Mall Management Compress

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Mall Management
About the Authors
Dr. Harvinder Singh is an Associate Professor in the area of

Marketing with Institute of Management Technology (IMT),
Ghaziabad. He has completed his doctorate from BIT, Mesra,
Ranchi, on Management of Shopping Malls. He has done his MBA
from Guru Nanak Dev University, Amritsar.
Dr. Harvinder Singh has over 14 years of teaching experience. He

has been part of faculty in institutions like BIMTECH, BIT Mesra,
Amity Business School and APEEJAY Institute of Management. Dr.
Singh has been a part of Centres of Retail at BIMTECH and Amity
Business School. He has already authored two books and has
published more than a dozen papers in international and national journals apart from being
on the reviewing board of many. He has also worked with Confederation of Indian Industries
(CM) and Boston Consulting Group (BCG) for preparing vision documents for the states of
Punjab and Rajasthan.
Dr. Singh is an active trainer in the area of retail and distribution management. Some of
his clients include Gujarat Cooperative Milk Marketing Federation (GCMMF), Ministry of
Defense, The Energy and Resource Institute (TERI) and Small Industries Development Bank
of India (SIDBI).
In recognition of his contributions, Dr. Singh was awarded 'Dewang Mehta award for best
teacher in Retail Management' in the year 2008.
Dr. Srini R. Srinivasan is a professor of Marketing and heading the

Research Program at Vivekanand Education Societies' Institute of
Management Studies and Research, Mumbai. He holds masters
degree in Management Studies and has received his Ph.D in the
area of Retail Management from Mumbai University. A passionate
teacher. Dr. Srini has over 11 years of teaching experience in
Management Institutes such as NITIE, SYMBIOSIS, KJSOMAIYA,
SIESCOMS and VESIMSR where he has worked as full time faculty.
Dr. Srini's general area of expertise and research interest lies
in Consumer Behavior, Marketing Management, International
Marketing, Retail Management and Marketing Strategies. He has
published and presented more than 40 research papers and articles
in leading magazines and reputed journals in India and abroad. Dr. Srini has two books to his
credit, which are Cases in Retail Management and Strategic Retail Management. He has
received the Best Educationist Award in 2011 from Indian Solidarity Council & HEM and is
also a recipient of NIC Young Achievers Award. Dr. Srini has been involved in work related to
strategic consulting for Lawrence & Mayo, Loot and Dosa Plaza etc.
Mall Management
Harvinder Singh
Associate Professor—Marketing
IMT, Ghaziabad
Srini R. Srinivasan
Chairperson, Vivekanand Education Society's

Institute of Management Studies and Research, Mumbai
Si
J L
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Dedicated to
My wife, Sumeet, and my son, Ramneek.
—Dr. Harvinder Singh
Dedicated to
My wife, Srividhya, son, Adithya, and daughter, Anusha.
—Dr. Srini R. Srinivasan

roreuiord
The Business Monitor International (BMI) India Retail Report predicts that total retail sales
in India will increase from 1NR 18.85 trillion (USD 392.6 billion) in 2011 (33 to 35% of India's
GDP) to INR 26.64 trillion (USD 674.37 billion) by 2015. Such startling figures are indicative
of why the wider world is beginning to take such an interest in the Indian Retail sector. Mall
Management: Operating in Indian Retail Space by Singh and Srinivasan is a timely and well
structured contribution to this topic which is important not just for retail practitioners and
students based in the sub-continent, but to a wider global audience. This book elucidates the
factors that are essential to ensuring that retail, with particular regard to shopping malls, is a
key engine of economic growth.
The vehicle of thorough explanation, analysis and a judicious choice of case studies the author
provides an eminently readable introduction to such seemingly arid topics such as Financing
and Revenue Model of Malls, Leasing Administration and Handling Anchor Tenants. The
authors write with a clarity and fluidity that not only engages the reader with the topic,
but ensures that they too begin to see Mall Management in a whole new light. Economic
complexities are explained in a cogent fashion, and the reader soon begins to sense the need
to appreciate the local factors that have ensured European and North American design
models cannot be successfully transplanted into an Indian context. Chapter 4 (Financing and
Revenue Model for Shopping Malls) provides valuable insight into the unique dynamics of
the retail sector that have resulted in certain speculative operators getting into difficulties for
want of sector specific knowledge.
This work has the potential to become a valuable guide to anyone seeking intricacies involved
in managing a mall right from the basics to more complex. With its clear learning outcomes
and assessment tasks it demonstrates a keen understanding of pedagogical and andragogical
methodology. The book also benefits from some well chosen visuals (including photographs
and store layout plans) which ensure a wider appreciation of the multiplicity of service
offerings designed to maximize footfalls. This book rightly emphasizes the vastness of India
as a market and has appreciated the significance of the regional and local conditions.
Mall Management: Operating in Indian Retail Space is certainly a book that deserves the
attention of the Retailers Association of India, but its true worth will lie in the part it can play
internationally in helping a better understanding of why certain shopping malls work or fail.
Dr P.R.Datta
Executive Chair
Academy of Business & Retail Management, London, UK
Prefoee
Shopping malls are synonymous with organized retail in India so much so that antagonists of
organized retail often lambast the 'mall culture'. In small towns, any modern format store is
mentioned as a 'mall'. Many Indian cities have commercial complexes having the term 'Mall'
suffixed to their names. It speaks volumes of recognition that the concept gained in barely
two decades in India. People's understanding of the concept and its utility is undergoing
refinement due to interaction with malls. Many shopping malls that were developed during
initial stages are facing the heat due to a clear mismatch between shopper's expectations and
what they offer. As the ancient Greek philosopher, Heraclitus, said, "Nothing is permanent
except change," people's expectation from shopping mall would undergo more radical
changes as time progresses. But would shopping malls be in a position to accommodate those
changes? And even before that: would people developing and managing shopping malls be
in a position to anticipate changes that are likely to come in future? What are the different
controllable factors that can be used to mix and match to come up with the ideal "mall-mix"
to keep the place relevant in the minds of people at all times? A search for these elements
induced us to write this book.
There are a number of myths associated with shopping malls - shopping malls are construction
projects; arranging finances and tenants is the only major activity in mall business; mall
management means facilities management; there is a standard formula for success applicable
across all shopping malls; and the biggest myth of all: people desperately need shopping
malls and would flock towards any mall as soon as it is built.
The Indian experience of last couple of decades has revealed that "If you build it, they will
come" approach doesn't work anymore. People are quick to reject dated options as soon as
they come across superior options as these are now available in plenty. The approach should
be: build and manage it such so that they come. Like any other business mall management
needs a holistic approach. This business has all the elements, flavors and functions that any
other business has. That is why we have split the book into a number of chapters, with each
chapter representing a core activity or function involved in the practice of mall management.
Chapters have been arranged chronologically so that a simple reading of the book takes
the reader through all the vital steps of mall management as and when these happen.
While writing the book an attempt was made to avoid things that are highly technical (e.g.
engineering and construction terms) as user of the book is more likely to be a person with
general management profile rather than somebody working in hardcore technical domain.
On the other hand, it is also ensured that the book highlights key aspects of these functions
so that a mall manager is in a better position to understand, appreciate and supervise work
in these domains. Special emphasis has been made on issues relating to tenant-mix planning,
zoning, leasing and marketing/promotion as these decisions are taken time and again during
the operating life of the mall.
viii Foreujord
Shopping Malls and Modern Retail Practices ride together. Due to the acute paucity of quality
retail space on high streets, the demand for additional space to spur the growth of the Indian
retail industry is being met by the Shopping Mall. But do we know enough of how to locate,
design, build, lease, market, promote and manage a Shopping Mall?
Shopping Malls have characterized the rapid growth of retail across the world. Over the last
10 years, there has been a virtual explosion in the growth of shopping malls in India. But have
all of them been scientifically designed, leased and managed? A few have passed this test but
many have fallen behind.
A Shopping mall is a long term commitment. It cannot be left and forgotten after it is built.
A Mall developer must have two objectives before they venture out- how to make their mall
attractive to retailers so that they would find the location and its catchment of customers,
appealing enough to move in and to the consumers in the catchment, who should find the
Mall a convenient and exciting shopping destination.
Singh and Srinivasan have captured all aspects of Mall management very succinctly and
scientifically in this book. I am sure the readers will find many nuggets of wisdom while they
flip through the pages of this book.
Bijou Kurien
President and Chief Executive - Lifestyle at Reliance Retail Ltd
Bengaluru
Malls have been the part of Modern Consumers Lifestyle for the last 50 Years.
The Mall Hi Mall phenomenon started in India just about 12 years back. Anyone who had
a piece of land started building malls without considering the nitty-gritty of this business.
Hence, today we find that only a handful of these malls are successful.
As this business concept is new in India, there is very little knowledge about it. In such a
scenario, this book Mall Management: Operating in Indian Retail Space comes as a great tool.
The authors seem have spent a lot of time researching and bringing practical insights to this
interesting topic.
This textbook does full justice to the various facets of Mall Management - right from
conceptualisation to design, execution, management, and financing and various regulatory
issues. The authors have undertaken a hands-on approach to present all the issues pertaining
to mall management, starting with conceptual background followed by relevant cases.
It is definitely going to be a invaluable tool for the students of retail management. I am

sure that it will also be a handy reference for the practitioners within the business of mall
management.
Govind Shrikhande
Customer Care Associate & Managing Director
Shoppers Stop Ltd.
Mumbai
x Preface
Apart from the mall managers, this book would be a suitable reading for practitioners and
students of retail management. It is because shopping malls are the popular and potent
platform to carry out retail business and a thorough understanding of mall management
would help them in taking better decisions while booking/rejecting retail space in shopping
malls. For researchers, the book highlights a holistic view of mall business and would help
them in picking up threads for initiating and conducting research on issues that raise curiosity
in their minds.
This is our first effort in compiling relevant content in the field of mall management. We look
forward to your support as well as comments.
Dr. Harvinder Singh
Dr. Srini R. Srinivasan

neknouiled9emen(/
Title page of the book would carry two names as authors, but efforts of many people go into
fructification of ideas into a tangible entity. I consider it my responsibility to acknowledge the
contribution of all those people.
To begin with, I would like to express my gratitude to my employer. Institute of Management

Technology, Ghaziabad, and my director. Dr. Bibek Banerjee, for providing an enabling
environment in which I could find time and focus to put my ideas together in the form of
chapters. IMT provided me with distraction-free environment full of motivation and positive
energy.
Though compilation of chapters took place during my stint with IMT, major part of
content was gathered while I was working with Birla Institute of Management Technology
(BIMTECH), Greater Noida. I would like to specifically thank Dr. Harivansh Chaturvedi,
Director-BIMTECH, for giving me an opportunity to work with Centre for Retail at BIMTECH
for three long years, the place where I learned more than I taught.
It is said that one becomes a better teacher by teaching better students. I have been blessed
with good fortune of teaching some of the best students during my teaching career. A lot
of content and arguments that are part of this book came out of discussions that I had with
my students, both inside as well as outside the classroom. I thank all my students for their
contribution in this book.
Out of all the students, I would like to specifically recall Amanpreet Banga. Frequency and
intensity of my interactions with him are more than with any other student. He has rich
exposure to working in mall management and mall leasing. Many of the topics included in
the book were discussed with him and he has informally vetted that content. Thanks Aman!
I would also like to thank Mr. Govind Shrikhande who took time out of his busy schedule
to review the book. His words of wisdom have gone a long way in shaping up the book the
way it has come up. I also feel indebted to Mr. Bijou Kurien, President - Reliance Retail Ltd,
for reviewing the book and conveying his insightful observations in improving the quality
of content. I also thank Mr. Guru Dutt from Shopping Centre Association of India (SCAI) for
examining the content in terms of industry-specific requirements. I would also express my
gratitude to Dr. P. R. Datta, Executive Chair Academy of Business & Retail Management and
Editor of Journal of Business and Retail Management Research (JBRMR), for bringing in an
academician's perspective and discipline with the help of his review comments. Mr. Kumar
Rajagopalan (CEO, Retailers Association of India, Mumbai) deserves more than plain gratitude
as he has always been supportive of our initiatives. His role in this book is more than that of a
reviewer.
xii flcknouuledgements
The book would have remained in ideation phase had it not been for the pro-active outlook
and prodding by my co-author, Dr. Srini R. Srinivasan. His positive attitude and energy was
a great catalyst in making this dreams a reality.
I would like to express my sincere thanks to the entire Tata McGraw Hill family of which
we are also a part now. We appreciate and respect the support and perseverance of Mr. Amit
Kumar who has been in touch with us since the beginning. I also thank Mr. Tapas Maji, Ms.
Surabhi Khare, Mr. Yogesh Kumar, Mr. Manohar Lai, Ms. Amrita Marik and Mr. Atul Gupta
from TMH. The team has done a wonderful job and the book would have looked poorer
without their contribution.
Creation of this book took more than two years. All these years I sacrificed my personal time
that rightfully belonged to my family, but they let it happen without making any complaint. I
must thank my wife, Sumeet, who has been a great support throughout this process and my
son, Ramneek. May god bless you both!
And how all this could have happened had it not been planned by the almighty, Waheguru! I
have no words to thank hence I submit myself before the almighty, who made us an instrument
in this process of knowledge creation. Lord, give us strength, energy and wisdom so that we
keep doing this in future as well.
Dr. Harvinder Singh

Ghaziabad
I express my sincere gratitude to Shri Kanchi Mahaswmigal and my greatest appreciation

to Shri V. Shankar, Secretary, SIES Mumbai, who brought me to the financial capital and
provided me with the platform to enter into this noble profession - teaching.
No one walks alone and when one is walking on the journey of life, one just doesn't know
where you start to thank those who joined you, walked beside you, and helped you along
the way. This book marks an important milestone in the intellectual journey that I have been
on for much of my professional life. It would not have seen the light of the day without the
support of highly talented group of academicians and corporate professionals.
I would like to show my greatest appreciation to Dr. R R. Datta, Executive Chair Academy
of Business & Retail Management and Editor of Journal of Business and Retail Management
Research (JBRMR), Dr. R. K. Srivastava, Director General - Sterling Institute, and Dr. P. N.
Mukherjee, Director-VESIMSR. I also have to thank Dr. Harivinder Singh, with whom I have
had the pleasure of sharing a stage and working with, and whose words, have given me the
confidence of writing this book.
I need to thank Mr. Kumar Rajagopalan, CEO - Retailers Association of India, Mr. Bijou Korian,
President - Reliance Retail, Mr. Govind Shrikande, MD - Shoppers Stop, and Mr. Gurudutt,
SCAT These amazing personalities extended their encouragement and support. They shared
their knowledge, ideas, and numerous tips, all of which culminated in the completion of this
book. Through this book and my travels, I will continue to spread their message of support to
others wishing to develop good retail industry professionals.
I extend our deepest appreciation to Mr.Amit Kumar (from Tata McGraw Hill Education),
who re-crafted the original manuscript into this book, with his intelligence, passion and care.
flcknouuledgements xiii
I also thank my friend, philosopher and well-wisher, Mr. Vivek Mendonza, Director -
Lawrence & Mayo. I feel motivated and encouraged every time I attend his meeting. Without
his encouragement and guidance this book would not have materialized.
I express my infinite thanks to my beloved mother, who is also a teacher by profession,

my wife, Srividhya, daughter, Anusha, and son, Adithya - all of whom, in their own ways
inspired me and subconsciously contributed a tremendous support to this book.
Finally, I would like to thank my beloved students for their enthusiasm in working with the
ideas and helping me clarify my thinking in innumerable ways.
Dr. Srini R. Srinivasan

Mumbai
Conlenl/
Foreword vn
Preface ix
Acknowledgements xi
1. Introduction to Retailing and Shopping Malls 1-20
Introduction 2
Emergence of Organized Retail in India 2
Organized vs Unorganized Retail 4
Evolution of Shopping Malls 5
Malls Move Out of Indian Metros 8
Mall Management 10
Factors Stimulating Growth of Shopping Malls in India 11
Challenges of Mall Development in India 15
High Rental Charges 17
Summary 18
Review Questions 18
Practice Exercises 18
Suggested Readings 19
Case: India's first modern mall 20
2. Concept of Shopping Mall 21-38

Introduction 22
Definition of Shopping Mall—Different Perspectives 22
Shopping Centre Vs Mall: The Paradox 25
Comparison of Indian and Western Shopping Malls 26
Significance of Shopping Malls 29
Types of Shopping Malls 30
Emerging Trends 32
Summary 34
Review Questions 35
Case: The mall and the community 38
3. Mall Development Process 39-63

Introduction 40
Planning and Design Decisions 41
xvi Contents
Site for the Shopping Mall 45

Mall Design Process 47
Summary 57
Review Questions 58
Case 1: What makes a mall successful? 60
Case 2: Square peg in a round hole 62
4. Financing and Revenue Model for Shopping Malls 64-90

Introduction 65
Capital Sources for Malls 66
Sources of Revenue 74
Strategic Decisions in Mall Financing 83
Summary 87
Review Questions 88
Case: Multiple owner can't manage malls 90
5. Tenant Mix 91-115

Introduction 92
Zoning 92
Concept of Tenant Mix 93
Important Terms Related to the Tenant-mix 95
Five Attributes of the Tenant-mix 96
Benfits of Tenant-mix 98
Types of Retail Tenants 102
Tenant Categorization on the Basis of Lease Contract 103
Tenant-mix Decisions 105
Tenant Mix Modification to Flow with Times 206
Modes of Tenant-mix Improvement 206
Anchor Tenants 207
Temporary Tenants 209
Ancillary Uses of Mall Space 111
Future Direction of Tenant Mix Management 222
Summary 112
Review Questions 113
Case: Retailer developer partnership: A way forward 115
6. Leasing Administration 116-137

Introduction 227
Important Terms Related to Leasing 118
Contents xvli
Types of Lease 118

Major Provisions of A Lease Agreement 119
Significant Clauses and Exigencies Concerning Lease Agreement 121
Rent Changes in Leasing Agreement 123
Leasing Process 125
Documentation Used for Interaction with Prospective Tenants 128
Best Leasing Practices 128
Lease Preparation 130
Leasing Administration 230
Expiry and Termination of Lease 134
Summary 134
Case: Retailer's down shutters 137
7. Marketing and Promotion Activities for Shopping Malls 138-161
Introduction 139
Classification of Marketing Activities in Shopping Malls 139
Marketing and Promotion during Planning and Construction Phase 140
Targeting Retail Tenants 144
Targeting Customers 146
Marketing and Promotion during Launch and Operations Phase 147
Mall Promotion Calendar 154
From Marketing to Relationship 156
Summary 157
Case: Summer carnival at Oberoi mall, Mumbai 161
8. Facilities Management in Mall Operations 162-181

Introduction 163
Facilities Offered in a Mall 164
Summary 178
Case: Accidental deaths in shopping malls 181
9. Regulatory Framework for Shopping Malls 182-209

Introduction 183
Shops and Establishments Act 189
Environmental Regulations for Shopping Malls 190
Insurance for Shopping Malls 195
xviii Contents
Labour Laws Concerning Shopping Malls 197

Summary 199
Case 1: Disputes over right to inspect the mall 202

Case 2: Demolition of mall built on enchroached land 203
10. Handling Anchor Tenants 210-224

Introduction 211
Definition of Anchor Store 211
Popular Anchor Tenants in the Indian Malls 212
Summary 221
Case: Food court emerging as anchors 224
11. Future of Shopping Malls 225-236
Introduction 226
Comparison of Mall Development in the US and India 226
Challenges before Indian Shopping Malls 227
Life Cycle Stages of Shopping Malls 230
Summary 233
Case: Has the decline set in for the Indian malls? 236
Glossary 274
Index 293
CHAPTER
1
Introduction to Retoiling
and Shopping Molls
LEARNING OBJECTIVES
This chapter will enable the readers to

