour in a few categories has changed for keeps. Excerpts:
Analysts and operators have started talking of the property market’s revival from the pandemic lows. What has been your experience? Which categories have recovered the fastest?
Consumer sentiment has turned positive due to reasons such as a strong vaccination drive, total lifting of restrictions and opening up of offices. This also indicates that life has come back to normal. We have also noted that the consumer dwell time at malls and their spends coming back to 2019 levels. That is because after facing protracted lockdowns and curfews over the past two years, consumers just want to go back to travelling, shopping at malls and socialising. So categories such as luxury, electronics, footwear and fashion have recovered very quickly. We have seen a similar trend across our portfolio malls. But post-pandemic, grocery shopping has reduced at malls because consumers now depend more on apps that offer things like 30-minute delivery. With the upcoming festivities, we are expecting the sales and footfalls to pick up even further.
You just mentioned that a lot of grocery shopping has moved online. Do you see this shift as a permanent phenomenon? Are bricks-and-mortar malls having to offer more discounts and dog-eat-dog deals to lure customers back?
During the pandemic, we saw the online shift because of the various restrictions and the lockdown. People were left with no option but to buy items online. Post-pandemic, … consumers want to head out and experience the true essence of shopping from malls. One major difference is that online food delivery that got a boost during the pandemic is returning to the pre-pandemic normal. But grocery shopping is still preferred through the online medium because of the convenience factor. Trends in every other category show that consumers prefer shopping at malls.
What has been your experience when it comes to rental negotiation or re-negotiation post-pandemic?
We have customised deals with our partners to ensure business continuity. Re-negotiations are happening but still negligible. On the other hand, many new retail players are coming to our malls. Currently, our malls have over 98% occupancy.
Cost cutting, closures and lay-offs were a common feature during the pandemic years. How did you manage?
While there has been a lot of noise about various corporations retrenching and undertaking pay cuts, we decided none of our employees will be furloughed. We probably were the only mall company in India to not cut salaries for our employees as well. Several of our employees stepped up and came up with ideas to reduce the cost of operations at our malls, while these were non-operational. Some of the most noticeable ideas which we successfully implemented across our entire portfolio were contactless elevator mechanism; minimal contact shopping across the malls; sensor-based water taps across washrooms; fast-tag based parking fees facility and implementation of solar power. The Shopping Centres Association of India adopted several of our recommendations as a part of their SOPs.
You said people have started coming back to malls but you had to play your part to get them back. What were those steps?
I am a firm believer in the Chinese proverb, “When the winds of change blow, some people build walls and others build windmills.” We used the pandemic as an opportunity to prepare for restrictions to be lifted and malls to reopen. We are probably the only modern retail company to get ourselves audited by certification organisation Bureau Veritas. The third party audits and certifications meant that customers were reassured of their safety when they walked in. In turn, this resulted in the fastest business recoveries for us across the country at a portfolio level. We also reached out to the local authorities to use our parking lots as drive-in vaccination centres.
Coming to your operational costs. The safety features that were put in place during the pandemic months would have added to your cost. Do you see that as something you have to live with?
Keeping our premises safe did lead to a spike in the cost of operations. Our teams came up with innovative cost-saving measures that helped us keep a check on those. Contactless payments and parking system can be cited as an example.
Going back a little, you had said there would be many “cross-functional synergies” when the Blackstone Group’s retail platform was rebranded as Nexus Malls. Did those materialise?
In June 2021, we decided to undertake a rebranding exercise at once, and bring all the malls we own under the Nexus Malls brand. During the pandemic, we also acquired eight Forum Malls. This presented us with the perfect opportunity to come up with a unified identity. From a marketing standpoint, this allows us the flexibility to host the same activation across our 17 malls… From the leasing perspective, earlier, all our malls were known by their erstwhile identities. Now… we can leverage our negotiations with retail partners to ensure win-win deals…