Malls to see dismal Diwali amid surge in e-retail

India's shopping malls, already under huge pressure, expect to see a sharp decline in footfalls to the extent of 55.58 per cent during the ongoing festive season this year thanks to the boom in online shopping, reveals an Assocham survey.

According to the just-concluded survey, Delhi-NCR has recorded the highest decline in footfalls at city malls. As per the study, about 120-150 malls were launched in the past two years but close to 65-70 per cent of the spaces in many of the malls still remain empty. Several malls, unable to attract dealerships, are even shutting down.

The major factors for this situation are economic slowdown, online shopping, high interest rate and inflation in consumer goods items. The steep drop in shoppers have hit the malls which are already suffering from large vacant spaces, says the Assocham paper.

The industry body's research team interacted with about 720 leasing managers, representatives of malls' managements, strategists, marketers and supervisors in Delhi-NCR, Mumbai, Ahmedabad, Chennai, Kolkata, Hyderabad, Bangalore, Chandigarh and Dehradun.

In the nine major cities, more than 59 per cent of the total mall space remains vacant, with Delhi-NCR topping the list with 68.5 per cent, followed by Mumbai at 65 per cent, Ahmedabad at 61 per cent and Chennai at 60 per cent.

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 per cent occupancy, others struggle with less than 20 per cent, 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 remaining malls lie somewhere in between good performing and bad performing malls - average performers, adds the survey.

A mere 8-10 per cent of these shopping malls are running successfully in India but are facing tough competition from online retailers such as Flipkart, Amazon, Jabong, and Snapdeal, which deliver goods to the front door at minimal cost.

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, Ahmedabad etc. according to Assocham.

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

The most popular among the e-commerce websites have been giving massive discounts on purchase of popular brands of apparel, footwear, and electronic goods, coinciding with the upcoming festive month.

The growing trend is being attributed to the fact that all reputed Indian and international brands have tied-up with these websites and are being offered to the consumers at a much lower price than their retail prices.