• Understand the important forces and events affecting retail in the perspective of its
evolution
• Learn about the growth and development of the organized retail worldwide and in India
• Know the prospects and challenges faced by the Indian retail business
SHOULD THERE BE FDI IN INDIAN RETAIL?
The policy framework for the retail sector in India is being hotly debated for quite some
time now. At one extreme of the debate are the people who oppose the entry of big
business houses in retail (even the Indian ones). Their argument is that retail is a major
employment generator (second only after agriculture) and the entry of big players would
decimate small retailers/intermediaries leading to a huge loss of employment. The other
extreme comprises people who advocate entry of international players like Wal-Mart.
They cite frequent bouts of food inflation experienced by the country and suggest that
the world-class supply chain infrastructure and practices used by these companies
would revolutionize the Indian agriculture, reduce wastages and stabilize food prices.
Generation of employment, remunerative prices to farmers, lower prices to consumers
and higher revenues (by way of tax collection) for the government are other reasons
cited in favour of foreign direct investment (FDI) in retail. In between the two extremes
of the retail debate is a section of Indian retailers who advocate the organized retail but
are apprehensive of the deep pockets and aggressive strategies of international retailers.
They support delay in the FDI induction in retail and seek imposition of conditions on
2 Mall Management
the entry of foreign retailers. However, some Indian retailers see the entry of foreign
retailers as a good opportunity to collaborate with them.
Though the debate is on, the Government of India on its part has taken some decisions
favouring FDI in the retail sector. It has permitted 100% FDI in cash and carry (1997) and
51% FDI in single-brand retailing (2006). But the fate of FDI in multi-brand retail still
hangs in balance.
Introduction
It is often said that 'change is the only constant' as it is sure to come, but it is variable in
the sense that it does not arrive at a constant pace. With the advances in transportation,
communication and information technology, things are changing at a faster pace.
Development of the retail sector in India is a live testimony to this.
Retail is one of the oldest professions in India that came into existence when people
started generating surplus that could be exchanged or traded. It started within the
village through barter system but over the years expanded in terms of scope, coverage
and complexity. Its outlook metamorphosed due to emergence of currency, marketplaces
and regulations. The earliest evidence of retailing is seen in the Indus Valley Civilization
(Harappa and Mohenjo-Daro), which was a predominantly urban civilization. This
civilization exchanged merchandise with the Babylonian Civilization and also sold it
through marketplaces. Over the ages, other platforms came into existence for carrying
out retailing activities. These include haats (rural as well as tribal), on-foot hawkers, push-
cart vendors, traditional vendors (e.g. maniharins), mobile traders and a variety of shops.
Retailing was an integral part of life in ancient and medieval India as is evident from the
book Arthshastra, which clearly demarcates locations for retailing of specific products and
services within a city. The old city of Delhi (Shahjehanabad) had well-planned locations and
layout for marketplaces. All these changes since the days of the Indus Valley Civilization
were more of an evolution than a sudden metamorphosis. However, during the last two
decades or so, the pace of change has been remarkable.
Emergence of Organized Retail in India
People generally associate the evolution of the organized retail in India with either the
entry of private players or the developments that took after 1991. However, the truth is
far from this. Till date, India's largest network of retail stores (if we may call them so!) is
governed by the Government of India and the state governments. Here we are referring
to 'Fair Price Shops' (ration shops) that are operated under the Public Distribution
System (PDS). Similarly, private initiatives in creating and managing organized chains
date back to the pre-liberalization era. Who can forget the icon brand 'Bata' and its pan-
India presence well before the onset of liberalization!
Fair Price Shops
The Public Distribution System (PDS) is a rationing mechanism that ensures availability
of specific quantities of select essential commodities at subsidized prices to a target group
Introduction to Retoiling ond Shopping Molls 3
of people, and Fair Price Shops (FPS) are the instruments or platforms to implement this
system. At present, India has nearly 5,00,000 FPS, which provide essential commodities
to a sizeable population of India. These shops are run by private persons under the
authorization and monitoring of respective state governments. The private person
provides the retail space and handles operational issues at the front-end (including
workforce), whereas the state government handles the supply chain. The government
also frames rules and norms to be followed by the shop. In this sense, it is very similar to
the franchising mode that operates in the modern retail business.
The Public Distribution System was started as a war-time measure in 1939 (British
India). Its evolution can be divided into four phases. Phase one was from its origin to the
1960s when it was meant to distribute imported food grains. The second phase lasted
from the 1960s to 1978 and it involved development of an administrative machinery to
handle and distribute domestically produced food grains after the Green Revolution.
The third phase lasted till 1991 and saw tremendous expansion of the network. It was
during the second and third phases that FPS started distributing a variety of products
beyond food grains. Phase four commenced in 1991 and resulted in the shift of the PDS
from universal coverage to targeted coverage.
Private Initiatives in Pre-liberalization India
Private initiatives in setting up retail store chains were taken by companies like Raymond's,
Bata, DCM and Bombay Dyeing. Some of these companies have been doing business in
India for over 70 years now. As a step towards forward integration, these companies
started chains of stores (company owned as well as franchisee owned) in Indian cities.
These stores were larger in size, had better ambience and carried deeper assortment.
Flowever, these were located in or around the existing marketplaces.
High-street Markets in India
During a large part of the twentieth century, urban retailing was carried out through
shops of varied sizes in well-demarcated marketplaces. The typical size of a shop ranged
from 50 square feet to 500 square feet. Each city had one 'sadar bazaar' ( a term used
for wholesale market), which used to be a lane or road having shops on both the sides.
Shops followed a unique pattern of clustering in which competing or complementary
shops were clustered together. In some cases, it evolved into a market that was entirely
dedicated to a single product category, for example, Jauhari Bazaar in Jaipur. There were
marketplaces like Connaught Place in Delhi, MG Road in Bangalore, Mount Road in
Chennai and Linking Road in Mumbai. Proximity to customers, relationship orientation
and trust were hallmarks of this type of retailing. This framework worked well till the
1970s or 1980s. A big change came with the advent of liberalization. The Indian market
was opened for international companies and brands. International companies desperately
needed suitable platforms to showcase their brands and products. They picked up the
best retail spaces available (e.g. Connaught Place). However, such spaces were very few,
whereas brands came in abundance. It provided an opportunity for new retail platforms
to emerge.
4 Mall Management
Forces Shaping Demand for Improved Retail Formats
Another simultaneous change took place in the customer's shopping list and shopping
preferences. The services sector started contributing a higher proportion to India's
GDP. Gradually, the private sector became a larger and more sought-after employer
than the public sector (the government). People's income skyrocketed and so did
the aspirations. The emergence of sectors like banking, finance, insurance IT and
ITES changed the economic profile of the urban population. These changes brought
commensurate improvements in people's shopping behaviour and pattern. People had
more money and less time and shopping experience and comfort became an important
part of people's life.
The above changes in market and consumers resulted in the emergence of the
organized retail formats. Department stores like Shoppers Stop, Ebony and Pantaloon
were first to come, but later on India witnessed the emergence and acceptance of myriad
retail formats. As very few existing marketplaces could provide the kind of space and
ambience required to accommodate the tenants eager to serve the 'new Indian consumer',
the situation was ripe for the emergence of shopping malls in India. Shopping malls
are considered superior to stand-alone retail stores or high-street locations as they can
insulate shoppers from unfavourable ambient factors and distractions by offering a
controlled and superior ambience. The concept of 'all solutions under one roof became a
big hit with the time-starved urban shoppers and thus shopping malls took off in India.
Organized vs Unorganized Retail
The organized retail occupies nearly 75-80 per cent of the total retail sales in the
developed countries, whereas the unorganized sector dominates the retail business in the
developing countries (ICRIER, 2007). In the developing world, the share of the organized
retail varies widely from just 1 per cent in Pakistan and 5 per cent in India to 36 per cent
in Brazil and 55 per cent in Malaysia (BRIG Report 2007). Modern retail formats, such as
hypermarkets, superstores, supermarkets, discount and convenience stores, are widely
present in the developed world. However, these retail formats have just begun to spread
to the developing countries where the retail business continues to be dominated by family
run neighbourhood shops and open markets. As a consequence, the wholesalers and
distributors who carry products from industrial suppliers and agricultural producers
to the independent family shops and open markets remain a critical part of the supply
chain in these countries.
Spread of Modern Retail in Developing Countries
The shopping mall construction boom in Asia has attracted a good deal of international
media attention during the past few years. Eight of the ten largest malls in the world were
in Asia in early 2008, and several more mega-malls in China and the United Arab Emirates
are under construction. From Shanghai to California, shopping malls are sprouting up
by dozens every year. And, with the retail sector booming, more such swanky shopping
plazas are waiting to be built.
Introduction to Retailing and Shopping Molls 5
The arrival of modern retail in developing countries occurred in three successive

phases. In the early to mid-1990s, the first phase took place in South America (e.g.
Argentina, Brazil and Chile), South East Asia and East Asia outside China (e.g. South
Korea, Malaysia, Philippines, Thailand and Taiwan), North-Central Europe (e.g. Poland,
Hungary and the Czech Republic) and South Africa. During the mid- to late 1990s, the
second phase covered Mexico, Central America (e.g. Ecuador, Colombia and Guatemala),
South East Asia (e.g. Indonesia), China and Southern-Central Europe (e.g. Bulgaria). The
third phase began in the late 1990s and early 2000s in parts of Africa (e.g. Kenya), some
countries in Central and South America (e.g. Nicaragua, Peru and Bolivia), South East
Asia (e.g. Vietnam), India and Russia.
Thus, the third-phase countries, which include India and Russia, are late comers in
the diffusion of modern retail. The main reason why they lagged behind was the severe
restrictions on EDI in retailing in these countries though the demand side features of
these countries, such as income, size of the middle class, urbanization and the share of
women in workforce, have been similar to the countries covered by the second wave. In
China and Russia, these restrictions were progressively relaxed in the 1990s and in India
partially in the 2000s. In January 2006, India allowed foreign companies to own up to 51
per cent in single-brand retail joint ventures (JVs), but multiple-brand foreign firms are
still barred in retail although they can set up wholesale operations.
Evolution of Shopping Malls
According to some researchers, malls started in the early 20th century with a group of
stores establishing off-street parking in a Baltimore neighbourhood in 1907. Another
significant development took place in the 1920s in California where supermarkets would
anchor and serve as a magnet for a strip of small stores. However, the entities referred to
in both the cases cannot be called malls in the true sense of the concept as it is understood
today. At best, these commercial units may be termed as 'precursors' of modern malls.
Incidentally, many aspects of retailing emphasized by the 'first malls' have become an
integral part of modern malls.
In 1922, in suburban Kansas City, Missouri, J.C. Nichols built the Country Club
Plaza, which was a group of stores accessible only by cars. It was constructed as the
business district for a large-scale residential development. It featured unified architecture
and paved and lighted parking lots. It was managed and operated as a single unit. In
1931, Hugh Prather developed Highland Park Shopping Village in Dallas, Texas. It was
the first group of stores having its own parking lot with the stores facing away from
the access road. Unlike Country Club Plaza, Highland Park occupied a single site that
was not bisected by public streets. The first modern shopping mall, Southdale Center,
was established in 1956 in Edina, Minnesota, outside Minneapolis. It was the first fully
enclosed mall with a two-level design. It had central air-conditioning and heating, a
comfortable common area (atrium), and two competing department stores as anchors
(ICSC, 2000).
6 Mall Management
^ WVWWNW
Country Club Plaza, Kansas City, Missouri—World's first shopping mall
The concept of mall was originally conceived as a community centre where people
would converge for shopping, cultural activities and social interactions. Traditional
developers attracted consumers to malls through the promise of making available
a wide assortment of stores and merchandise at a single location. Apart from the
products and services offered, a mall itself offers experiences that are consumable. It
has the advantage of climatic comforts and gives shoppers the freedom from noise
and traffic, which characterize other shopping venues. More recently, mall interiors
have evolved from comfortable-yet-mediocre spaces to architecturally rich with lavish
materials and sophisticated design elements such as multilevel atrium and curved
escalators. Mall managers have been organizing special events within the malls, like
home improvement expos, walking clubs, art exhibits, health screening, auto shows
and live music. Malls have also become important meeting places, especially for young
people and senior citizens. Some bigger malls have become so famous that they have
emerged as tourist destinations.
India's Entry into Shopping Mall Era
India entered the mall era in the 1990s when the first wave of mall development was
observed in the form of Spencer Plaza (Chennai), Crossroads (Mumbai) and Ansal Plaza
(New Delhi) creating approximately 6,50,000 sq. ft. of mall space in India. Despite being
the forerunners of the organized retail, these malls differ a lot from modern malls.
Phase one of Spencer Plaza was inaugurated in 1990 after rejuvenation of the fire-
gutted old Spencer Commercial Complex. The seven-floor mall has a mix of retail, office
space and entertainment facilities, but it has glaring flaws. After having sold the outlets
to retailers, the mall management has no control over the retail space utilization. There is
complete absence of the floor-wise retail concept or zoning as tenants and owners have
set shops with all kinds of retail outlets everywhere. However, the latest phase of Spencer
Plaza (phase three) is very close to a modern-day Indian mall.
[15'
Spencer Plaza, Chennai—India's first shopping mall
Ansal Plaza was launched in 1999 as a joint venture of the Housing & Urban
Development Corporation Ltd. (HUDCO), a government corporation, and the Ansal group.
Located in proximity to the posh South Extension locality in New Delhi, Ansal Plaza was
the first retail project of its kind in North India. This is a three-storey complex divided
into three wings (A, B and C) and encloses an open-air amphitheatre. The project was
conceived as a mixed-use property comprising offices and retail. Although architecturally
it looks different from modern shopping malls with an enclosed atrium and corridors, it
scores well on other parameters such as the tenant mix and zoning. Of the three pioneers.
Crossroads is closest to a modern shopping mall. Inaugurated in 1999 in the Haji Ali area of
Mumbai, Crossroads was planned and developed by the Piramal Group of Industries after
renovating their old pharmaceutical buildings into a new-style mall. It is a three-storey
construction dominated by retail, food and entertainment. Notably, none of the pioneer
malls has a multiplex as a tenant, which is in stark contrast to the present scenario.
8 Mall Management
Hi
•!
Ansal Plaza, Delhi, during its initial years
Malls Move Out of Indian Metros
The growth of India's retail sector is phenomenal. It is growing at a swift pace that is
expected to be sustained in future. Barring some slowdown in the mall construction
activity during 2008-09 due to economic recession, this sector has registered a fairly
steady growth rate. The total shopping mall area has been doubling every year. From
a meagre one million sq. ft. in 2002, it rose to over 52 million sq. ft. covered by 172
operational malls in 2009.
The Indian retail growth has been fuelled by a strong economy, favourable
demographics, rising wealth levels and rapidly changing lifestyles and aspirations of an
ever-burgeoning middle class. The mall business is spreading fast, charting a new course
in Tier II cities of India. Real estate developers are taking this phenomenon further to
smaller cities, with corporate houses like ITC and the Sriram Group making a steady
progress in proving its feasibility even in the rural market. There is no denying that top-
notch cities like Mumbai, Delhi, Bangalore, Hyderabad, Kolkata, Chennai and Pune are
leading the way. But Tier II cities like Ludhiana, Chandigarh, Nagpur and Surat are too
catching the eye of mall developers. Mall developers are in such a mood that they may
override the requirement in a specific city.
Figure 1.1 shows distribution of mall space across major centres.

The McGraw HUI Companies
Introduction to Retailing ond Shopping Molls 9
100%
H Other Centres
80% ■ Rune
□ Hyderabad
60%
□ Bangalore
40%
■ Chennai
□ Kolkotta
20%
□ Mumbai, Navi
Mumbai, Thane
0%
Year 2004 2005 2006 2007
m ncr
Year
{Source: Indian Retail Report, images. Malls of India 2009)
Figure 1.1: Distribution of mall space across major centres
According to an Images F7R research, there were about 172 operational malls in
India in 2010. North India dominated the scene with 79 operation malls followed by
West Zone with 56 operational malls. South zone with 21 malls and East zone with 16
malls. In North India, major supply of mall space came from Delhi NCR with 53 malls
out of 79 coming from its constituent cities (including, Gurgaon, Ghaziabad, Noida and
Faridabad). In west zone, 35 malls out of total 56 are in Mumbai. Major location in the
East is Kolkata with 10 out of 16 operational malls whereas South has Bangalore and
Hyderabad as prominent locations. Smaller cities like Ahmedabad, Jaipur, Nagpur,
Lucknow, Indore, Ludhiana and Chandigarh are also coming up with shopping malls..
With such high projections of new format retail space, innovation, the right tenant mix,
effective mall management and provision of ample parking space are the components
that will decide the future success of malls.
In India, the organized retail space development has witnessed a sea change in the
last decade. Over these years, there has been a spur in the availability of mall space in
India. From just three malls in 1999, the country now has a total of 172 operational malls
10 Mall Management
offering 52.2 million square feet of mall space. Though the pace of growth in mall space
dampened a bit during the last few years, according to a research, the country is likely to
have a total of nearly 750 operational malls providing 350 million sq. ft. of mall space by
the year 2015 (Images F & R Research Analysis, 2007).
Mall Management
The management procedure universally adopted for malls is that the landlord
remains responsible for all aspects of managing the mall but recovers the cost of such
management by way of a service charge levied on the tenants. The basis of service charge
apportionments varies from case to case. The mall management and the mall owner
have the same goal —of driving up the revenues achievable from the mall. Nevertheless,
there is a wide difference in the way they approach this goal. While the owner's focus is
principally on driving up the rentals, the mall manager concentrates on other ways as
well for enhancing overall revenues (such as rentals, common area maintenance charges
and marketing income) that will eventually boost the rents that the mall can command.
In India, the concept of mall management continues to be equated with the facilities
management. Several large international property consultants operate in the sphere
of facilities management. While the facilities management is one of the functions of a
mall manager, it cannot be a substitute for the integrated mall management. A facilities
manager charges a monthly fee per unit area for managing services on-site. On the other
hand, a mall manager charges a percentage of the revenue generated by the mall.
Because the management demands of a mall are substantially different from those
of an office building or an apartment complex, the mall management process comprises
certain functions that are unique to it. Even in the case of the activities that are common to
general management of a commercial or residential real estate, the orientation is entirely
different. The functions that come under modern mall management are described
below.
Positioning
Positioning a mall refers to defining the category of services it will offer based on
demographics, psychographics, income levels, competition in neighbouring areas and
extensive market research of the catchment area. For example, if the market research
indicates that the average number of households living in a particular area belongs to the
upper middle class then a high-end retail mall would suit the location.
Zoning
Zoning refers to the division of the mall space into zones for the placement of various
retailers. A mall is dependent on the success of its tenants, which translates into the
financial feasibility of tenants in the mall. Generally, there are two types of consumers
visiting malls - focused buyers and impulse buyers. The time spent by the focused buyers
in malls is relatively less compared to the impulse buyers who also enjoy window-
shopping. There is little that retailers can do to attract the focused buyers, as they usually
know what they require and from where. However, the right tenant mix and optimum
retailer placement after a diligent zoning exercise can help retailers attract both types of
consumers, especially the impulse buyers. Formulating the right tenant mix based on
zoning helps attract and retain shoppers by offering them multiple choices and satisfying
their multiple needs. It also facilitates smooth movement of shoppers within the mall by
preventing cluster formation and bottlenecks.
Promotions and Marketing
Promotional activities and organizing events in a mall form an integral part of the mall
management. Activities like food festivals, handicraft exhibitions and celebrity visits
increase footfalls and, in turn, sales volumes. Organizing cultural events has time and
again proved vital in attracting consumers to a mall. Such activities may also act as a
differentiator for a mall.
Facilities Management
The facilities management refers to the integration of people, place, process and technology
in a building. It also means optimum utilization of resources to meet organizational
needs. It broadly includes management of infrastructure, ambience and traffic.
Infrastructure Management
It refers to the management of facilities provided to the tenants within a mall. It includes
provision of adequate power supply, safety issues in case of emergency and miscellaneous
issues such as signage, water supply and sanitation, etc.
Ambience Management
The overall shopping experience provided for consumers is an important factor for the
success of any mall. The ambience management includes management of parks, fountains
and the mall's overall look.
Traffic Management
The traffic management includes managing foot traffic into the mall and parking facilities.
The foot traffic management involves crowd management inside the operational area of
a mall.
Finance Management
The financial management of the mall as a true business venture is a must. The financial
management involves monitoring and controlling of various issues such as cash receipts
and collection of income including rentals and electricity, service and other utility charges,
and payment of all invoices and expenses.
Factors Stimulating Growth of Shopping Malls in India
Some major factors that contribute in the growth of shopping malls in India are
discussed below.
12 Mall Management
The Young India
India has the advantage of a largely young population. Children below 14 years of age
currently constitute 35 per cent of India's population. By 2050, over 60 per cent of the
country's population is estimated to constitute the working age group (15-60). Two-
thirds of Indian population is under 35, with the median age of 23 years, as opposed to
the world median age of 33. India is home to 20 per cent of the global population under
25 years of age (Rama Pijapurkar, 2008). This trend is projected to continue for the next
decade. The large proportion of the working-age population translates into a lucrative
consumer base vis-a-vis other economies of the world, placing India on the radar as one
of the most promising retail destinations of the world.
Rapid Economic Growth
The fast and furious pace of growth of the Indian economy is a driving force for the Indian
consumerism, with the Indian consumers confident about their earnings and spending a
large portion of their high disposable incomes. Projections by analysts suggest that India
has the potential to emerge as the fastest-growing economy and outpace the developed
economies by 2050. Analysts predict India to sustain an average GDP growth rate of 5 per
cent till the middle of this century.
Potential Rural Market
India ranks first, ahead of Russia, in terms of the emerging market potential and is
deemed a "Priority 1" market for international retail. The organized retail penetration
is on the rise and offers an attractive proposition for the entry of new players as well as
scope for expansion by the existing players. India is home to a large base of consumers
with annual incomes falling in the range US$ 1,000-4,700, comprising over 75 million
households (ICRIER 2008). A steadily rising percentage of rich and super-rich population
and impressive disposable incomes offer a spectrum of opportunities, spanning from
rural retailing to luxury retailing. The impressive retail space availability and growing
consumerism in the emerging cities and small towns add to the market attractiveness.
Low Cost of Operations
The most attractive component of India's value proposition is its cost-effectiveness. The
existing players are increasingly turning to Tier II and Tier III cities for retail establishments
and for manpower sourcing. These cities offer significant cost advantage in the form of
availability of low-cost skilled human resources. Well-educated small-town graduates
turning to cities for employment are ideal candidates for sales and marketing executive
roles in modern organized retail formats.
Share of Wallet
The average annual expenditure of a household is estimated at Rs 1,22,446 in metro cities.

