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Surge in online sales dampens festive season for malls

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Bangalore | Published: October 31, 2015 12:20:05 AM

In nine major cities, more than 59% of the total mall space remains vacant, with Delhi-NCR topping the list with 68.5%, followed by Mumbai at 65%, Ahmedabad at 61% and Bengaluru at 60%. While some malls are operating at 40% occupancy, others struggle with less than 20%, due to poor location and parking facilities

Shopping malls across the country are likely to witness a drastic fall in footfalls during Diwali, thanks to the rapid surge in e-commerce business. According to a recent survey by industry body ASSOCHAM, Delhi-NCR will see a drop of 55.58% in footfalls, followed by Mumbai (51%), Ahmedabad (49%), Bengaluru (46.5%) and Kolkata (42%) among others.

About 120-150 malls were launched in the past two years but close to 65-70% of space in many malls still remain empty. Several malls, unable to attract shops, are even shutting down, said ASSOCHAM’s just concluded study. Major factors attributed to this situation include economic slowdown, online shopping, high interest rate and inflation of consumer goods items.

The ASSOCHAM Research team interacted with 3,000 shoppers and also 720 managers, representatives of malls’ management, strategists, marketers and supervisors in Delhi-NCR, Mumbai, Ahmedabad, Bengaluru, Chennai, Kolkata, Hyderabad, Chandigarh and Dehradun.

In nine major cities, more than 59% of the total mall space remains vacant, with Delhi-NCR topping the list with 68.5%, followed by Mumbai at 65%, Ahmedabad at 61% and Bengaluru at 60%. According to the survey, several developers have already started giving rent-free period of up to six months for big brands to lure retailers.

While some malls are operating at 40% occupancy, others struggle with less than 20%, mainly due to poor location, poor design and poor parking facilities, the survey found.

Both retailers and consultants seem convinced that the mall magic seems to have disappeared in a puff of smoke on the back of the economic slowdown, poor revenue model, low footfalls-to-sales conversion and lack of special purpose malls, adds the survey.

For some malls, even the design and construction quality is poor, the study says. A meager 8-10% of these shopping malls are running successfully in India and facing tough competition from online retailers such as Flipkart, Amazon, Jabong, Snapdeal, which hand-delivers goods.

The festival season this year has triggered a huge rise in online shopping and may cross the Rs 55,000-crore mark, resulting in the halving of footfalls in malls in places like Delhi, Mumbai, Chennai and Ahmedabad among others.

The study also revealed that there may be a five-fold increase in the revenue clocked in by the e-commerce websites in categories such as mobile phones, electronics, designer furniture, home decorations, apparel, accessories, jewellery and footwear among others.

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