Indian Retail Realism
Phoenix Mills Ltd has been a pioneer in converting mill land into modern, multi-use integrated property. Led by young Managing Director, Atul Ruia, the company is redefining the retail development in Indian cities. Talking to Realty Plus, he gives his insight on what retail real-estate means today.
What has been the growth pattern of retail real-estate in India?
Retail real-estate in India has come a long way over the past 15 years. From mere shopping destinations, malls have become urban lifestyle consumption destinations which offer holistic & premium experience for retail, F&B and entertainment as a mix.
The Phoenix Mills Limited has been at the forefront of this evolution. Our large retail-led, mixed-use developments have the best-in-class modern facilities available inside each of our integrated developments. Our city-centric developments are landmarks/destinations in the cities where they operate, around which prominent commercial and residential hubs have sprung up. Consequently, our centers are the best urban lifestyle consumption destinations in the key gateway cities of India.
What are the newer formats of retail space?
A mall is a living breathing animal that keeps on evolving through its life. While initially, it will have larger concentration of Anchor brands, over the years the brand mix evolves having smaller super premium offerings. For example last year at High Street Phoenix, a large hypermarket made way for an international departmental store, H&M – a brand that is more in sync with our target customers –which inaugurated its flagship store in Mumbai in August 2016.
Besides churn in the existing brands and store categories, key focus area for malls is to enhance overall experience for the entire family. As a result, malls are reformatting themselves by expanding entertainment zones and by providing varied food & beverages options. Snow World, Amoeba (Bowling & gaming center) and the newly opened PVR’s 4DX theatre at Phoenix Market city, Mumbai are some of the best example of this evolution. These newer formats result in higher frequency of repeat customer visits and longer time spent by the customer in each visit
Phoenix Mills is the pioneer of mixed-use development model in India. Our strategy is to acquire city-centric, large land parcels which we typically anchor with a million square feet of retail development in the first phase of development and the balance development potential is utilized by residential, commercial or hotel developments which complement the retail development.
What are the new trends in Mall concept and designs?
It is critical for malls to be in sync with the changing aspirations and demands of consumers. With growing economy resulting into rising disposable income, consumers have become more savvy and demanding. As India’s leading mall operator, Phoenix Mills constantly refurbishes and upgrades its malls, introducing new concepts, designs and experiences.We also create 360 degree sensorial experience which constitutes perfume architecture & music architecture designed specifically for the different zones of the mall, larger than life visually appealing décor experiences & events. The smaller malls too, can thrive in any gateway city provided they remain contemporary and satisfy consumers’ need to fulfill varied experiences for the entire family under one roof.
What are some of the distinct operational methods of Phoenix malls?
Our Malls are not just shopping destinations, but complete experience centres as people look for a holistic experience comprising of shopping, F&B and entertainment. “Everything that we do is with a sole focus – To enhance the Customer’s experience at our malls.” We want people to come and spend more time at our properties with their families and friends, which also results in us getting a share of their wallet. We want to keep giving our customers a different experience every time they visit our malls and this is what will keep them visiting us.
Also, Phoenix Mills is not just the owner and developer but also operator of all our malls. This gives immense advantage in terms of smooth renovation, upgrade, and smoother brand transition without disrupting causing any inconvenience to customers and other retailers. It also helps us in bringing in efficiency without compromising on the quality of experience as we need to run the mall in a way that it gives the customer a seamless premium experience. As a result, all our malls look & feel new even though the Marketcity malls were constructed more than 4-5 years ago.
Phoenix Mills do not sell any space in its malls as we believe in actively managing our malls and lease the mall space to retailers who are more like our partners. Our relationship with the retailers is symbiotic.
What are the challenges facing the retail sector?
A million square feet mall, – a typical size of our MarketCity malls takes around 4-5 years to come up post the land acquisition. A mall developer is required to take various permissions even before the construction begins. A single Window clearance for projects will go a long way in fewer time and cost overruns and allow us to offer a better product to our customers. Likewise, the 100% FDI in retail will certainly add to an overall economic growth. Besides the investments that the country will receive, the exchange of know-how, additional employment opportunities, better opportunities for the farm sector and finally more choices for consumer are the key benefits.
What is the growth potential of the retail sector in India?
Retail sector is at a very nascent stage in India. Retail penetration in India as compared to developed nations is miniscule. India’s biggest asset in my opinion is its young working population. A McKinsey study indicates that as much as 79% of growth in India in the next 15 years is going to come from increased per capita consumption. Rising working age population and increased urbanization bode well for sustained growth in Private consumption. Phoenix Mills has built a strong foundation on which it can grow in the years to come and tap the unmet demand for quality retail in India.
Phoenix Mills, being the largest mall operator in India is a proxy to the country’s retail sector growth. As a mall operator with close to six million square feet of retail assets, we have assimilated lot of learnings and that has helped us in narrowing down to a mall format which is retail led mixed-use, with a size of at least a million square feet with good mix of shopping, entertainment and F&B experiences. This format has worked well for us across “Marketcity” brand in Pune, Bangalore, Chennai and Mumbai.
The Phoenix Mills Limited today has the largest retail portfolio in India. Starting with High Street Phoenix in Lower Parel, Mumbai in 2001, our portfolio has expanded to India’s top cities comprising Phoenix Marketcity formats in Chennai, Bengaluru, Pune and Kurla along with smaller formats called Phoenix United in Lucknow and Bareilly. In the next five years, we aim to double our retail portfolio and consolidate our position as the number one mall developer in the country.