The maximum share is devoted to food and grocery at 36% followed by rent. Utilities too
account for a significant proportion. As is evident from Fig. 1.2, the Indian consumer
no longer spends typically on one type of item. Her consumption basket is getting
diversified day by day Significant shifts in the consumer spending will be seen in other
consumption categories as well, as the values and preferences of the Indian consumer
change. The shift will be in favour of 'economically enabling' categories that will either
boost current productivity or facilitate future participation in economic activity, namely
health, education, transportation and communication.
Share (in %)
35
30
25
20
15
10
T ■ ,B, I,
Share (in %)
&&o ?
» <5 '' ^ y y
////
><y // p0
/'
^ r#
a Cr
■o
-P & / y
<<•
0
Source: Compiled from data on Private Final Consumption Expenditure provided by CMIE
Figure 1.2: Consumption expenditure for an Indian family
Government Support to Modern Retail Formats
Large format malls are increasingly becoming popular with developers as well as consumers,
getting prominence with adequate retail space allocated to leisure and entertainment. To
catalyze the trend, some states like Punjab even exempted multiplexes from entertainment
tax in the past. This boosted the confidence of the mall developers to accommodate
entertainment players like PVR, Waves, Adlab and Fun Republic in large malls.
Increase in the Sizable Disposable Income
The Mckinsey Global Institute predicts dramatic changes in India's income pyramid with
the rise in the incomes of Indians (Figure 1.3). Apart from a substantial reduction in
poverty, India will create a sizeable and largely urban middle class. The National Council
of Applied Economic Research (NCAER) defines the middle class as comprising two
economic segments: seekers with real annual household disposable incomes of 200,000-
500,000 Indian rupees ($4,380-10,940 or $23,530- 58,820 at purchasing power parity
or PPP) and strivers at 500,000 -1,000,000 Indian rupees ($10,940-21,890 or $58,820-
117,650 at PPP). In 2005, the Indian middle class was still relatively small, comprising
approximately 5 per cent of the population or 13 million households (50 million people).
Flowever, if India achieves the projected growth rates, its middle class will reach 41
L
14 Mall Management
per cent of the population or 128 million households (583 million people) by 2025. In
addition, households with real annual earnings of more than 1,000,000 Indian rupees
a year (classified as global—greater than $21,890 or $117,650 at PPP) will comprise
approximately 2 per cent of the population, but earn almost a quarter of its income.
Due to unequal distribution of income, a sizeable portion of disposable income is

concentrated in the urban areas and affluent classes. However, the absolute size of rural
market is so large that the total number of middle-class homes in rural India equals the
number in urban India and thus have the same purchasing power Therefore, there is a
significant opportunity for the organized retailers in rural areas as well. The rural market
undoubtedly holds immense promise for the organized retail but companies have to
devise ways to serve this market profitably. Unlike the urban market, it is less developed
in terms of infrastructural facilities.
Household income Number or Aggregate Aggregate

brackets households disposable income consumpiton
thousand, Indian million trillion, Indian rupees, trillion, Indian rupees,
rupees, 2000 2000 2000
Globals (>1,000) 12.0 2

I
I12 I1
Strivers (500-1,000) 0
LU A24 1-6 I
in 12.1
o
o
Seekers (200-500) 1 10.9 J JS.!
CM Aspirers (90-200) 91.3 Jl1.4 8.5
Deprived (<90) 101.1 5.4 4.1
Globals (>1,000) 4.1

Strivers (500-1,000)
LL
in
Seekers (200-500) 55.1 11.8
o
CM
Aspirers (90-200) 106.0 12.2
I
Deprived (<90) 74.1 3.8 3.3
Globals (>1,000) 14.1

Strivers (500-1,000) 16.5
Li.
in
CM Seekers (200-500) ~| 94.9 24.6
o
CM Aspirers (90-200) 93.1 13.7 1.9
Deprived (<90) 49.9
Source: Mckinsey Global Institute
Figure 1.3: India's income pyramid
Diversified Culture and Festivals
India is a secular country, with a variety of cultures, languages and festivals. Festivals
are celebrated throughout the year with great enthusiasm. Most of the festivals are
celebrated all over India though under different names and with varying rituals. On
auspicious occasions like 'Akshaya Tritiya', gold sales record a sudden and steep spurt
in the country, with Tamil Nadu alone contributing over 20 tonnes of gold sale. Festivals
provide opportunities to retailers to convert shoppers into buyers, as Mr. Kishore Biyani
(MD and Chairman of the Future group) stated once, "We have learned that if we provide
people with an occasion and an excuse to shop, they will come".
Growing Number of HNWIs
India is a developing country that has the most number of the high net worth individuals
(HNWIs) exist, which as a huge potential to spend. In the country, the number of HNWIs
rose 22.7 % during the year 2007 to 123,000 (DSP Merryl Lynch, 2008). The growth was
primarily led by market capitalization and real GDP growth. According to BRIC report
(2007), India's HNI population will equal the population of Australia in 2025.
Challenges of Mall Development in India
The realization of growth projections for shopping malls in India is likely to face the
following challenges:
Lack of Quality Real Estate
Modern malls with adequate space for leisure and entertainment cannot come up in the
absence of quality real estate. Traditional Indian cities are either totally unplanned or were
planned for an entirely different scenario/context. In most Indian cities, plots of suitable
size are not available at locations that are close to dense population areas.. Plots available
in central business districts (CBD) are quite small and for utilizing these mall developers
have to either go vertically up (which means reducing the footfalls at successive levels)
or scale down (which means affecting the economies of scale). Best players to operate
effectively from these small plots are the unorganized retailers who still reign supreme
at prime shopping places like Connaught Place, Karol Bagh and Lajpat Nagar in New
Delhi. Consequently, malls are moving to the periphery of cities.
Price of Quality Real Estate
The price of quality real estate has gone up significantly in the past few years in India
because of two reasons: First, there is a severe shortage of land at prime locations, so it
is available at a very high premium.. Secondly, prices are going up constantly because of
competition. The remarkable growth of the retail sector is in tandem with the growth of
the Indian economy and the services sector.
The services sector includes industries like banking, insurance, finance and
investments, and outsourcing. For their expansion, these industries also require space
with specifications similar to that of the retail sector. As a result, there is a huge demand
from a number of eligible clients for the limited quality space available. At times, retailers
who operate on wafer-thin margins are fail to clinch land deals that are snatched by these
rivals with deep pockets. The problem is complicated by government policies that do not
extend equal benefits to different sectors and industries, even if they are utilizing similar
resources and contributing equally to the development of nation. A case in point is the
favourable (higher) floor space index (FSI) permitted to the IT sector as compared to the
16 Mall Management
retail sector, thus depriving mall developers of a level playing field while competing for
prime space in big cities.
Spiralling Construction Cost
The situation is further complicated for mall developers the rising cost of construction
over the last few years due to a consistent increase in key construction inputs. For
example, the price of steel, a key input, has gone up nearly 1.5 times in the last three years
because of the continuously rising prices of iron ore, scrap iron, metallurgical coke and
ocean and land freight. Rising steel prices is a global phenomenon. It may be noted that
between December 2007 and March 2008, the price of steel in the international market
has gone up from US $ 600 per ton to US $ 970 per ton—a staggering hike of US $ 370 per
ton (about Rs. 15,000 per ton).
Poor Infrastructure
It is impossible to plan and develop millions of square feet of mall space in the absence of
adequate infrastructural support. For example, owing to lack of good transportation, easy
access to malls has become an issue. Traffic jams and increased time spent in commuting
to and from the mall rather than enjoying the same within the mall have truncated the
catchment areas for the mall resulting in reduced profitability.
Parking is another infrastructural bottleneck faced by shopping malls. Lack of good

public transportation in most Indian cities compels people to use personal vehicles like
motorbikes and cars. Here again, the absence of adequate public parking space adds to
the woes of mall developers as they find it very difficult to accommodate the ever-rising
number of personal vehicles into their dedicated parking lots.
Another major area of concern is the erratic power supply. Shopping malls need
to offer temperature control, lighting and modern facilities like lifts and escalators for
providing a good shopping experience to visitors. All these facilities require uninterrupted
power supply at reasonable prices. However, power shortages are a common feature in
all Indian cities. Thus power back-up arrangement coupled with recurring operational
and maintenance cost escalates the capital expenditure.
Non-availability of Professional Mall Managers
The emergence of organized retailing as a potent commercial activity is a new development

in India. Till recently, the man behind the counter did not command respect in society.
Still, the domain largely belongs to untrained, make-shift salesmen. The institutions
offering professional learning and training in retailing and mall management are too few.
Hence professionally qualified and trained mall managers are practically non-existent.
There is no denying the fact that shopping malls need to be managed by professional
managers capable of devising ways to keep their properties alive, vibrant and youthful to
retain and attract tenants and give visitors a wonderful shopping experience.. It requires
a mall manager to have a thorough understanding of promotion, marketing, branding,
shopping behaviour, consumer psychology and retail financials and economics. These
diverse areas of learning are encapsulated in a professional degree/qualification that

integrates learning with practice. There is no institution in India offering a specialized
programme in mall management though some retail management programs offer it as a
single subject which is insufficient. As a result, this profile is mostly managed by people
with background in real estate, hospitality or security.
Legal and Regulatory Framework
Multiple laws regulate and guide the conduct of mall business in India. Some laws
relate to the conduct of trade in general while others are specific to real estate business.
Some laws are in the domain of the Central government while others are legislated and
implemented by respective state governments. Most laws are outdated and provide scope
for discretion to the authorities, which is often exercised unfairly. There are also a number
of laws and by-laws which affect this business indirectly. Administrative decisions of
governments also affect the mall business adversely.
Financing
Funds required for development of millions of square feet of mall space must be generated
through a robust system of financing, but India's real estate sector is driven primarily by
private funds and bank loans. Private funds come from different sources and in different
colours. Public money started coming in over the last 2-3 years through initial public offers
(IPOs), but since January 2008 it has taken a severe beating due to economic recession
and the crashing of the Indian stock market. The Real Estate Investment Trusts (REITs)
and Real Estate Mutual Funds (REMFs) are virtually non-existent. Thus the growth of
malls is constrained by quantity and quality of financing options available.
High Rental Charges
Though market scenario seems upbeat, there are serious concerns about the high prices of
real estate in India. Fligh property prices result in higher project cost that translates into
sky-high rentals. Genuine retailers suffer due to high rentals as their business becomes
unviable. However, the market is driven by speculators who keep investing in retail
properties to make higher returns in future. This inflates the asset-price bubble, which is
liable to burst any time.
18 Mall Management
SUMMARY
Retailing in India has come up a long way—from pre-historic civilizations to the modern-day
glitz and glamour of metropolitan cities. Indian retail formats and stores remained traditional
and unorganized for a long time but organized retailing has taken a decent start during last
couple of decades. It is primarily due to favourable socio-economic conditions that the
nation experienced after economic liberalization. Presence of organized retail formats is
minimal at present (in single-digit figure). However, going by the experience of other nations,
it is expected to assume significant proportion in near future. A rapid growth in mall space
during the last decade is a reflection of this trend. Shopping malls need to deliver in terms
of all important functions, such as positioning, zoning, positioning and marketing, facilities
management and financing, in order to meet the challenges posed by the environment.
V
1. Highlight the significance of the retail business in the history of mankind.
2. Discuss the emergence of the organized retail in India over a period of time. What changes
in the economy and society catalysed this business?
3. What is the status of the organized retail as compared to the unorganized retail in India?
How far is it likely to go in a decade's time?
4. Trace the evolution of shopping globally and in India. How do the two patterns of evolution
differ?
5. How do the three pioneering malls of India (Spencer Plaza, Chennai; Crossroads, Mumbai
and Ansai Plaza, New Delhi) differ from present-day malls? What could be the possible
reasons behind these differences?
6. "Smaller cities are going to drive the mall business in the coming decade." Comment.
7. Define mall management. Discuss important functions that come under its domain.
8. "The mall management in India is considered synonymous with the facilities management."
Comment.
9. What are the factors that indicate that malls would increasingly become epicentres of
commercial and social activities?
10. What are the major challenges faced by the mall business in India? What should be done
to overcome these challenges?
PRACTICE EXERCISES
1. Visit a large kirana store (unorganized store) in your neighbourhood. Make observations
about the store, merchandise, ambience and service delivery. Also visit a supermarket
(organized store) and make observations on similar parameters. What are the major
differences that you find between these organized and unorganized retail stores?
2. Visit a shopping mall of your choice. Note down the retail stores/brands housed in that
mall. Also observe the people who visit the mall. Could you make any generalization about
Introduction to Retailing ond Shopping Molls 19
the segment of people who visit the mall? Compare your observations with those of your
friends who visited other malls. Are the results same? If no, try to find out the reasons for
the difference.
3. Explore old news items (six-month to one-year old) on shopping malls in a library or on
the Internet. What are the issues highlighted in the news clippings? How many of these
portray shopping malls in a positive light and how many paint them adversely? Prepare a
list of all the negative issues and discuss the possible ways to handle/solve them.
SUGGESTED READINGS
1. Ablett, J.; Baijal, A.; Beinhocker, E.; Bose, A.; Parrel, D.; Gersch, U.; Greenberg, E.; Gupta,
S. and Gupta, S. (2007), The Bird of Gold: The rise of India's Consumer Market, New Delhi:
McKinsey Global Institute
2. Annual report 2007-2008 (2008), New Delhi: National Council for Applied Economic
Research (NCAER)
3. Bijapurkar, R. (2007), l/l/e Are Like That Only, New Delhi: Penguin Books India
4. Feinberg, R.A. and Jennifer M. (1991), A Brief History of The Mall: Advances in Consumer
Research, Vol.18, 426-427
5. http://www.easternct.edu/depts/amerst/MallsDef.htm
6. ICSC (2000), A Brief History of Shopping Centers, New York: International Council of
Shopping Centers
7. Images F St R Research (2009), India Retail Report, New Delhi: Images Multimedia Pvt Ltd
8. Images F & R Research Analysis (2007), 'Mall space in India: A demand and supply analysis',
In A. Taneja (Ed.), Malls in India: Shopping Centre Developers and Developments, pp. 150-
155, New Delhi, India: Images Multimedia Pvt. Ltd
9. Joseph, M.; Soundararajan, N.; Gupta, M. and Sahu, S. (2008), Impact of Unorganized
Retailing on Unorganized Sector, May, by ICRIER
10. Kuruvilla, SJ. and Ganguli, J. (2008), 'Mall development and operations: An Indian
perspective', Journal of Retail & Leisure Property, 7(3), 204-215
11. Poddar, T. and Yi, E. (2007), "India's rising growth potential", NY: Goldman Sachs Global
Economics Paper
12. Roy, D. and Nitika, M. (2007), Mall Management—A Growing Phenomenon in Indian Retail
Industry, New Delhi: Jones Lang LaSelle Meghraj
13. Shankar, A. (2008), Preface. In A. Taneja (Ed.), The India Retail Report, 2009, New Delhi,
India: Images Multimedia Pvt. Ltd
14. Shukla, R. (2009), How India Earns, Spends and Saves: Unmasking the Real India, New
Delhi: Sage Publications Pvt. Ltd
15. Singh, H.; Bose, S.K. and Sahay V. (2010), 'Financing of malls in India: problems and
prospects', Journal of Retail & Leisure Property, 9(2), 55-64.
16. Taneja, A. (2009), Malls of India, New Delhi: Images Multimedia Pvt Ltd
□ □□
20 Mall Management
Case
^^ IndiVs first modern mall y n
On August 28, 1999, Mumbai witnessed the launch of a concept that was new to India at
that time. It was Crossroads, a world-class shopping mall and entertainment complex that
was supposed to set new standards in multi-purpose high-rise shopping complexes. Though
before the launch of Crossroads, Spencer Plaza had already become operational in Chennai,
concept-wise it was nowhere near what one calls a modern shopping mall. On the other
hand, the 150,000-square-foot internationally styled Crossroads in South Mumbai, the hub
of India's business activity, redefined shopping in India.
Crossroads is situated in the Haji Ali area in the heart of Mumbai. It is a case of a building
reincarnated into a shopping mall. The location was owned by a pharmaceutical company
(Piramals) and had three buildings constructed on it. Seeing the immense potential of the
concept, the owner decided to convert the buildings into an enclosed shopping mall. The
three buildings were covered with a glass ceiling to create an atrium in the inter-building
space. The separate buildings were connected with the help of aerial bridges. The buildings
were suitably altered to convert them into retail stores. Parking was a big issue. Positioned
as an upmarket entity, Crossroads was expected to attract the affluent car-owning shoppers.
As the parking space created in the basement had nominal capacity, it was decided to install
two huge car lifts so that cars may be lifted from the basement to the terrace car parking.
For ensuring adequate background sound for the mall, Bose Corporation was selected for
providing the sound system. Promoters (Piramals) themselves opened the anchor store
(Pyramid Store) along with the choicest brands available at that time in India.
Crossroads evoked an overwhelming response from the consumers, but it could offer superior
experience only to a limited number of shoppers at a time. Keeping this in view, the mall
management had to devise strategies to contain and filter the footfalls so that only the most
appropriate consumers could get it. They decided to permit only those who carried either a
mobile phone or a credit card. Those were the early days of liberalization and penetration of
both these products was confined to the affluent sections of society, and this was the target
segment for Crossroads mall.
V y
CHAPTER
Concept oF Shopping Moll
LEARNING OBJECTIVES

