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Post meltdown,malls face shutdown threat

Malls in Gujarat are now facing the meltdown heat. The city had a sound mall culture; but with the economic slump further intensifying,city malls face a shutdown threat.

Written by Ujjwala Nayudu | Ahmedabad |
February 10, 2009 3:29:59 am

Malls in Gujarat are now facing the meltdown heat. The city had a sound mall culture; but with the economic slump further intensifying,city malls face a shutdown threat.

Retail market sources have said that three big malls in the city— Gallops,Dev Arc and R3 Mall—are on the verge of shutdown. The friction between retailers and mall owners on rentals has led many mall stores to down their shutters.

Harit Shukla,Senior Manager,Gallops Mall,phrased it as “a havoc that has come in the retail market as retail is still in its infancy in India”. According to him,the chances of revival are least until next year.

Indraneel Banerjee,a retail analyst and General Manager of 10 Acre Mall,which has managed to register 10 per cent growth this year as compared to last year,opined that the crunch acted as a catalyst for the problems of the malls in West Ahmedabad. “Most of the malls had come up during the development ‘bubble’ in the city. Only the malls with a good supply chain,management and expertise on consumer behaviour would survive,” he said.

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“As compared to other players,we have been planning ahead of time. Although our footfall and conversion ratio have decreased,we have not taken desperate measures like staff layoffs. We have lowered the rentals and tenants are happy,” Shukla said.

Contrary to Shukla’s claims,an apparel shop owner,who ran his store in the Gallops Mall earlier,confirmed that there is serious tussle between the storeowners and mall management. The storeowners are tired of the high rentals and heavy maintenance costs and are planning to shutdown. “They are tired of the adamant management that refuses to cooperate. We decided to shut down the store because we couldn’t afford it anymore,” he said. The owner added that this will eventually force the mall to close down.

The R3 Mall,which started last September,has had a raw deal. The mall intended to possess around 200 stores but runs only 10 at present. The stores like Lilliput,OYO and two other kids’ apparel stores closed down due to rental issues.

“The malls never attracted many takers. With the meltdown,the retailers,who had shops in the mall,left within 2 to 3 months of the opening. The rentals are skyrocketing and we do not get many consumers because the mall has been getting minimal business,” said the manager of Blue Buddha,an apparel store in the mall.

Vijay Patel,owner of the mall,said,”We have brought down our store rentals. Our footfalls and sales have gone down drastically,but we have good relations with the storeowners. The serious effect of cash crunch may appear later,and then we will see what to do.”

Suryakumar Sharma,training partner in Retail Association of India,said the high overhead costs,poor customer satisfaction and retailers working on credit have left the malls in a vulnerable condition. “They have an advantage of offering all services under one roof. Therefore,they must not shutdown but rather make it non-A/C,run a lesser number of stores,squeeze their area of operation,cut down on the number of outlets and the like,” he added.

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