New Delhi: Blame it on the steep discounts offered by e-commerce players. Shopping malls are set to suffer this Diwali.
Footfalls at malls in Delhi and the National Capital Region (NCR) are estimated to decline 55.58% during the ongoing festive season, revealed a study by industry body Associated Chambers of Commerce and Industry of India (Assocham).
Not just Delhi, the trend is likely to extend to cities like Mumbai, Chennai and Ahmedabad, the study added.
“Economic slowdown, online shopping, high interest rates, inflation of consumer goods and steep drop in shoppers have hit the malls which are already suffering from large vacant spaces,” noted the study released on Friday.
In the past two years, according to the study, about 120-150 malls were launched but about 65-70% of the space in many of the malls remains empty.
“Several malls, unable to attract shops, are even shutting down. 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 study found.
In the nine major cities, more than 59% of the total mall space remains vacant. Delhi-NCR tops the list with 68.5%, followed by Mumbai at 65%, Ahmedabad at 61% and Chennai at 60%, the report said.
The Assocham study also noted that several developers have already started offering rent-free periods of up to six months to big brands to lure retailers.
The Assocham study is conducted based on responses from 720 leasing managers, management representatives of malls, strategists, marketers and supervisors in Delhi-NCR, Mumbai, Ahmedabad, Chennai, Kolkata, Hyderabad, Bengaluru, Chandigarh and Dehradun.
Assocham estimated that online shopping will cross Rs.55,000 crore this festive season. According to the study, there may be a five-fold increase in the revenue clocked by the e-commerce companies in categories like mobile phones, electronics, designer furniture, home decorations, apparel, accessories, jewellery and footwear.
However, the share of online shopping vis-a-vis the total retail market in India was just 2% in 2014, and is projected to reach around 11% by 2019, according to a February report by property consultant Knight Frank India Pvt. Ltd and the lobby group Retailers Association of India (RAI).
Commenting on the study, Anuj Puri, chairman and country head of JLL India, a realty consulting firm, said while the Assocham study does reflect some of the ground realities of e-commerce’s influence on retail today, it is difficult to read this as a departure from the physical retail culture.
“Online shopping has definitely increased, but a significant part of this would be from aspirational smaller cities without a well-defined mall culture. Today, a lot more Indians shop online, but they also go to malls because malls are not only about shopping but about an experience. In fact, this is where malls will continue to have an edge over e-tail. Today’s malls are family destinations. The festive season is, among other things, a season in which to indulge the senses and for families to have a good time. This is what malls are offering, and large cities like Mumbai are not exactly replete with alternatives for it,” he added.
Delhi-based real estate firm DLF, which operates a few shopping malls in Delhi and NCR, declined to comment on the Assocham study. A spokesperson at DLF said footfalls at two of its south Delhi malls had gone up considerably in the recent months. “Currently, we are running a very successful luxury shopping festival at DLF Emporio and a Diwali promotion at DLF Promenade. The festive season is looking robust (for us),” the spokesperson added.
In September, rating agency Crisil said that the brick and mortar retailers were expected to see their growth rate moderate to 13-15% over the next 2-3 years from an annual average growth rate of 24% seen over the last five years as online shopping rises in the country.