• Understand the meaning of the term 'shopping mall'
• Know how does a shopping mall differ from other similar entities
• Get an idea of the evolution of the shopping mall concept globally over a period of time
• Know how eventful or otherwise has been the journey for shopping malls in India
• Learn the problems and prospects for shopping malls in India
EVERY BIG SHOPPING PROPERTY IS NOT A MALL!
Shopping malls, or malls as they are generally referred to, are fast becoming a part of
an average Indian's life. Even the people like labourers and rickshaw pullers use this
word comfortably. Some of them are occasional visitors and shoppers at these malls. A
couple of years ago when I inquired about shopping malls in Bhubaneswar, one of our
friends proudly mentioned 'Big Bazaar'. In fact, large format stores like hypermarkets are
generally referred to as malls by many. And then, there are several 'self-styled malls' in
every Indian city. These are buildings that add the word 'mall' as a suffix to their name, as
there is no law-governing nomenclature of buildings. Most of the people are not aware
of what makes a particular building a shopping mall, whereas another one with similar
dimensions fails to qualify as one.
22 Mall Management
Introduction
While travelling in India, it is not unusual to come across a 'Mall Road' in many cities,
especially the ones having some colonial background. This raises a question whether
there is any similarity between the word 'mall' in a 'Mall Road' and the word 'mall' as
used in a shopping mall.
The answer is yes!
The word 'mall' shares an etymological origin with the word 'mallet', as in the
mallets used in games such as croquet, and dates back to the Renaissance Age in Italy. The
word has its genesis in the old sixteenth-century European game of pall mall (Pallamaglio
in Italian meaning ball and mallet), which is a precursor to croquet. The game was played
in a long alley and involved hitting a wooden croquet through an iron hoop suspended
over the ground at the other end of the alley.
When Pallamaglio popped up in England, locals called it pall mall, and they dubbed
the long, often grassy, lanes used to play the game as malls. These malls shortly became
popular as walking spaces and the word became synonymous with any pedestrian-
friendly promenade or walkway. This is the genesis of the concept of 'Mall Road'.
Keeping in view the crowds gathering at these malls during games and for walk,
some retailers started setting up their shops along these malls. When the game fell out
of fashion, some of these pall malls evolved into shopping precincts, hence the modern
name of shopping centres while others evolved into grassed shady walkways, still called
malls. Many European cities have long straight roads which evolved from the alleys in
which the game was played. Notable examples are Pall Mall and The Mall in London.
Definition of Shopping Mall—Different Perspectives
Different sources define shopping malls differently, with each definition focusing on
some characteristics rather than taking an integrated view of the entity. For defining the
term comprehensively, it is important to associate the following perspectives with this
apparently simple term;
Structural Perspective
Definitions from a structural perspective focus on the physical or structural aspects of the
building called shopping mall. As physical aspects are normally visible, people assume
these definitions to be the concluding ones though it is not the case.
Barron's Marketing Dictionary defines a mall as 'a public area containing a complex
of shops with associated walkways and parking area'. It is also called shopping mall.
Some malls are also covered to provide the same climatic conditions year-round. The
Dictionary of Architecture and Construction, Cyril M. Harris, defines the shopping mall in
architectural terms as 'a shopping centre enclosed within a large structure, often 2 or 3
storeys high, normally designed around a central atrium; may have numerous stores
as well as entertainment facilities such as movie theatres, fast-food outlets, restaurants
and public areas'. Here the focus is on physical elements like enclosure, the number of
Concept of Shopping Moll 23
storeys and atrium. The Urban Land Institute (ULI) identifies a shopping centre as the
one having a distinct separation between automobile and pedestrian traffic flows and the
availability of on-site parking.
Anuradha Kalhan in her study described a shopping mall as having a large real
estate infrastructure spread over many thousand square feet, where a number of specialty
retail chains and a super market co-exist.
Management Perspective
As the structural aspects may be copied, there must be something more concrete that
goes into transforming a commercial real estate into a shopping mall. Giving a hint about
this, the Encyclopaedia Britannica describes a shopping mall as 'a collection of independent
retail stores, services and parking areas constructed and maintained by a management
firm as a unit'. Similar views are expressed by Prendergast and co-researchers when
they define shopping mall as 'a collection of shops planned and managed as a unit'.
Guy (1994) also defines shopping malls as 'planned developments that are managed
and marked as a unified whole'. These definitions score over others, as these highlight
parameters like planning and management of a shopping mall which are the key features
when we compare malls with other retail real states. These definitions also clarify that the
mall remains a single 'unit' though comprising a number of 'independent' retailers
Marketing Perspective
For understanding the spirit of a mall, it is required to find out something more substantial
as 'shopping malls are not just real estate property'. Avijit Ghosh and Sara McLafferty in
their article titled 'The Shopping Centre: A Restructuring of Post-War Retailing', mention
that in a shopping centre, the developer has direct control over the mix of outlets (the
tenant-mix) and the centre's image and positioning. They further highlight that the
centre's function is to facilitate 'shopping in a self-contained environment'. J.E. Mertes
in a pioneering article way back in 1947 also gave a hint about the shopping centres
being uncontrolled as well as controlled. These definitions make clear the developer-
tenant relationship in a shopping centre. The developer not only decides and controls
the tenant-mix (with the help of different bilateral arrangements) but also controls the
mall's image and positioning in the long run. The aim is to create, communicate and
sustain a favourable and strong image and positioning for the mall among the shoppers
and community.
Highlighting the significance of marketing in malls, Guy (1994) mentioned that malls
are coherently and proactively marketed and malls typically have a strong marketing
profile (Guy, 1994 quoted by Chattopadhyaya and Sengupta, 2007). Venkateswarlu and
Uniyal (2005) suggest that malls are not merely points of sale for different retailers but
also a place where several brands build their equity in unison. The last definition raises
a significant issue about the tenant selection —that is, the tenant selection should be
such that the presence of different retailers creates a synergistic effect resulting in better
business for all. It supplements the contention of Ghosh and McLafferty (1991) who
advocated developer's direct control over the tenant-mix.
24 Mall Management
Social Perspective
Shoppers would patronize a new retail format only if it offers something which is lacking
in the existing formats. Any attempt to define shopping mall would be incomplete if the
social angle is ignored.
The description of shopping malls as given by the Encyclopaedia Britannica describes

it as a twentieth-century adaptation of the historical marketplace. In fact, malls in the
west, especially in the US, evolved with the idea of developing a community centre for
people, where they could converge for shopping, cultural activity and social interaction.
However, slowly malls increased in such huge numbers that they replaced the street
shopping centres and became shopping communities themselves. Sandes and Cook (1997)
term the malls as 'sealed envelopes' that reveal the continuum of middle class consumers
and their involvement in shopping and recreation, insulated from the unsavory streets
of the city. The shopping mall is also presented as an outcome of post-War US migration
from cities to suburbs and increased proliferation of automobiles, fulfilling the need for
centralized shopping {Britannica Concise Encyclopedia).
Malls are also referred to as 'new quasi-public spaces', 'privatized public spaces',
'fortified cells', or 'theatre' (Voyce, 2007; Davis, 1992; Kowinski, 1985; Langrehr, 1991). Such
has been the significance of mall in modern-day life that it has been compared with the Greek
'Agora' (the medieval marketplace) that used to be the fulcrum of Greek social life.
The social attributes of a shopping mall are created, maintained and enhanced by
an interplay of the physical infrastructure, management philosophy and marketing focus
of the mall developer. Hence, the social perspective may be described as an orchestration
of the physical, management and marketing perspectives of a shopping mall. This
relationship is illustrated in Figure 2.1.
Socia
*v
§
Shopping
Mall
^nagemeA
Figure 2.1: A holistic perspective of mall management

Shopping Centre Vs Mall: The Paradox
Definitions given by different sources highlight different features of shopping malls.

There is unanimity regarding features such as having a large number of shops together,
parking spaces and walkways. However, these definitions appear discordant. In the first
place, different definitions seem to be using the term 'shopping centre' and 'shopping
mall' synonymously. The term 'shopping centre' is used particularly in Europe and
Australia, while in Asia, the term 'shopping mall' is used to a large extent. The terms
'shopping precincts' and 'shopping arcade' are also used in some parts of the world.
Malls in Ireland, pronounced 'maills', are typically very small shopping centres placed
in the centre of town.
Are shopping malls always enclosed by climatic control, or is there an open-air

version as well? Are these malls always controlled or uncontrolled? And, if controlled,
what parameters are controlled and by whom?
For answering these questions, there was a need for a more comprehensive
classification of commercial retailing entities and for arriving at a non-overlapping
definition for each format. Such an effort has been made by the International Council
for Shopping Centers (ICSC). In 1CSC shopping centre definitions, 2004, it is clarified that
shopping centres are a group of retail and other commercial establishments that are
planned, developed and owned and managed as a single property, with on-site parking
provided. As far as mall is concerned, ICSC presents it as a special design configuration. In
this design configuration, n the walkway or 'mall' is typically enclosed, climate-controlled
and lighted, flanked on one or both sides by store-fronts and entrances. On-site parking,
usually provided around the periphery of the mall, may be surfaced or structured. On
the basis of size and tenant assortment, ICSC categorizes malls into regional and super-
regional categories. It needs to be mentioned that as per ICSC categorization, open-air
centres are different from malls which are essentially enclosed.
South China Mall—world's largest shopping mall

26 Mall Management
Comparison of Indian and Western Shopping Malls
These are still early days of mall development in India. At present, India is making efforts
to replicate successful international models and is also incorporating learning from local
experiences. However, India needs a different or modified solution for the shopping
needs of its citizens, as shopping needs and behaviour also vary with context. Though
the malls that are coming up in India are not an exact replica of those in the US, they
differ on several parameters. Some of the major differences are as follows:
Location of Malls
Most of the malls in the US and Europe are situated in out-of-town locations because of
excellent accessibility. However, the Indian malls have unique locations due to distinct
characteristics of Indian cities and suburbs. Indian suburbs are in close proximity to the
metropolitan cities (e.g. Gurgaon, Noida and Faridabad on the outskirts of Delhi). The
mall's proximity to the metros is primarily because of poor infrastructure, unaffordability
of personal vehicles and the absence of efficient public transportation, which do not permit
commuting over long distances. Over the years, the suburbs became hubs of industrial
and commercial activity and attracted large populations. Consequently, these suburbs
and approach ways to them became highly congested. Most of the Indian malls are either
in the heart of dense population clusters or at a very short distance from these clusters.
Observations made on some of the vital parameters reflect the distinction between Indian
malls and their western counterparts and also highlight the extent of adaptation carried
out by Indian malls to suit the local context.
Size of the Malls
In the developed countries, shopping mall sizes vary from 100,000 sq. ft. to a few million
sq. ft., with the bigger ones like Mall of America and West Edmonton Mall touching 4.2
million and 5.5 million sq. ft. of retail space respectively. On the contrary, Indian mall
sizes range from 50,000 to 500,000 sq. ft., with the exception of two malls with more than
a million sq. ft. of space (Great India Place, Noida and Ambi Mall, Gurgaon). On the
basis of size, the Indian malls are separated into three categories. Small malls range from
50,000 to 200,000 sq. ft., medium malls range from 200,000 to 500,000 sq. ft., and big malls
are larger than 500,000 sq. ft. The majority of the Indian malls fall in the small or medium
category. The contribution of big malls in terms of numbers as well as gross leasable
area (GLA) is almost negligible. There are a few upcoming projects in NCR, Mumbai,
Hyderabad and Bangalore that seem to approach global standards in terms of size and
grandeur, but the trend is yet to catch up.
hiiofAiherTca
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Mall of America—one of the largest shopping malls in the world
Mall Expansion
Being situated in out-of-town locations, the US malls are spread over massive expanses
of land. Because of availability of abundant horizontal space, these malls have developed
horizontally rather than vertically. Some of the bigger malls comprise more than one
building, which are separated from each other. These malls utilize the external open
space for landscaping, parking and outdoor activities. On the contrary, the Indian malls
are established on smaller plots of land. For efficient utilization of prime land, the Indian
malls are developed vertically with a higher floor area ratio (FAR). There are narrow
pathways around the buildings for circulation, exhibits and landscaping. The buildings
stand up to four or five floors with single/double basement. The basement is meant
primarily for parking. The first two or three floors are meant for retailing, whereas top
few floors are dedicated to entertainment, specifically a multiplex coupled with a food
court, which is an attempt to utilize every square foot of the mall space.
Stages in Mall Life-Cycle Curve
Like other products and services, the concept of product life cycle may also be applied
to shopping malls. A mall's stage in life cycle is determined by a host of factors such as
the mall's age, competitive forces, changes in shopper behaviour, and changes in the
marketplace (Lowry, 1997). Because malls have been around in the United States long
28 Mall Management
enough to observe the growth, maturity and decline, it is possible to apply life-cycle
concept to them (Lowry, 1997). Analysing data from 1970 to 2003, it is observed that
the shopping centre annual growth rate in the United States has come down from 6 per
cent to 1.4 per cent during this period (SCOPE US, 2004). Starting from 1956 (Southdale
Center), the US malls have taken more than 50 years to reach this stage of the life-cycle
curve. The US retail market has become thoroughly oversaturated, with an excessive
amount of retail space in the light of current consumer demand (LeHew and Fairhurst,
2000). At this stage, the major challenges before the US malls are reduction in patronage
and sales, retention of tenants, changing demographics, vacancy problems, and the
designing of survival strategies (Ghosh and McLafferty, 1991; LeHew and Fairhurst,
2000; Lowry, 1997).
On the other hand, the first Indian malls came into existence less than a decade ago,
and major developments have started taking place only during the last four or five years.
Competitive forces in this sector are not too intense, as there are still only a few big mall
developers. A decade is not a very long time period to see major changes in marketplace
or shopping behaviour. All this along with the astronomical growth rates of 70-80 per
cent in the recent past, puts India clearly in the growth phase of the mall development
life-cycle (KSA Technopak and ICICI Properties, 2005). The prominent challenges faced
by the Indian malls are mapping the uncharted territories, matching international
standards, customizing malls to specific needs of customers and positioning the malls
adequately (Puri, 2007; Singhal, 2007) (see Figure 2.2). Still, it is all the more important
for India to learn from the US experience regarding response to the different stages in
the mall development life-cycle, as India is likely to consume less time in reaching the
maturity stage as compared to the United States.
Infancy ! Development Maturity Decline
South East Asia

Middle East
t
USA
China
UK
India
MARKET t
GROWTH
RATE Bangladesh
Sri Lanka
Stage I Stage Stage Stage IV
TIME
Source: Singh and Bose (2008)
Figure 2.2: Stages in Global Mall Life Cycle

Choice of Anchor Tenant
Traditionally, mall developers all over the world have shown a clear-cut preference for
fashion retailers, thus apparel-oriented department stores have been the first choice as
anchor tenants. In the United States, as discount shopping became more acceptable to
high-income customers, value retailers such as Target, Wal-Mart and KohTs became
prime candidates for the position of anchor tenant (Magazine, 2007). In India, malls are
still dominated by apparel and fashion brands. Most malls have department stores such
as Shopper's Stop, Westside, Pantaloon, and Lifestyle. The next choice as co-anchors are
multiplexes like PVR, DT and Fun Cinemas, whereas food and beverage brands such
as McDonald's, Pizza Hut and Haldiram's are favourite sub-anchors. A discount-led
hypermarket such as Big Bazaar, Spencer's Hyper or Vishal Megamart as anchor tenants
is a new and relatively explored phenomenon in the country though it is catching up
very fast.
Entertainment Retailing
As discussed earlier, shopping malls also serve as avenues for social interaction and
recreation. Over the years, the US malls have started offering 'Shoppertainment' by
diverting a substantial part of their retail space toward entertainment. The US malls
offer a diverse entertainment mix of multiplexes, mini motor speedways, natural rock
climbing, ice rinks, swimming pools and water sports.
In the Indian malls, the entertainment component is dominated primarily by

multiplexes. In some malls, play zones for kids, bowling alleys and pool games have
been added, but these represent an insignificant proportion. Malls' excessive dependence
on movies as their entertainment dimension is due to the fact that movie watching is a
favourite entertainment of Indians. It has also been observed that the Indian families
bond more while watching movies as compared to shopping (Singhal, 2007). Hence
multiplexes create a stronger emotional connection. Moreover, because of longer
duration of Indian movies (three hours as compared to one to two hours for Hollywood
movies), there is a positive impact on the retailing of food and beverages in multiplexes.
Besides, multiplexes help in occupying top floors of vertically expanded malls, which are
otherwise not conducive to shopping.
Significance of Shopping Malls
Why do consumers go to shopping malls? No doubt, malls provide necessary and desired
products for consumers in a modem economy. However, a mall may also provide a
pleasant diversion from everyday activities and chores. It is this pleasant diversion that
has now become an important focus of mall management and development. Malls are
now being built with large entertainment centres equipped with rides, skating rinks,
amusement parks, multiplexes, museums and virtual reality centres. In view of the
rising competition among malls, enhancing the entertainment value for the consumer
has become a critical factor for differentiating a mall from its competitors.
30 Mall Management
Apart from serving as a place for entertainment, a shopping mall or shopping plaza
is perceived as the modern adaptation of the historical marketplace. Mall means Market
for ALL (MALL). The premises of the mall have a group of retailers located under one
roof with the objective of providing with range of products and services to every member
of the family (Srini). Shopping malls have become the latest trend in shopping for people
who do not have much time to go to different places for fulfilling their various needs.
Shopping malls have changed the old idea of shopping, when people used to sweat it out
while shopping in different markets, shouldering the burden of several bags. Now, they
just need to step in an upmarket mall, buy all their necessities leisurely under one roof,
entertain themselves and come home refreshed.
Types of Shopping Malls
Over the last few decades, the concept of shopping mall has undergone numerous
improvements and evolved into a multitude of mall concepts, each mall having distinct
characteristics to deliver distinct benefits while catering to distinct shopping needs. Many
large malls are now being integrated with office buildings and residential space to create
huge, connected complexes covering millions of square feet. Some of the significant types
of malls are described below.
Regional Malls
A regional mall has 400,000 square feet to 800,000 square feet leasable area with at least
two anchors. Regional malls serve a larger area than typical malls and are often tourist
attractions. Regional malls usually have high-end stores that require large service area to
be profitable. Example: Inorbit Mall, Mumbai.
Outlet Malls
An outlet mall (or outlet centre) is a type of shopping mall in which manufacturers sell
their products directly to the public through their own branded stores. Clothing, sports
goods, electrical products, cosmetics and toys are among the types of items sold at outlet
malls. Stores in outlet malls usually provide discounted or used items. Example: City
Gate Outlet Mall in Hong Kong.
Seamless Malls
By seamless we mean that the mall is bereft of any boundaries. This helps in removing
barriers in the customers' minds and allows them the freedom to easily move from
one display to another and from one section to another to compare and choose their
favourite items.
Examples: Central malls developed by future group at eight locations across India,
including cities like Bangalore, Gurgaon, Hyderabad and Mumbai.
BS-
CB\i i RAl
Crossroads—India's pioneer mall remodelled as SOBO Central, Mumbai
Vertical Expansion
Due to high land prices in densely populated commercial areas and the higher yield on
retail property, the vertical mall is common globally. The concept of the vertical mall is a
departure from the common western model of flat shopping mall. In a vertical mall, the
space allocated to retail is configured over a number of stories accessible by escalators
linking different levels of the mall. The challenge before this type of mall is to overcome
the natural tendency of shoppers to move horizontally and encourage them to move
upwards and downwards. Example: Times Square in Hong Kong.
Strip Malls
A strip mall is a shopping centre where the stores are arranged in a row, with a sidewalk
in front. Strip malls are typically developed as a unit and have large parking lots in front.
They face major traffic arterials.
Specialty Malls
A specialist mall focuses on a specialized product category. Since specialist malls are
about specialty retailing, they are destination points where serious buyers of a particular
kind of commodity come to shop in comfort. Because of their specialized nature, the
economics of specialist malls are very different from general malls. They are often away
from the crowded main roads but are well-located on transit spines. Examples: Ishanya
Mall, Pune, and Eva Mall, Bangalore.
Discount Malls
Discount malls offer a great collection of branded outfits at reasonable prices. Consumers
could never imagine getting all international brands at their original prices offered by
32 Mall Management
discount malls. Aspiring middle-class buyers have traditionally depended on those

end-of-season sales for their purchase. But now among young Indians aspiring to don
international brands and buying them at discounts, discount malls are a major hit.
Emerging Trends
Last one decade or so has been more of a learning phase for Indian mall developers as
well as consumers. Developers were developing malls and managing it the way they
thought would best satisfy the shoppers. Shoppers on their part had no appropriate
benchmark to compare the shopping malls. Now situation is different with the market
and consumers getting familiar with the concept. Environment is highly dynamic and
competitive, posing a diverse set of challenges to this business. The mall developers and
managers are being positive and flexible in responding to these demands as is reflected by
the trends that we observe in this business. Some of these trends are discussed below.
Emergence of Large Malls
During the initial phase of mall development in India, majority of Indian malls were
confined to 2-5 lakh square feet only. However, these malls were not able to provide the
experience and assortment expected by demanding customers. Now, newer formats have
come into existence, which require large retail space. Consequently, India is seeing the
emergence of 'million plus' malls having more than a million square feet of GLA. In this
category, Mantri Square mall in Bangalore, Great India Place in Noida and Ambi Mall in
Gurgaon are already operational while many others are about to start business.
Growing Popularity of Lease Model
In the conventional model of mall management, developers invest money in a mall project
and recover it immediately after the project completion by selling it. Worse still, most of
these investors are retail investors who do not use the premises themselves. But this
model reduces the long-term interest of the developer in the mall. However, to overcome
the drawbacks of the conventional model, the lease model is gaining popularity in Indian
malls. Under this model, the developer leases out the space to retail brands (who actually
occupy the mall space) and recovers the investment over a longer time period by way
of lease rentals. This way, the developer also has a long-term interest in promoting and
growing the mall.
Revenue-sharing Model
Being a novel concept in India, shopping malls witnessed an overwhelming response

from shoppers and tenants. It resulted in sky-high rentals being charged. High rentals
affected the bottom line of retailers who found it difficult to break-even. This problem was
intensely felt during the present wave of recession. This has compelled mall developers to
bring down the rentals to realistic levels. Many malls have opted for the revenue-sharing
model in which the tenants are supposed to share a percentage of their sales revenue
instead of paying a fixed rental per square foot. This helps the tenants as it changes their
cost structure from fixed to variable.
Professional Face of Mall Management
The process of managing malls is far more complex and elaborate as compared to that of
a retail store. Acknowledging this fact, mall management is being studied and practised
as a separate discipline in the United States. In fact, there are a number of US universities
and business schools that offer courses in real estate and mall management. There are a
number of professional companies that are managing malls on a dedicated basis. In the
United States, mall management as a discipline covers all aspects of mall operations.
Ninety per cent of the US malls are owned by institutional investors and are managed by
professional managers. The success of a shopping centre is expressed in dollars per sq. ft.
of GLA. Shopping malls can no longer maintain the "build it and they will come" attitude
due to intense competition. This has compelled the mall managers to respond to the
situation as retailers and not as landlords. The performance of these managers is judged
on the basis of well- established, objective criteria such as increase in pedestrian traffic
and conversions, rate of contract renewals and increase in rentals during subsequent
renewals. Apart from managing the facilities, the mall managers are required to promote
the mall as a 'happening place'. Thus, the mall managers have been promoting the mall
with a marketing funds method rather than through a merchant association, thereby
generating a unified image of the mall.
In India, most of the malls are so new that they have not come across the retention of
tenants as an immediate challenge. During the mall inception phase, the Indian managers
are primarily concerned with finding brands and selling retail space to investors. Once
a mall is operational, the managers shift their focus to facilities management. To most of
the players in this field, mall management means marketing and facilities management.
There are few institutions or training institutes that teach mall management as a discipline.
The situation is understandable as retail itself is a new area in India and the number of
institutions offering programs in retail management falls well short of the requirements
of industry. There are few specialized organizations that offer the entire range of mall
management services and solutions to mall developers who wish to outsource. A few
years ago, a start was made by the Future group (Pantaloon Retail) in the form of Kshitij
CapitaLand Mall Management Company which started off as a 50-50 joint venture
between the Future group and CapitaLand (one of Asia's largest property groups) and is
now a fully owned company of the Future group (Saha, 2006).
Virtual and 3D Shopping Malls
Technology in malls can be seen as future trend in India. With paucity of time and Internet
penetration, people will start shopping using their PC, laptops and mobiles. Technology
advancement will also help retailers in developing websites that would give the feeling
of shopping in a 3D mall.
Theme-based Malls
Theme malls is the new trend adopted by promoters and developers to add a touch
of exclusivity to the new malls. Serious buyers always want to shop at a place where
there is variety, and for them theme-based malls will bring all brands under single roof.
34 Mall Management
The concept of theme malls will not only benefit the buyers but also help the sellers get
quality customers. A very wide range of similar merchandise, price range and focused
consumer are the key considerations for a brand to take position in a theme-based mall.
Given the higher rate of in-store conversion of footfalls (50-65% in a theme-based mall)
against an average of 15-25% in general malls, there is a marked benefit for retailers to
opt for specialty formats.
Destination Malls
Real estate developers are coming up with destination malls on major highways to lure
travelling consumers to a new way of shopping. Destination malls will be massive retail
centres converging in a huge area just few minutes' drive from the main city. The new
shopping concept will offer the fun of a long-distance drive with attractive discounts
on the merchandise. Destination malls would usher in a product differentiation that is
important to sustain in the fast growing retail competition. These malls would transform
the fundamental shopping format to a unique selling proposition. The factors for the
success of destination malls would be prime location, getting premium consumers and
providing quality dining services and refreshing customer experience.
: )
SUMMARY
Shopping mall is a place where people can buy a multitude of products and services
conveniently. But essence of a mall goes much beyond shopping. The concept has many
perspectives. A mall should have certain physical attributes that are indicated by the
structural perspective. The entire mall should be planned, developed and managed as a
single unit, which is specified by the management perspective. A mall should brand and
position itself according to the marketing perspective. All these perspectives transform the
physical entity called mall into a wonderful platform for social interactions and bring in the
social perspectives. However, these perspectives need to be defined in context of a particular
market. India is coming up with its own model of mall development and there are many
exciting things coming up in this sphere in near future.
)
REVIEW QUESTIONS j
1. Define the term 'shopping mall'. Discuss the integral attributes for a commercial building
to qualify as a shopping mall.
2. Trace the evolution of the concept of mall and relate it with the refinement of consumer
profile.
3. Distinguish between a shopping mall and a shopping centre.
4. What is the significance of shopping malls in contemporary urban Indian landscape?
5. "Every product or service needs to be adapted/modified as per the local conditions".

Justify this statement in case of shopping malls in India
6. Can shopping mall survive if the tenant bleeds? Comment.
7. Discuss the important types of shopping malls. Which of these are commonly observed in
India? Exemplify.
8. Discuss unique attributes of the Indian shopping malls in terms of unique attributes of
Indian cities and people.
9. Discuss the major corrections that have come in the mall business as a result of economic
recession.
10. Comment on the prospects of mall development and management in India in the days to
come.
. >
: )
PRACTICE EXERCISES
k y
1. Select a mall of your choice. Visit it to verify whether it is fit to be called a shopping mall
in terms of the essential attributes associated with the concept of mall.
2. Prepare a list of 4-5 malls in your vicinity. Visit them and record where each mall stands in
terms of the parameters (structural, management, marketing and social) for a shopping
mall. Consolidate your results to identify the parameters according to which these malls
do not live up to the ideal/desired state.
3. Compile some news items/articles relating to shopping malls in different media (print,
broadcast and online) during the last 2-3 months. What are the different issues highlighted
in these items? Does the issues convey any trend in mall development and management
in India?
SUGGESTED READINGS
1. Bloch, P.H.; Ridgway, N.M. and Dawson S.A. (1994), 'The shopping mall as consumer
habitat', Journal of Retailing, 70(1), pp. 23-42
2. Bloch, P.H.; Ridgway, N.M. and Nelson, J.E. (1991), 'Leisure and the shopping mall', Journal
of Retailing, 18(1), pp. 445-453
3. Chattopadhyaya, A. and Kalyan S. (2006), 'Perception of mall shoppers in Kolkata: A study',

The ICFAI Journal of Consumer Behavior, 1(3), pp. 34-43
36 Mall Management
4. Concise Encyclopedia Britannica (digital ed.); (2006), Chicago, Illinois: Encyclopedia

Britannica Inc.
5. Csaba, F.F. and Askegaard, S. (1999), 'Malls and the Orchestration of the Shopping
Experience in a Flistorical Perspective', Advances in Consumer Research, vol. 26, 34-40
6. Davis, M. (1992), City of Quartz, New York: Vintage
7. Feinberg, R.A. and Jennifer M. (1991), 'A brief history of the Mall', Advances in Consumer
Research, Vol.18, pp. 426-427
8. Ghosh, Avijit and Sara McLafferty (1991), 'The shopping center: a restructuring of post-
war reta Wing', Journal of Retailing, 67(3), pp. 253-267
9. Gruen, V. (1973), Centers for the Urban Environment: Survival of the Cities, New York; Van
Nostrand Reinhold
10. Gruen, V. and Smith, L. (1960), Shopping Town USA: The Planning of Shopping Centers,
New York: Van Nostrand Reinhold
11. Guy, C. (1994), The Retail Development Process: Location, Property and Planning, London:
Rutledge
12. Harris, C. (2005), Dictionary of Architecture and Construction (4th ed), NY: McGraw Hill
Publishing Inc.
13. http://www.easternct.edu/depts/amerst/MallsDef.htm
14. http://en.wikipedia.org/wil<i/Pall_moll_(game)
15. ICSC (2000), A Brief History of Shopping Centers, New York: International Council of
Shopping Centers
16. ICSC (2001), ICSC Dictionary of Shopping Center Terms, New York: International Council of
Shopping Centers
17. ICSC (2004), ICSC Shopping Center Definitions, New York: International Council of Shopping
Centers
18. Images F & R Research Analysis (2007), 'Mall space in India: a demand and supply
analysis', In A.Taneja (Ed.), Molls in India: Shopping Centre Developers And Developments,
pp. 150-155, New Delhi, India: Images Multimedia Pvt. Ltd.
19. Imber, J. and Toffler, B. (2000), Dictionary of Marketing Terms, NY: Barren's Education
Series
20. Kalhan, A. (2007), 'Impact of malls on small shops and hawkers', Economic and Political
Weekly, Vol. 42 (3), pp. 2063-2066
21. Kim, I.; Chriestiensen, T; Fienberg, R. and Choi, H. (2005), 'Mall entertainment and
shopping behaviors; A graphical modeling approach', Advances in Consumer Research,
Vol. 32, pp. 487-492
22. Kowinski, William, S. (1985), The Mailing of America, New York: William Morrow 8: Co.
23. KSA Technopak and ICICI Properties (2005, June), Shopping unlimited, Retail Biz, pp. 21-24
24. Langreher, F.W. (1991), 'Retail shopping mall semiotics and hedonic consumption',
Advances in Consumer Research, Vol. 18, pp. 428-433
25. LeHew, M.L.A. and Ann E.F. (2000), 'US shopping mall attributes: an exploratory
investigation of their relationship to retail productivity', International Journal of Retail and
Physical Distribution, 28 (6), pp. 261-279
26. Lowry, J.R. (1997), 'Life cycle of shopping centers', Business Horizons, January-February,
pp. 77-86
27. Magazine, A. (2007), 'Anchors in malls'. In A. Taneja (Ed.), Malls in India: Shopping Centers
Developers and Developments, pp. 94-95, New Delhi, India: Images Multimedia Pvt. Ltd.
28. Mertes, J.E. (1947), 'The shopping center—a new trend in retailing', The Journal of
Marketing, Vol. 7 (January), pp. 374-379
29. Prendergast, G.; Marr, N. and Jarratt, B. (1998), 'Retailer's views of shopping centres: a
comparison of tenants and non-tenants', International Journal of Retail and Distribution
Management, 26 (4), pp. 162-171
30. Puri, A. (2007), 'Designing India's mall potential', In A. Taneja (Ed.), Malls in India: Shopping
Centre Developers and Developments, pp. 72-75, New Delhi, India: Images Multimedia
Pvt. Ltd.
31. Saha, S. (2006, April 21), 'Global boost to mall market', The Telegraph , 6
32. SCOPE U.S. (2004), 'A report by International Council of Shopping Centers'
33. Singh, H. and Bose, S.K. (2008), 'My American cousin: a comparison between Indian and
the US shopping Malls', Journal of Asia-Pacific Business, 9(4), pp. 358-372.
34. Singh, H.; Bose, S.K. and Sahay V. (2010), 'Financing of malls in India: problems and
prospects', Journal of Retail and Leisure Property, 9(2), pp. 55-64
35. Singhal, A. (2007), 'Consumer demographics and changing consumption demands

innovation in upcoming mall projects', In A. Taneja (Ed.), Malls in India: Shopping Centre
Developers and Developments, pp. 54-60, New Delhi, India: Images Multimedia Pvt. Ltd.
36. Taneja, A. (2007), Molls in India: Shopping Centre Developers and Developments, New
Delhi: Images Multimedia Pvt. Ltd.
37. Taneja, A. (2008), The India Retail Report, 2009, New Delhi, Images Multimedia Pvt Ltd.
38. Urban Land Institute (1977), Shopping Centre Development Handbook, Washington:
Urban land Institute
39. Venkateswarulu, A. and Uniyal, D.P. (2007), 'Concept of a mall: measuring attitude and
perception of shoppers towards mails of Mumbai', Indian Retail Review, 1(1), pp. 7-16
40. Voyce, M. (2007), 'Shopping malls in India: new social dividing practices', Economic and
Political Weekly, 42(3), pp. 2055-2061
41. Wakefield, K.L. and Baker, J. (1998), 'Excitement at the mall: determinants and effects on
shopping response', Journal of Retailing, 74(4), pp. 515-539
□ □□
38 Mall Management
CASE
s- ^The mall and the community ^ n
The Indian shopping malls are trying to connect to the community at large in more meaningful
ways, going beyond the narrow confines of shopping. Some of these initiatives are discussed
here.
Inorbit Mall, Malad
As part of the company's corporate social responsibility (CSR) initiative, Inorbit Malls (India)
Pvt Ltd, part of K Raheja Group, adopted a community-building programme called 'Aikya' for
its customers with an aim to establish an effective social interaction medium. As part of the
programme, the mall has installed a 'Residential Community Notice Board', a pin-up board for
the neighbourhood, where residents can post messages, classifieds and information.
Speaking on this initiative, Kishore Bhatija, CEO, Inorbit Malls, said, "With Aikya, we are trying
to reach out to our customers by implementing a lighter and more exciting approach to impart
knowledge and awareness on the issues that matter". "Having developed a personal connect
with the customers over the years, the mall intends to further enhance their shopping
experience by planning these enticing workshops, highlighting the smaller yet noteworthy
issues which are definite to make a difference in the lives of the citizens", added Bhatija.
Mantri Square Mall, Bangalore
To make the most of the Christmas shopping season 2010-11, Mantri Square ran several on-
ground activities under the title of The Grand 2011 Tour. It was the mall's first Christmas-CSR
initiative and was managed by an in-house team.
To celebrate Christmas with shoppers in a unique manner, Mantri Square had associated
with Sukrupa, a registered non-profit charitable organization serving the underprivileged
community in the area of socio-economic development. Commenting on the exercise,
Jonathan David Yach, CEO, Mantri Square, said, "our motto is shop a little and give a little. We
have come up with many CSR initiatives." Mantri square urged shoppers to buy a donation
token of Rs. 10 for the Indus International Community School, which provides free education
to underprivileged children from the neighbourhood. For every token, Reliance Timeout
made a matching contribution, thus increasing the overall donation to the school. Under the
'Colour My Christmas' activity, the mall invited shoppers to gift art material such as crayons,
paints, colour pencils, drawing books and more to underprivileged students.
Mantri Square had also made Bangalore's Biggest stocking, wherein shoppers at the mall
could drop in gifts for underprivileged children. After Christmas, the gifts collected were
given to the children of an orphanage.
Sources: "Inorbit Mall focuses on CSR activities", India Retailing Bureau, June 25, 2009, retrieved
from http://www.karmayog.org/csrlto500/csrlto500_19794.htm, accessed on 9 September 2010.
"Mantri Square Mall goes on-ground for their first Christmas", Shweta Ramsay, retrieved from
http://www.eventfaqs.com/eventfaqs/wcms/en/home/news/Mantri-Square-Mall-goes-on-gro-
1293081470117.html, accessed on 23 November 2010.
v
CHAPTER
Moll Development Process
LEARNING OBJECTIVES

• Highlight the significance of planning and design in mall development
• Get themselves acquainted with major activities involved in the mall development process
• Emphasize vital aspects of location decisions for a shopping mall
• Understand how business potential is assessed for a mall
• Present an overview of the mall design process
CHALLENGE OF KEEPING UP WITH MODERN TIMES
Galaxy Plaza is one of the pioneer malls in India. It was built more than a decade back
in a posh locality of South Delhi. It was considered a landmark in terms of building
architecture and it accommodated all the prominent brands available in the Indian
market at that time. However, things changed rapidly during the last decade. Brands
that were considered upmarket a decade ago have lost their sheen, with new brands
becoming popular. New retail formats and concepts have gained popularity. For instance,
at the time of development of Galaxy Plaza, multiplex was a totally new and untested
concept and so it did not find a place in the mall. The same holds true for food courts.
But, these two formats have gained immense popularity in the recent years. In fact,
these are now a must for any upcoming mall. New shopping malls have better ambience
and a tenant-mix that goes well with the aspiring shopper of today. These malls pose
serious competition to Galaxy Plaza. For keeping the mall relevant to the shoppers, it is
essential for Galaxy to accommodate new brands and formats. The Galaxy management
40 Mall Management
is keen to improve the tenant-mix and aesthetics but has limited elbow room. Inviting
new tenants (such as multiplexes and food courts) may mean effecting major changes in
Galaxy's original structure that is simply out of tune with the modern mall design. The
management team of Galaxy Plaza is in a fix as it can neither afford to shut the mall for a
long time (as required for major structural changes) nor let it die a gradual death in the
face of burgeoning competition with modern malls.
Introduction
The location and design of a shopping mall are significant decisions to be taken by the
developers. These decisions are taken during the planning stage itself. Organizations
commit substantial time and resources during this stage in the form of field studies and
research because they cannot afford to go wrong. The following reasons explain why the
decisions concerning location and design are important for a mall:
(a) Cost: The location and design of a mall have a direct and strong impact on the
project cost. The costs of two plots of land in the same city could differ significantly.
Plots of land in the central business district are far costlier than similar plots in
suburban areas. The cost of construction is another major cost head, and it varies
depending on the design opted for. Design and architecture also impact the operating
costs because certain design configurations require a higher level of maintenance.
The final capital outlay for the mall project is calculated by adding up the costs
associated with location (land price) and architecture (construction cost). In cases
where limited funds are available, the developer might choose a location and design
configuration that fits into his budget.
(b) Nature of Decision: Decisions taken on both location and design are purely
irreversible. Once constructed, it is impossible to change the location of the mall
even if another location promises much higher business. In terms of design, some
cosmetic changes are possible, but the basic design cannot be altered without
investing time, money, damage to business and loss of reputation. All these costs
are prohibitive in nature.
(c) Business Potential: Location and design impact the business potential and
attractiveness of a shopping mall. The significance of location for retail business
needs no emphasis, as it is quite apparent. Shoppers are more likely to visit a mall that
is located at a convenient and accessible location. If two or more malls are situated
at a similar or same location, then their design and architecture play the role of
tiebreaker for finding favour with shoppers. However, design and architecture must
be well supported by an appropriate tenant-mix and good shopping experience.
(d) Shopping Experience: The location and design of a mall also influence shopping
experience of a customer. From the customers' perspective, the shopping experience
starts as soon they leave their home for the mall. If the mall is located at an easily
accessible location, shoppers are likely to enter the mall in a positive frame of mind.
Design and architecture complement the shopping experience, as these two aspects
determine the visual appeal and flexibility of the mall to accommodate suitable
Moll Development Process 41
changes over a period of time. For instance, the shape and size of atrium has a
significant impact on how shoppers feel after entering the shopping mall.
Planning and Design Decisions
General economic indicators and the retail potential do advocate a case for mall
development, but the decision of coming up with a shopping mall at a location depends
on specific information about the business potential at that location. For a large country
like India, a series of decisions should be taken before a mall becomes operational. These
decisions are categorized as follows:
(a) Deciding the macro location
(b) Deciding the micro location
(c) Assessment of business potential
(d) Selecting a suitable design and architecture
Decisions related to categories (a), (b) and (c) comprise the 'planning phase', whereas
decisions concerning category (d) comprise the 'design phase'.
Deciding the Macro Location
For a vast country like India, there are many locations that may be considered suitable
for developing shopping malls. Retail formats like supermarkets prefer selecting a
zone or a state to begin with. It is because these formats require elaborate arrangements
and infrastructure in terms of supply chain. Luxury retailers do not opt for such
carpet bombing. They select the most ideal locations (cities) all over the country. The
shopping malls follow the second pattern. While doing so, the mall developers rely
on macro- economic indicators of the cities. This information may be available from
secondary sources: government or private. Since the capital investment is huge and
secondary information could be dated or unreliable, it is safe to get it cross-checked
by conducting a small study specific to the project. The study could be done in-house
or could be outsourced to specialized research and consulting agencies. However,
departing from the second pattern, some developers may decide to focus on a specific
zone or region. It could be because of limited availability of funds, insistence by
investors, familiarity with a region and strong liaison with political, administrative
and business spheres in that region.
Deciding the Micro Location
It involves selecting an area or locality within a city and selecting the actual piece of land
(plot) where the mall should be located. Different localities within the same city offer
different potential for business, as customer profile varies significantly across localities.
For instance, South Delhi and East Delhi are two different worlds altogether! Similar
contrasts exist in almost all Indian cities. The best way to understand it is to carry out an
area-specific study that looks into the following issues:
(i) Absolute size and density of population

42 Mall Management
(ii) Economic profile
(iii) Monthly income
(iv) Shopping trends and pattern of consumption
(v) Existing level of market development
(vi) Pricing and availability of real estate
The outcome of this study should be in the form of a clear-cut ranking of areas on
the basis of relevant parameters. If the locality is large enough, there could be multiple
locations catering to different catchment areas. A catchment area is the area around a
retail store or a shopping mall from where customers are more likely to come and visit
it. Catchment areas are often demarcated on the basis of radius (distance from the store)
or travel time (time taken to reach a store). However, the demarcation quoted most often
is based on the proportion of business generated. On this basis, catchment areas are
categorized into three types:
• Primary catchment area: It is the area around the store or mall from where it gets
60-80 per cent of its business. It includes people who are at a convenient distance
and visit the store or mall regularly.
• Secondary catchment area: It is the area from where the store or mall gets 15-30 per
cent of its business. The secondary area lies at a considerable distance from the mall,
and people from this area visit the mall occasionally, only to buy select products/
services.
• Tertiary catchment area: The store or mall gets only 5-10 per cent of its business
from this area. It includes casual visitors who could be a part of some other store's
catchment area but happen to shop at this location due to some random reason.
Tools for Estimating Catchment Areas
Theoretically speaking, catchment areas are in the form of concentric circles with radius
depending on merchandise or store format. Supermarkets have the smallest catchment
areas while specialty stores have the largest catchment areas. In real life, catchment
areas are rarely circular because they get modified by natural, artificial or administrative
barriers. For instance, an express highway can cut off a locality situated just a few
hundred metres away from a store if there is no safe and convenient option to cross
the expressway. Estimation of the catchment area for a shopping mall is tricky as the
mall accommodates a variety of tenants —ranging from supermarkets to specialty and
luxury stores. A preliminary estimate of the catchment area of a mall can be made by
superimposing catchment areas of its tenant stores. The actual catchment area for a mall
would be larger than this, as customers are likely to prefer a shopping mall on the basis
of convenience (all solutions under one roof), experience and image. In practice, the
catchment area for a mall can be estimated by field work. Some of the tools employed for
this estimation include:
(a) PIN codes
(b) Vehicle number plates

(c) Customer surveys
(d) Contest and schemes
Assessment of Business Potential
If the catchment area is small, all locations (plots) might be equally accessible resulting
in a much simpler analysis. While accepting or rejecting a location, it is the business
of primary trading area that is considered. (Primary trading area is the area (localities)
around a mall that accounts for a significant (more than half) proportion of business for
the mall. It is also referred to as the catchment area. Once a decision is made in favour of
a particular location, the following information must be looked into:
(i) Profile characteristics: This information consists of demographic details of

customers, their income, lifestyle and preferences in the catchment area.
(ii) Demand characteristics: Demand characteristics are estimated by processing/

analysing the information collected under the profile characteristics. These give an
idea of what and how much is demanded by customers living in the catchment area.
The demand for each product or service category is converted into an equivalent
amount of retail space for each category. The aggregate of these represents the total
demand for retail space in square feet.
(iii) Supply characteristics: It is the information about the total supply of products and
services provided by the existing sellers to the customers living in the catchment
area. Just like demand, it is also measured in square feet of retail space for each
category.
(iv) Business potential: It is assessed after analysing the above information.
Estimation of Demand Situation
The demand estimation begins with the estimation of the total number of households in
the locality. This information can be arranged through local authorities and its sources
include lists of voters, electricity connections and households available with local
authorities that collect house tax, electricity bill, water-sewerage bill and so on. The
next step is to estimate the average income of each household and composition of their
shopping baskets. One way of doing this is to get these figures for the state/city through
some secondary data and explore them to the catchment area. Though this method is
easier and economical, it may not yield correct results because of lack of current data and
accuracy. A better way is to carry out a sample survey in the catchment area. At the end of
this stage, the research team should know, how much quantity and value of each product
and service is demanded in the catchment area.
The next step involves translating the estimated demand into the demand for
retail space. The benchmark needed for this estimation is the average sales (in rupees
or in volume terms) per square feet of retail space. This information could be available
with trade associations or publications. However, it may not be available in developing
countries like India where retail business is neither very transparent nor open to scrutiny.
Services of professional consultants and researchers may be hired in such cases. Once
44 Mall Management
the benchmark is available, the total retail space required to generate sales equal to the
demand estimated for the catchment area may be calculated. This calculation is done for
each product/service category. The sum total of all individual figures would give an idea
of the total retail space required.
Estimation of Supply Situation
This step requires comprehensive fieldwork and includes detailed listing and estimation
of the retail space available in the catchment area. Estimation of the retail space is done
separately for each product and service category. The aggregate figure gives an idea of
the total supply of available retail space. For practical purposes, the aggregate supply
figure should be inflated because some people living in the catchment area might be
going outside the catchment area to buy some products and services. This phenomenon
is called 'out shopping'. Conversely, some people from outside the catchment area might
be visiting the marketplaces in this catchment area. Their number should be estimated as
floating population during the demand estimation phase.
Estimation of Business Potential
By comparing the estimated demand for retail space with the estimated supply of retail
space, one can estimate the categories where there is a demand-supply mismatch. There
would be categories where the supply of retail space is less than demand for it. These
are the areas of opportunity because the mall space could be allocated to tenants in
these categories (provided it jell well with the positioning of the mall). There could be
some categories for which the supply of retail space is more than the demand. If it is
important to have brands from these categories then the mall developers has to be very
conservative and discerning while selecting the required brands and allocating retail
space to them.
Estimation of oversupply and undersupply is only the starting point for planning
the tenant-mix. It gives an idea of which product and service categories are to be
accommodated and which categories are to be preferred over the others. In a way, it
helps in formulating the ideal tenant-mix for the mall (though it is not the only means
of doing it). The next big decision concerns the tentative allocation (in square feet) of
mall space to each category of tenants. For this allocation, the mall management needs
to start from the demand-supply gap as discussed in the previous paragraph. In cases
where the supply is less than the demand, the management has to decide on one of these
options —fill the demand-supply gap (by allocating mall space equal to the gap), keep the
market undersupplied (by allocating mall space less than the gap) or create a situation of
oversupply in the market (by allocating mall space more than the gap). If the decision is
in favour of oversupply, the management must be aware of the rivals at whose expense
it plans to expand. Then the identification of brand categories and specific brands for
oversupply would take place to give competition to the rivals. Alternatively, the mall
management might feel that their tenants in each category should be able to occupy a
certain percentage of market share. That tentative market share may also be converted
into equivalent mall space.
Summing up the Planning Process
At the end of the planning process, the mall management should be clear about the
product and service categories to be accommodated in the mall, the proportion of
retail space for each product and service category, and specific brands in a category to
be targeted. With the help of secondary studies and the past experience of shopping
behaviour, the mall management should be in a position to find out which categories/
brands should be placed at which level inside the mall. Secondary studies are suggested
for this work since the shopping behaviour does not vary significantly across localities.
Since the management would be analysing detailed demographic and economic profiles
of prospective shoppers, it can decide locations for categories/brands inside the mall
on the basis of preferences manifested by shoppers with similar profiles elsewhere
(analogous method). This decision is referred to as 'zoning' in a shopping mall.
Site for the Shopping Mall
Once the area is decided, the mall management should identify and shortlist plots for
construction of mall. Normally, information about the availability of plots lies with the
real estate brokers operating in that area. This information might also be available in
newspapers or online advertisements. If the catchment area overlaps with an urban
township developed by a real estate developer, it is advisable to approach that developer
to know about the plot availability because commercial plots are demarcated in advance
in such townships. If the desired plot belongs to the local urban authority, the mall
developer needs to fulfil certain formalities and follow a specified procedure. If the plot
belongs to a private party (individual or builder), negotiations should start straightaway.
Details of documentation and legalities regarding plot acquisition have been dealt with
in Chapter 9 on Regulatory Framework for Shopping Malls.
Checking Suitability of a Plot for Mall Development
More than one plot in the area could be considered for selection, but all of them may not
be equally suitable. The suitability of a plot must be checked in the light of the concept-
positioning, tenant-mix and scale of the project. Certain characteristics of proposed plots
should be examined to see whether they meet the requirements. These characteristics are
discussed below.
Location
All locations within a catchment area may not have the same appeal for the customers.
Plots located at the centre of the catchment area are equidistant to the target customers
and hence convenient. If the proposed plot is at one corner, residents living in localities
in the opposite corner might perceive it to be distant and prefer out-shopping. A central
location is particularly important if the mall plans to have tenants like supermarkets.
Connectivity and Accessibility
While selecting the plot, it must be ensured that the shoppers can reach the location
conveniently. Relevant variables to be considered in this regard are: existence of traffic
46 Mall Management
arteries connecting residential localities to the plot, condition of roads/lanes, and nature/
volume of traffic, especially during peak hours relevant for the shopping mall. After
reaching the location, it should be convenient for the shoppers to enter the mall. Relevant
factors in this context are: the number of roads/lanes bordering the plot (as it will impact
the number of exit and entry points), effective width of these roads and direction, volume
and nature of traffic during different hours of the day.
Visibility
Visibility of the site means that the mall constructed on it should be visible from a
distance. The visibility may not be a strong factor if it is supposed to be a neighbourhood
mall. For such malls, almost entire footfalls come from nearby residential clusters that
are well aware of its existence. But if the mall is large, it is expected to attract footfalls
from a large area, it is advisable that such malls are built on plots situated on major traffic
arteries and not on the inner lanes. Visibility also depends on the nature of buildings in
the neighbourhood and the pad/elevation of the proposed mall.
Size of the Plot
Large malls offer a superior shopping experience. Therefore the plot for development
should be large enough to accommodate all the required tenants. If the mall compromises
on the tenant-mix due to the small size of the plot, it would encourage out-shopping. In
the worst-case scenario, it would provide a good opportunity for competitors to come
and fill the gap by building a larger mall containing all the tenants. This would adversely
affect the mall, as shoppers prefer to visit a single mall that provides all solutions under
one roof. Some locations are expected to attain their full potential after some time. In such
cases, the developer might look for a plot that gives the option of adding more mall space
after a few years. It is also relevant in cases where developers wish to develop the mall
in different phases.
Zoning Classification
It is important to know the classification of available plots in terms of permissible land-

use as notified by the local municipal/urban development authority. It is better if the
plot is already categorized as a commercial plot, more better if it is earmarked for mall
development. If the plot is meant for residential or agricultural use, it would require
change in land use (discussed in detail in Chapter 9 on Regulatory Framework for
Shopping Malls), which is time-consuming, costly and risky (approval might not be
accorded at all).
Condition of Plot
It is advisable to ensure that the plot is free from encroachments and constructions.
Eviction of occupants can prove to be a big problem. The same holds true for any existing
structure/building on the plot, as its demolition would consume time, money and
resources. Regarding the existing building, one should ask for its civil and engineering
drawings because the foundations of the building could be deep and difficult to extricate.
There could be a possibility (though remote) of using the existing structure (not meant
for a mall) as a mall. Check whether the plot is at the ground level. If it is lower than the
ground level, additional expenditure needs to be incurred for levelling it. However, the
lower plot could be beneficial if the mall plans to have a basement parking.
Available Infrastructure
For being fully operational, a mall would require access to civic amenities like electricity,
water and sewers. The plots having these amenities are preferable because arranging
them afresh requires completion of tedious and time-consuming formalities apart from
incurring expenses, both official and unofficial.
Neighbouring Buildings
The nature of buildings in the neighbourhood, if any, has a significant impact on the
attractiveness of the plot. In general, the presence of commercial buildings (offices and
retail) is considered beneficial, as it guarantees some footfalls. A cluster of commercial
buildings or entities is also expected to have some existing facilities like common parking
that can be utilized by the mall shoppers as well. However, it must be noted that the existing
traffic should not act as a bottleneck for the shoppers. The plot loses its attractiveness
if an existing commercial unit happens to be a shopping mall. On the other hand, the
presence of residential blocks in the neighbourhood is a positive indicator, as it adds to
the population in the primary catchment area. These people assure guaranteed footfalls
for many product and service categories. However, for this to happen, the profile of these
people should match with the profile of the mall's target customers. Vehicular traffic due
to the neighbouring residents is also an area of concern. Another concern would be the
attitude of these residents towards the traffic generated by the mall.
Mall Design Process
The design of a shopping mall should be such that it ensures functionality, aesthetics
and safety. This can be done by designing it in a collaborative manner. Designing and
architecture are considered to be the sole domain of civil engineers and architects. But,
for huge projects like shopping malls, designing is an orchestration of multiple functions
and skill sets. Different functions involved in it are architecture, civil work, interior
designing, acoustics, electrical work, basic amenities, lighting and marketing. Many
applications relating to ambience, experience and promotions must be provided for
during the design phase. Subsequent modifications, though possible, may compromise
the aesthetics, functionality and/or safety of the mall.
Stages in Designing Process

Designing the mall is a multi-stage process. The various stages of this process are
described below.
Developing the concept and feasibility
Concept development and feasibility estimation is done during the planning phase of a
shopping mall. Vital inputs at this stage come from the marketplace (in terms of demand
and supply for different product and service categories), target segment, acceptability
48 Mall Management
and willingness of brands, competitive scenario and objectives of the developer in light
of his strengths and weaknesses. The outcome is in the form of a report that establishes
financial viability of the project and spells out the products, services and brands to be
accommodated in the mall.
Appointing the Architect
Development of architectural blueprint of a building requires highly specialized skills.

Except the big mall developers who own and operate a number of shopping malls, it is
not advisable for the developers to have an architect on their payrolls on a permanent
basis. Selection and appointment of the architect is done from the pool of talent available
in the market. The engagement is contractual in nature and is normally on a project basis.
The basic criteria for preferring a particular architect over others include reputation,
experience, recent projects, past relationship with the developer and expertise in handling
a particular type or scale of projects.
Preliminary Design
It is a basic design that presents the concept of the proposed mall in the form of a drawing.
It is the general site plan showing the building configuration and the site layout. It
includes a summary of gross and net development area and indicative drawings of mall
facade. Key parameters of the building like ceiling, floor levels, and overall height are
also indicated. It also includes mall layout (tentative positions of retail stores, common
areas and utilities) and circulation diagrams for the mall that include entry and exit
points, vertical circulation options, vehicular flow, parking plans and servicing areas.
The preliminary design is submitted to the client (developer) and comments/suggestions
are solicited.
Schematic Design
Suggestions made by the client are incorporated in the preliminary design to get the
schematic design. It is more detailed compared to the preliminary design, as it shows
detailed plan for each floor along with basements (retail and parking). Architectural
details are presented on a suitable scale. It also presents design data calculations,
proposed finish for exteriors and surfaces, material specifications along with finish
schedules. However, development of the schematic design requires significant interaction
with the client as many decisions are to be finalized by them before inclusion in the
design. Issues like compliance with government norms and cost management are the
constraining factors.
Detailed Design
This is the stage when the design for submission to regulatory bodies and for construction
is finalized. Going beyond the confines of aesthetics, this design outlines requirements of
civil works, municipal works, electrical fittings, and mechanical systems and incorporates
them in the design plan. This stage requires intense consultations with in-house specialists
or consultants (as the case may be) in the respective areas.
Development of construction drawings
The detailed design is broken down into construction drawings for different components
of the building. It becomes more important if the structure is modular in nature or
different building components are assigned to different contractors. It is followed by
actual construction work.
Elements of Mall Design and Aarchitecture
It is prudent for mall developers to opt for high-quality design, as their business involves
long-term ownership and management of the shopping mall, and returns accrue over a
long time period. Key areas to be taken care of in a mall design are described below.
Allocation of Open Versus Covered Space
How much of the total plate area is to be kept open is generally regulated by the local
authority. The covered area of the plate is generally expressed as a percentage of the
total plot area. Developers may decide to cover less area than they are entitled to but
cannot exceed it. The percentage of the covered area along with the floor space index
(FSI) determines the maximum permissible vertical expansion. The open space around
the mall building can be put to different uses. More open space adds to aesthetics and
convenience. Developers should consider appropriate uses for stores situated on added
floors because conventional retailing is not a viable option at floors higher than the
second or third floor.
Extent of Vertical Expansion
Vertical expansion refers to the number of floors that a mall can have. As discussed
earlier, the vertical expansion is affected by the permissible FSI. The FSI is a number that
indicates the total built-up area and is expressed as a ratio of 'the total built-up area on
the plot' to 'the area of the plot'. For instance, an FSI of 2 for a 20,000-square-metre plot
means that the total built-up area of the plot can be 2 x 20,000 = 40, 000 square metres.
If the authorities require 50 per cent of the plot area to remain open, then the mall can
have four floors (of 10,000 square metres each). However, it is too simplistic to decide the
mall elevation in this manner. Mall developers have to take a call whether they want to
utilize full FSI or not. The catchment area may not be able to absorb this much mall space
resulting in an over-supply. Even if the developer moves ahead with it, many brands may
not agree to move up to the third or fourth floor. Higher levels are suitable for retailing of
products and services that have high customer involvement, engaging the customers for
a long time period, for instance multiplexes, food courts, restaurants and discotheques.
Developers must have ample options in this category before opting for more floors. Else
they may end up diverting all or a part of the upper floors to non-retail uses (mixed use
developments).
Vehicular Circulation and Parking
While preparing the business plan (submitted for the purpose of arranging finances),
developers give projections about expected footfalls. However, it is also desirable to
50 Mall Management
estimate the number and composition of vehicles (two-wheelers, three-wheelers and

commercial vehicles) that the mall is expected to receive. Using this estimation, the
design and layout of the mall should facilitate: (i) comfortable entry, exit and movement
of the expected number of vehicles in the peripheral space and (ii) matching the available
parking space with the arrival pattern of vehicles. If 5000 vehicles are expected to visit
the mall per day, it does not need to provide parking space for all these vehicles because
they would neither come simultaneously nor remain parked throughout the day. Some
tenants attract high-income customers (more likely to come on personal vehicles) and
some retail formats engage customers for a long time (resulting in long occupation of the
parking space). Destination malls and luxury malls are expected to have high incidence
of personal vehicles while the converse is true for a neighbourhood mall. Suitable
provisions should be made in the layout and design to ensure smooth circulation and
adequate parking for these vehicles. Parking facilities are also required for commercial
vehicles supplying merchandise to the retailers, and the retailers and their employees too
need dedicated parking slots.
Loading Docks
A loading-unloading dock is a facility comprising a platform or a recessed bay where

commercial vehicles are parked for loading or unloading goods. These docks are
important for a mall as all its tenants are expected to receive replenishments at a specified
frequency. There could also be cases where a large and busy tenant (generally anchor
tenants like hypermarkets and supermarkets) receives massive replenishments so
frequently that it demands separate and dedicated docks. Docks are generally created
at locations where they do not interfere with the customer traffic and sight. These are
normally situated on the periphery of the mall building though these can also be inside
as a part of the basement parking. The number of docks in a shopping mall depends on its
size, the number and size of its tenants, the expected footfall and turnover and regulatory
requirements. Key issues for docks are: location, connectivity with the parking, storage
spaces and freight lifts, hours of operation, mechanical support available, safety concerns,
visual appearance, light and visibility, noise, odour and ventilation.
Landscaping
There are different options for landscaping the open space around the mall building.
It could be completely carpeted with stone, covered with vegetation or a mix of both.
Multiple options are also available in terms of material to be used for landscaping. Each
option has different initial cost and maintenance expenses. Natural vegetation adds to
freshness and aesthetics but requires higher maintenance. Stone-paved exteriors can be
put to multiple uses like games and rides for kids, kiosks, promotional displays and
organizing events. Some fixtures like fountains, lampposts and statues may be added to
enhance the impact of landscaping.
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External landscaping at Shipra mall, Indirapuram
Pad or Platform Development
The ground level of the mall building may be kept at par with the ground level of the plot or
the surroundings. The other option is to place the building at a raised pedestal or platform
so that it 'stands out' in comparison to its surroundings. Raised platforms are generally
preferred as they add to the mall's visibility, appeal and grandeur. Besides, the height of
the platform insulates the main building from the activities going on in its periphery, like
surface parking, circulation of vehicles, kiosks, games and the movement of shoppers.
Facade or External Appearance
Facade is the face of a shopping mall and conveys the initial impression about what kind
of a mall it is. The facade depends on its intended positioning and so does the material
used to construct it. The material used in constructing facade also reflects what kind of
mall it is or how the developer wants to position the mall in the minds of shoppers. For
instance, use of glass and metal gives the mall a contemporary look whereas dominant
use of plain brick or granite would give it a conservative look.
Common materials used in construction of facade are: stone (sandstone, granite and
marble), cement, glass, metal (aluminium, steel and brass), plastic and tiles. Different
components of the facade are: entrance, banner and tenant displays. Typically, the facade
of a shopping mall contains its name and logo, has its main entrance and carries names/
logos of major tenants. The identity of the tenants could be displayed on the facade with
or without charging additional money for it. If the tenants are to be accommodated on the
facade, there must be a suitable provision (panels) to do so. Some shopping malls rent out
the fagade space for promotional displays of brands rather than using it for their tenants.
52 Mall Management
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Overall Theme of Architecture
Most shopping malls bear a contemporary look with the use of glass and metal. There
are some malls (like Ansal Plaza, Delhi, and Shipra Mall, Ghaziabad) that have adopted
classical architecture as the central theme. Different elements like design details, materials
and colours used in a shopping mall should converge into a single theme. Unfortunately,
many developers do not plan it consciously resulting in development of malls that all look
alike or look confusing due to lack of orchestration between different elements of design.
Size, Shape and Number of Atriums

Atrium is the open space within the mall building facing rows of retail stores. It gives a
complete view of the retail stores from a distance. It adds to the comfort and convenience
of shoppers, providing them a place to escape when crowd builds up. It also serves as a
place for displays and promotional activities. The simplest design configuration includes
an atrium surrounded by a rectangular, square, oval or circular layout of stores. In case
of large malls, it becomes necessary to divide them into different zones. Such malls have
more than one atrium. These atriums might be arranged in the form of a dumb-bell or
chain of circles. Each atrium may have a different design theme and zoning plan.
Building layout
In the most basic layout, there is a single row of stores facing the atrium. The stores'
alignment may be square, rectangular, oval, circular or hexagonal. The continuity of
stores is broken by entry/exit routes or utilities. Such a theme is appropriate for small-
and mid-size shopping malls. In case of large shopping malls, a simple layout is not
suitable because the stores situated at the farther end look too distant to visit. Such malls
adopt a more complex structure with multiple atriums. Each atrium is of a manageable
size and has a reasonable number of stores around it.
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54 Mall Management
HVAC, Lighting and Acoustics
Provisions regarding heating, ventilation and air-conditioning (HVAC) must be

considered during the design stage itself. It should be decided whether the mall is going
to have a unified HVAC system or a modular one that is divided into different parts/
zones for the purpose of controlling the extent and intensity of air-conditioning. This
decision has a direct impact on the operational cost. Suitable provisions should be made
during designing and construction for laying electrical fittings and vents.
Lighting at UB City Mall, Bangalore
Special Provisions for Anchor Tenants
Though vanilla tenants are extended almost the same facilities and infrastructure as
anchor tenants, the latter might require some special facilities. The same holds true for
some other categories of retailers like food courts. Anchor tenants like hypermarkets
and supermarkets require access to dedicated facilities and infrastructure like ramps,
service lifts, escalators and travelators. The ceiling of hypermarkets and supermarkets
is considerably higher as compared to that of vanilla stores. Hypermarkets generally

extend to the first basement and have a direct entry and exit option to the parking.
Tenants like department stores expect at least one exclusive set of entry and exit at the
mall periphery apart from ingress/egress points towards the atrium. Multiplexes require
continuous space (without pillars in between) of a considerable size and also a higher
ceiling. The floor for multiplexes is generally inclined (as if a ramp). They also expect
space for a ticket booking window (box office) at the entrance or on the periphery of the
mall. Food courts require kitchens with access to running water, whereas kiosks placed
in the atrium or corridors require access to electricity and/or running water. Absence of
these facilities would seriously handicap the working of business. All these provisions
must be considered in advance and should be suitably taken care of at the design stage
itself. Any change made subsequently would either be costly and time-consuming or
would not be effective.
Basic Facilities and Amenities
Basic amenities and facilities to be offered in a mall include washrooms, drinking water,
lifts, escalators, travelators, stairs and benches. At a very basic level, the mall design
must provide for water and sewage connections at appropriate locations. Any attempt
to extend these connections subsequently might affect aesthetics and functionality. The
number, size and location of washrooms is another issue that must be decided at the
design stage keeping in view the expected customer circulation. The number, capacity,
categorization (customer versus service) and location of lifts and escalators are issues
requiring special attention. Vertical columns for lifts and horizontal span for escalators
must be duly provided. If the mall management is keen to place benches for the comfort of
customers, suitable spaces for them must be demarcated in the design, leaving adequate
space for those who are passing by. The location should be comfortable for those sitting
on the benches and should offer a decent view of the mall.
Safety Features
Some safety and security features should be incorporated because these are mandatory
as per the law. However, a mall should assess its individual requirements in terms of
possible threats specific to its location, size and expected traffic, and strengthen the
basic safety provisions. Most of the safety provisions are embedded in the basic mall
design and require deliberate planning during the design and construction phases. The
mall developer should know in which earthquake zone does the proposed project falls
and must ensure using such construction techniques that eliminate all risks. The depth
and nature of foundations, composition of construction material, length of beams and
proportion of windows to the length of walls are decided considering the earthquake
zone in which the building comes. Adequate provisions should be made for installing a
sprinkler system in the building. The installation of a sprinkler system requires provision
of vents, pipes and shafts at adequate locations. Staircases are rarely used in a shopping
mall, but they serve as emergency exit route in case of fires. Their number and location
must be decided in accordance with the law and the expected customer flow during peak
hours once the business is in full bloom.
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56 Mall Management
Characteristics of a Good Mall Design
The design of a shopping mall depends on a number of factors like customer personality
and profile, size of the project, its location, nature of competing malls, and the profile
and background of developers. However, there are some features that are common to all
good mall designs. These are described below:
Aesthetically Appealing
The appearance of shopping mall must be soothing and attractive for the target customers.
For this, the developers need to explore the preferences of the target customer group.
Attractiveness is the interplay of different elements like size, elevation, facade, cladding
material, lighting, ratio of open space to the total space and displays. However, the exact
mix of these must be validated by the target customers.
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Mural outside City Centre, Kolkata
Efficient Use of Space
The price of real estate in urban centres in India is comparable with that in the cities in
the developed world. Therefore, the mall design must ensure that such a costly resource
is put to optimum use. Every square inch of the space must be put to satisfactory use
and contribute to the return on investment (ROI). It does not mean that there should be
excessive construction, as it would increase the cost of construction and repulse customers.
What it means is that the space allocated to different components in the mall building
should be sufficient and not unwarranted. Apart from the ROI issue, the efficient use of
space also adds to customer comfort. If the atriums, corridors and stairs are too huge,
they can actually intimidate or repulse customers, especially during the mall's early days
when it is not fully occupied.
Open Appearance
Shopping malls are generally enclosed. When shoppers visit an operational mall, they
should not feel suffocated or restricted. One way of doing this is to ensure that there is
just optimum construction. The building can also look open by manipulating height,
lighting and circulation patterns. A good design can ensure that there is sufficient open
space at the entrance, and traffic gets diverted immediately after entering the mall. Such
a design can create an impression of openness by creating multiple atriums, placing
different units at different elevations and strategically locating the lifts and escalators.
Natural Ventilation
Shopping malls are meant to accommodate and host a large number of people in an
enclosed and insulated environment. But the shoppers' experience could turn nauseating
during peak hours during certain times in a year (say, peak summer in India). The
situation could turn disastrous if the artificial ventilation system fails. Shopping malls
should be designed in such a manner that they have adequate natural ventilation.
Natural Illumination
The lighting inside the mall is a big component of operational cost. Artificial light not
only consumes a lot of energy but also generates heat that needs to be neutralized
using high-level air conditioning. To cut down air-conditioning expenses, it is wise to
opt for a design that permits maximum use of natural light during day time. It may
be supplemented by choosing a suitable glass that permits maximum illumination but
minimum heat radiation. The size and nature of the roofing material used for the atrium
also plays a significant role in controlling illumination inside the mall.
SUMMARY (
It is very important to select location and design of a mall as decisions relating to these areas
are capital intensive and are irreversible in nature. Therefore, it is important to assess macro
as well micro issues involved in mall designing and development process. Macro issues involve
estimation of the catchment area, business potential and likely demand for the mall. Micro
issues involve checking accessibility, connectivity, visibility and other characteristics of the
site. Designing the mall is a multi-stage process involving orchestration of various people and
positions. All these deliberations are done to ensure that the mall is aesthetically appealing,
uses space efficiently and is open, ventilated and illuminated.
58 Mall Management
REVIEW QUESTIONS |
1. Why is it important to apply due diligence while planning the development of a shopping
mall?
2. What are the different decisions taken under the planning and design stages of mall
development?
3. What is the significance of identifying an appropriate macro location for a shopping

mall?
4. How do characteristics of the site (the plot) affect the business potential and performance
of a shopping mall? Cite examples from real life.
5. How would you measure the business potential for a mall at a particular location?
6. What parameters should be kept in mind while selecting a plot for mall development?
7. Discuss various stages involved in the mall designing process.
8. What are the different stages of mall design and architecture?
9. How do anchor tenants influence the design of a shopping mall?
10. What are the characteristics of a good mall design?3
: )
PRACTICE EXERCISES
1. Visit five shopping malls of your choice. Take photographs and make observations. Do
all the malls follow the same design pattern? If yes, prepare a list of common design
features. If no, what are the points of difference? Discuss the possible reasons for observed
variations.
2. Imagine your locality to be a potential land for development of a mall. What kind of mall
(size, positioning, etc.) would you suggest? Suggest the most suitable location and plot
(out of available options) for developing a mall. Why do you think this site is the most
suitable option?
3. Visit five to six malls of your choice. Visit and examine the anchor tenants in these malls.
Identify special and dedicated provisions made for the anchor tenants in the malls.
: )
SUGGESTED READINGS
1. Beyard, M.D. and 0' Mara, W.P. (1999), Shopping Centre Development Handbook,
Washington: Urban Land Institute
2. Darlow, C. (1972), Enclosed Shopping Centres, NY; Architectural Press (Routledge)
3. Das, A. (2009), Mall Management with Case studies, New Delhi: Taxman Publications Pvt. Ltd.
4. /CSC (2001), Dictionary of Shopping Center Terms, New York: International Council of
Shopping Centers
5. Gregorson, J. (1988), 'Tailoring a fashion mall to its urban setting', Building Design and
Construction, 29(March), p. 74
6. Gruen, V. and Smith, L. (1960), Shop/Ding Town USA: The planning of shopping centers,
New York: Van Nostrand Reinhold
7. Guy, C. (1994), The Retail Development Process: Location, Property and Planning, London:
Rutledge
8. Huff, D.L. (1964), 'Defining and estimating a trade area', Journal of Marketing, 32(4), pp.
34-38
9. Huff, D.L. and Rust, R.T. (1984), 'Measuring the congruence of a trading area', Journal of
Marketing, 48(4), pp. 68-74
10. Levy, M.; Weitz, B. and Pandit, A. (2008), Retailing Management, 6th edition, New Delhi:
Tata McGraw Hill
11. Maitland, B. (1985), Shopping Molls: Planning and Design, NY: Nichols
12. Pani. S. (2009),'10 considerations before building a mall', In A. Taneja (Ed.), Mall of India,
pp. 158-162, New Delhi: Images Multimedia Pvt. Ltd.
13. Puri, A. (2007), 'Designing India's mall potential', In Amitabh Taneja (Ed.), Malls in India:
Shopping Centre Developers and Developments, pp. 72-75, New Delhi: Images Multimedia
Pvt. Ltd.
14. Singh, H. and Bose, S.K. (2008), 'My American cousin: A comparison between Indian and
the US shopping malls', Journal of Asia-Pacific Business, 9(4), pp. 358-372.
15. Underbill, P. (2004), Call of The Moll: The Geography of Shopping, NY: Simon and
Schuster
□ □□
60 Mall Management
CASE 1
^What makes a mall successful?^.
A mall with a great promise reduced to a building that offers office space and banquet halls
for functions—that is the story of Star City Mall. Not long ago, Star City was considered a
recipe for success, thanks to its location in the middle-class Delhi neighbourhood of Mayur
Vihar. Surrounded by a large number of upwardly mobile young families, Star City Mall had
the closest competing supermarkets, department stores, and multiplexes a good 5 km away,
across the Uttar Pradesh border, in Noida. In 2009, a Metro station opened right next to the
mall and that should have put the seal on its success. Yet, Mayur Vihar's residents continued
to prefer to shop and eat out in Noida or in South Delhi. Retailers started fleeing the mall.
Reliance Super of Reliance Retail Ltd was announced as the anchor tenant of the mall with
much fanfare in 2006. But,it abandoned the mall in early 2011.
"Only about a quarter of the estimated 180 malls in India are making money," informs
Santhosh Kumar, Chief Executive of Operations at real-estate advisory Jones Lang LaSalle
Property Consultants (India) Pvt. Ltd. "Of the rest, 35 per cent malls are just making ends
meet, and the others are losing money," he adds further.
Why do some malls succeed wildly while others fail? Retailers and experts attribute the
success of mall business to a combination of factors. Experts name Prestige Group's Forum
Mall in Bangalore among the best located in the country. It is on the arterial thoroughfare
that links the city's central business district to Electronics City. On either side of the mall are
affluent residential neighbourhoods such as Koramangala and BTM Layout.
However, a great location cannot guarantee the success of a mall unless its developer
addresses the needs of the primary market—the catchment area—with the right products.
"For any shopping centre, the most important thing is to address the needs of the majority
of the catchment around it," says Neeraj Ghei, Director of Delhi's Select Citywalk Mall. "You
have to analyse the catchment," he adds further.
The Prestige Group researched the market before building its first mall, Forum, in Bangalore.
It hired CB Richard Ellis to study households in Koramangala and its neighbourhood besides
other parts of the city to understand the ideal mixture of retailers and services the mall would
need to offer. "The mall needs to be a sort of community rather than just a destination for
shoppers," says V. Muhammad Ali, Head of Mall Operations at Forum. "You have to tailor a
mall for the catchment rather than forcing a mall on the catchment," he adds. That approach
seems to have worked for Forum.
Similarly, Delhi's Select Citywalk in the Saket area decided it would focus on affluent women
in south Delhi. "To make this a preferred destination for the south Delhi woman we had to
capture and reflect her character and her soul," says Pranay Sinha, Managing Director of
Star Shopping Centres Pvt. Ltd., which is working on malls in various cities. (Mr Sinha earlier
served as the Chief Executive of Select Citywalk.)
A large part of the mall was dedicated to smaller stores and the developer convinced several
retailers of ethnic apparel and accessories including Zardozi and Fabindia to set up stores in
the mall. The idea was to replicate a typical market such as South Extension or Greater Kailash,
where many women from south Delhi shopped. This was complemented by international
fashion brands such as French Connection, Mango and Esprit.
There's a science to designing and managing malls, say experts. "There is a lot of expertise
required—the way it's designed, the displays, the shops," says Anshuman Magazine,
Managing Director of real estate consultant CB Richard Ellis South Asia Pvt. Ltd. According
to Star Shopping's Pranay Sinha, part of this design is to make it possible for visitors to see
as many shops as they can from where they stand. "In a well-designed mall, this number is
15-20, encouraging visitors to walk around to see what's on offer," he says. The emphasis,
adds Select Citywalk's Ghei, has to be on the shops, not the mall's architecture.
And, the emphasis has to be on a significant number of shops (which brings us back to the
issue of size). Noida's Centrestage Mall, which opened for business in 2003 was initially much
sought after by retailers. Four years later, a much bigger mall, Great India Place, opened across
the road and Centrestage saw a flight of customers. Although Centrestage has a five-screen
multiplex, Trent Ltd's Westside department store is its leading retail attraction. Great India Place
boasts a Big Bazaar hypermarket; Pantaloons, Shoppers Stop, Lifestyle and Max department
stores; a sprawling Home Town do-it-yourself outlet; and several other large stores.
This variety is important, say experts. Bangalore's Forum has an 11-screen multiplex, a 30,000
sq. ft food court and restaurants on all floors. Developer Prestige is now opening its first mall
in Chennai, which will have two 50,000 sq. ft. anchor stores. It leased space for one anchor
store to Lifestyle, a department store. It avoided leasing the other to another department
store, signing up instead with RmKV, famous for its traditional silk saris and ethnic apparel.
About the decline of one-time hotspot Centrestage, Kumar of Jones Lang LaSalle says the
mall has now been reduced to a "convenience mall" with the number of people visiting it
dropping by 40%. "People will mostly go there for a specific purpose," he says.
According to various retailers at the Centrestage, the mall attracts around 6,000 visitors a day
over weekends; Great India Place gets around 150,000. Woodland, located on the ground
floor of Centrestage, closed its outlet in the beginning of 2011 as did Levi Strauss. Both
brands have stores in Great India Place.
Source: Adapted from 'The Recipe for a Successful Mall', Rasul Bailey, retrieved from
http://www.livemint.com/Articles/PrintArticle.aspx?artid=C260D0CC-6F5C-llE0-B67E-
000B5DABF613, accessed on 16 May 2011
62 Mall Management
CASE 2
x Square peg in a round hole^.
"This is a real deal. Move ahead and grab it," Rajneesh instigated Neelabh.
"Do you think it is advisable to go for this skeleton? After all, we are into developing malls and
this structure has been designed and put up as an office complex," argued Neelabh.
Rajneesh emphasized: "Why don't you see the clear-cut cost advantage? If you purchase a
similar piece of land and come up with a comparable framework, it shall cost us a fortune.
Now we are getting all this at 70% of the actual cost. Isn't it a deal?"
"Well, the point is: Is the structure suitable for our kind of business? If case we have to
demolish the whole skeleton and come up with a fresh construction, the cost of project shall
actually go up by 30% instead of coming down!" Neelabh seemed a bit sceptical.
Rajneesh then retorted: "But what is the fun of pulling it down? We shall make suitable
changes, club or compartmentalize the land into chambers and offer it to tenants as per their
requirement."
"The concept seems attractive but let us discusses the things in detail." Neelabh now seemed
interested in discussing things. He adds further: "What can we do this six-storey building with
single-basement parking? There is not much open space outside."
"It is because the office complex was not supposed to attract the masses. But even for a mall,
we shall be using external space only for the purpose of landscaping and there is sufficient
space for it." Rajneesh explained to him.
But Neelabh asked: "I don't agree with this argument. Anyway, what about atrium?"
"The original structure has a narrow open space in between, again because of being an office
complex, but we can always expand it by clubbing adjacent compartments to it." Rajneesh
suggested thoughtfully.
Neelabh then exclaimed: "An atrium with pillars in it! Wonderful!, And what about the
narrow corridors?"
"At the outset, it seems a real problem but we can regulate and channelize the flow of customer
traffic in such a manner that people move in a single direction." Justified Rajneesh.
"As they normally do in the malls. It looks reasonable." Neelabh seemed a bit convinced. "So
we need to provide extra set of stairs for reverse movement."
"Not only an extra set of stairs but also escalators and more lifts," explained Rajneesh.
"Well, we need to analyse a few things again in light of this." Clearly Neelabh was not
convinced and he wanted more information. He asked: "So, after building what about running
business?"
Rajneesh answered: "Simple! Let us approach the hypermarkets, get one as the anchor
tenant that will attract footfalls, then approach other brands and things will move on."
Neelabh then enquired: "But how do you propose to provide the enormous floor space that
a hypermarket requires?"
Rajneesh replied; "Elementary! Offer them two or three floors, preferably the lower ones."
But Neelabh resisted: "Look, we cannot offer them large, continuous halls because what we
have is the framework for chambers. And they need to create their own stairs/pathways out
of that floor area. And what about continuous space required for counters?"
Rajneesh responded casually; "Let them carve it out as per their own plans. Counters can be
aligned as per the floor area. I don't see any problem in this."
Neelabh had a suggestion: "Why don't we think of attracting a Cineplex as an anchor tenant?
This will help us in utilizing the upper floors. And let us have a food court under that."
Rajneesh solicited: "I believe a hypermarket and a Cineplex attract customer segments that
are diametrically opposite. Still, we should consider this. By the way, why can't we have
both."
Neelabh then commented: "It is not a normal practice. After all, there must be infrastructure
to support both the activities."
But Rajneesh had a point to make; "We have enough floor space, seven floors. It is our biggest
strength."
Neelabh was still sceptical: "I don't know whether it is strength or weakness. But what about
remaining tenants?"
Rajneesh replied: "Well, that depends, to a great on the anchor tenant. So, it shall be
premature to decide that."
Neelabh came up with a suggestion: "What is your opinion about giving top floors to
a hotel or commercial offices? That shall give us revenues without taxing heavily on the
infrastructure."
But Rajneesh countered: "That doesn't get well with the conventional image of a mall."
"The structure itself doesn't seem conventional. So, we need to think unconventionally to
make it run profitably, if at all we decide to purchase it." Neelabh had the final word.
Discussion Questions
1. Had you been the decision-maker, what would have been your reasons for rejecting the
building?
2. In case you are compelled to take up the building, what decisions shall you take to utilize
it as a mall?
CHAPTER
Finoncing and Revenue
Model for Shopping Molls
LEARNING OBJECTIVES

• Identify the major sources of funding for mall projects
• Understand pros and cons of each mode of financing
• Know the major sources of revenue for shopping malls
• Get an overview of latest happenings in the field of mall financing
WHAT WENT WRONG?
Prashant Arora does not know what to do. He never realized that the mall business will
turn out to be so different from the real estate business he has been running for the last
17 years.
A successful real estate developer dealing in residential properties in Delhi, Prashant
decided to get into the retail opportunity that everybody was talking about—the
shopping malls. He joined hands with three friends, bought a commercial plot in Noida
and went ahead with a shopping mall project. However, his problems started soon. Even
before the construction could begin, one partner walked out of the project because of
personal compulsions, and the project started facing funds crunch. Prashant approached
commercial banks for a loan but banks were asking too many questions and Prashant did
not have answer to all, like questions related to the mall's earning potential, tentative
future business models, etc. "How can I answer all these questions even before the
ground is broken?" Prashant teased his mind. In fact, he did not have any idea about
most of the issues related with the mall business.
Financing and Revenue Model for Shopping Molls 65
As a last resort, Prashant approached real estate brokers who could find investors for
his project. He offered the ownership of stores in the upcoming mall to investors for the
money they would put in. However, the investors wanted commitment in terms of return
on investment (ROI) and tenancy contracts, whereas prospective retailers wanted to see
the project first. Then Prashant started construction with whatever limited funds he had
so that he could showcase the under-construction project to potential investors and
retailers and instil confidence into them about good prospects. But then the recession
hit the industry. The retail real estate was one of the worst-hit sectors. Investors became
cautious and retailers put the expansion plans on hold.
Standing in front of the bare skeleton of his mall, Prashant was wondering what went
wrong. "Which financing model should I have gone for?" He was trying to answer this
question.
Introduction
In India, the first decade of the twenty-first century saw development of retail space
taking off rapidly, thanks to the astronomical growth projections for the future retail
trade. People hailing from all backgrounds jumped onto the shopping mall bandwagon
without realising the exact nature of its business and its unique requirements, especially
in terms of financing.
Development of shopping malls is a capital-intensive business. It requires huge

investments for buying land and putting up world-class infrastructure and for creating
an ambience that can attract tenants as well as retailers. Contrary to many Western
countries where shopping malls are located away from the heart of the city, the Indian
shopping malls are generally situated closer to population clusters. It is due to the factors
like increase in the sale of small cars in India, lack of efficient and comfortable public
transportation system, poor road infrastructure and chaotic traffic. All these factors make
it difficult for shoppers to travel over long distances to do shopping. Plots of land closer
to population clusters tend to be prime land. Developing malls on such plots means
competing against land uses for residential and office projects. It inflates the price of
the land. As a good shopping mall requires a considerably large space to accommodate
a deep tenant-mix and to create a decent ambience, investment in land alone tends to
be prohibitive for a mall project. Add to it the prices of vital ingredients of construction
(such as cement, iron, and glass) that have shown a consistent upward trend in recent
years, thus making shopping mall one of the costliest projects.
In contrast to a normal shopping complex where the developer walks out after
transferring ownership to individual store owners, the developer of a shopping mall
manages it perpetually. It is the developer's responsibility to create footfalls that are tied
to the returns (rentals) in many cases. As a shopping mall does not start attracting footfalls
immediately and automatically, the developer has to put in a considerable amount of
money during the initial period to attract the shoppers. It also adds to the requirement of
finances for a shopping mall.
66 Mall Management
A comprehensive discussion on the financing issues concerning malls would entail

discussing investment (capital as well as operating expenses) against the revenues that
are generated. Difference between the gross revenue collection and the cost (comprising
the operating cost and the return on capital employed) would give the net cash flow from
the project. The challenges of mall financing are as follows:
(a) Keeping this net flow positive
(b) Keeping it insulated from unwanted fluctuations in the short term
(c) Looking for cushions to absorb revenue fluctuations
(d) Ensuring long-term growth and sustenance of positive net cash flows
Let us explore various capital sources available to mall developers.
Capital Sources for Malls
The finances required for developing shopping malls come from a combination of internal
and external sources. The internal contribution occurs as the promoter's contribution in
cash and/or in terms of land valued at the market price. It is mandatory to have some
element of internal contribution for tapping external sources of funds because it evokes
confidence among outside sources. Funding from external sources might come in the
form of debt or equity. The external sources could be or institutions. For the purpose of
structured discussion, these sources may be divided into two categories:
1. Private funds
2. Public funds
Each category must be examined by the mall owners prior to seeking commercial
financing. They then need to examine the type of loans offered by lenders as per their
needs and the anticipated growth. Financing to mall project will depend on value of the
business in the future, whereas in case of a residential real estate, financing is based on
the value of a home at the time of its sale.
Private Funds
Contributions from promoters may come as private debt or private equity. Sixty per cent of
financing in the Indian mall projects comes from the capital contributed by the promoters
from their personal kitty along with the debt taken from financial institutions (private
debt). The rest 40 per cent of the requirement is met by the private equity. Investors in this
category include high net-worth individuals (HNIs), institutional investors and global
investors. Most of them invest through real estate funds (REFs). Some important private
funding options are:
(a) Internal accruals
(b) Loan from banks
(c) Loan against property
(d) Loan against future rent receivables

(e) Note and mortgage
(f) Contract for deeds
(g) Trust deed
(h) Real estate funds
Let us know more about the above-mentioned private funding options.
Internal Accruals
These include the accumulated retained earnings and depreciation charges. Managements
of corporate houses use internal accruals for a number of reasons. Depreciation means
simple allocation of capital funds for some asset that is expected to improve the financial
condition of the organization. The charge on depreciation is an internal source of funds
and is considered a non-cash charge.
The retained earnings are shareholders assets. However, most companies retain
some earnings for further financial growth. The retained earnings represented by
reserves and surplus are an important source of long-term financing. Advantages and
disadvantages of the retained earnings are described below.
Advantages
1. Availability of the retained earnings is the greatest advantage and there is no

obligation on the use of this fund.
2. Use of the retained earnings does not affect the efficiency of the business.
3. Use of the retained earnings for financing is viewed as an excellent option by the
stock market.
4. Issue costs and losses because of under-pricing are eliminated by the retained
earnings.
Disadvantages
1. Most of the companies have a well-established dividend policy in place. Hence,

there is a cap on the amount of the retained earnings that can be utilized.
2. The opportunity cost of the retained earnings needs to be considered before utilizing
them. Some companies neglect this opportunity cost and invest in sub-marginal
projects.
Loans from Banks
Banks offer a significant financing solution to various reputed retail chains. The
product offering includes providing an upfront loan to the landowner and discounting
the future receivables every month (or on any other frequency), thus extending good
liquidity in the hands of the landowner. However, financing real estate development
has never been popular, because of perceived opaqueness of pricing in the market,
lack of clarity and standardized practices, and associated risk of what is still seen as a
speculative bubble.
68 Mall Management
The situation became severe in 2008 owing to the economic recession, and banks
have ceased lending.
In case of mall projects, banks evaluate the loan eligibility of the prospective
borrower on the basis of the following details:
• Property profile including criticality of the premises for the lessee's operations
• Deal structure
• Lessee details
• Lesser details
• Cash flow pattern envisaged in the agreement(s)
Loan against Property
The loan against property comes under the secured loan category where the borrower
gives a guarantee by presenting his/her property as security. The property loan or loan
against property is a type of loan awarded by the bank against the current assets of
the customer. This type of loan is very useful when other resources of financing get
exhausted. It is important to note that a property loan is not similar to a mortgage. While
a property loan is obtained from the bank by keeping the customer's current assets as a
security against the credit, a mortgage is a security instrument for purchasing an asset.
On the basis of the current market situation, the paid-up cost of the asset and other
aspects, the cost of the loan against an asset can range anywhere from 40% to 60% of the
asset cost.
The eligibility criteria to get a loan against property vary from one bank to another.
However, the common factors that all banks look at are:
• Cost/value of the property mortgaged
• The property owner's income, savings, debt obligations
• The property owner's repayment track record for other loans, credit cards, etc.
A loan against property is one of the best ways to raise money. The only
disadvantage of such a loan is that if the borrower is not able to repay the loan fully,
the bank or the financial institution can take possession of property kept as security.
Hence, while deciding on a property loan, one should take into account one's repaying
capability.
Loan against Future Rent Receivables
The loan against future rent receivables has been developed keeping in mind the
growth potential of real estate in the metros and various urban centres, where many
shopping malls are being developed. The mall owners approach banks for loans against
securitization of future rent receivables from their properties. As these owners lack the
financial resources required to improve the condition of their properties to enhance the
prospects of earning higher rent, they opt for this type of loan.
Before offering the loan against future rent receivables, the bank will ensure that the
following conditions have been met:
• The property has been built according to the plan approved by the local government
authorities.
• There is a confirmed lease agreement between the property owner and tenants.
• The property has been rented out.
• The worthiness of the property owner and tenants is evaluated for extending the loan.
Once the bank has checked the above criteria, it starts processing the loan application.
Normally, the bank enters into a tripartite agreement with the property owner and
tenants. Also a term loan agreement is signed between the property owner and the bank
prior to the loan approval. As per this agreement, the rent from the tenants will directly
go to the bank. The owner and the tenants will have to give an undertaking to this effect
to the bank. If the direct rent submission to the bank is not possible (typically in the case
of a mall when there are many tenants in one property), the owner has to inform this to
the bank. In that case, the borrowed amount along with the interest in equated monthly
instalments (EMIs) has to be paid by the owner. Certain banks also allow the owner to
open multiple rent loan accounts in case of many tenants.
Once the owner's papers are in order, the processing of his/her loan application
begins. The owner may get a loan up to 90 per cent of the discounted value of future rent
receivables. Interest rates differ from bank to bank. While most of the banks charge the
floating rate interest on this type of loan, certain banks also offer the fixed interest rate
option.
The owner can expect to get the loan on a better interest rate if he/she has a good
banking relationship and an impeccable past repayment record with the bank. Additional
charges include the processing fee, prepayment fee (if the owner plans to pre-close the
loan), and overdue penalty if the owner defaults on making the loan repayment.
The loan tenure also varies. Banks tend to offer the remaining period of the lease
or rent agreement as the loan tenure. If the owner has different lease agreements with
different tenants, then the bank offers a loan for the remaining period that is minimum
among all the lease agreements. For example, if the owner has four tenants, whose lease
agreements expire in four, five and six years from the date of loan application, the bank
will offer the loan tenure of four years.
Note and Mortgage
Another financing instrument is the note and mortgage. A note is a promise to pay, while
a mortgage is the pledge of a specific parcel of real property as collateral to secure this
promise. A note, also called promissory note, signed by the mortgagor is a negotiable
instrument that specifies the terms and conditions for the debt repayment..
A mortgage is an instrument that conveys an interest in real property to a lender

as security for payment of a promissory note. The borrower (mortgagor) pledges a
property to the lender (mortgagee) as collateral for a debt. A mortgage, signed by both
the mortgagor and the mortgagee, establishes a lien on the collateral property on the date
the mortgage is recorded. When the mortgage debt is paid in full, the mortgagee marks
70 Mall Management
on the note "paid in full", signs it and returns it to its maker along with the mortgage
form that will clear the record of the mortgage lien.
The promissory notes usually accompany security instruments that give the
creditor leverage against the debtor and also give the debtor extra incentive to pay. A
promissory note is advantageous to the lender because he/she has the right to accelerate
the entire debt in the event of default and the authority of the court for the judicial
foreclosure. However, time and expense involved with the judicial foreclosure are major
disadvantages for the lender. The same turns out to be an advantage for the debtor as it
gives him/her time to arrange for the money. But the debtor's inability to miss a payment
or two could compel him/her to pay off the entire debt to save the property because of
the lender's right of acceleration.
A mortgage is duly recorded by judicial officers. A public notice of the mortgagee's

interest in the property is issued once it is recorded. When the mortgagor pays off the
balance of the mortgage, the mortgagee gives the mortgagor a satisfaction of the mortgage
document that is also recorded. This document gives the notice that the mortgagee's
interest in the property is terminated. The mortgagee can foreclose on the mortgage if the
mortgagor defaults on the loan payment or fails to pay property taxes or insurance.
Contract for Deeds
A contract for deeds is both a sales agreement and a financing instrument between the buyer-
borrower-vendee and the seller-lender-vendor. The full terms of the sale as well as the manner
in which the loan will be repaid are elaborated in this contract financing form. The buyer is
granted the permission and control of the property during the term of payment under the
conditions specified in the contract. The seller delivers the deed to the buyer who transfers
full legal title when the terms of the contract are satisfied. Mall financing through the contract
for deed is used when other financing means are not available.
Trust Deed
A trust deed is a three-party instrument in which the borrower (the trustor) makes
payments on a note to the lender (the beneficiary). In order to provide the beneficiary
a greater measure of security, the trustor actually gives the title to the property—in the
form of a trust deed —to a third person (the trustee) to hold.
Private Equity Investors
Private equity (PE) investments are derived from high net-worth individuals as an
essential source of early-stage funding for high-risk ventures. Individuals often invest in
malls through partnerships or specialist firms. Investments in malls are typically made
via a private equity real estate fund, a collective investment scheme, which pools capital
from investors. These funds typically have a ten-year lifespan consisting of a 2-3 year
investment period during which properties are acquired, and a holding period during
which active asset management will be carried out and the properties will be sold. The
private equity real estate funds generally follow core-plus, value-added, or opportunistic
strategies when making investments.
I
Core Plus: This is a moderate-risk/moderate-return strategy. The fund will generally

invest in core properties. However, some of these properties will require some form of
enhancement or value-added element.
Value Added: This is a medium-to-high risk/medium-to-high return strategy. It

involves buying a property, improving it in some way, and selling it at an opportune time for
a gain. Properties are considered value added when they exhibit management or operational
problems, require physical improvement, and/or suffer from capital constraints.
Opportunistic: This is a high-risk/high-return strategy. The properties will require a

high degree of enhancement. This strategy may also involve investments in development,
raw land and niche property sectors. Investments are tactical.
The PE investments mainly occur at the initial stages of the project and would
facilitate the funding requirements for construction. Once the projects are sold off, possibly
in 18-20 months, PEs would make an exit. The money from PE funds is typically useful
at the land acquisition stage because thereafter banks and other lenders are available to
fund the actual development of the project.
The PE firms are returning to real estate investments through projects rather than equity
because an easy exit option coupled with the relatively higher returns from the sector
helped them overcome their fear of loss. Since late 2008, the PE investors have been
shying away from real estate investments as the stock market downturn took a heavy
toll on real estate prices, which were quoted higher than the market price, resulting in
many funds burning their fingers.
Krishna's Kotok Realty Fund, a unit of Kotak Mahindra Bank, invested Rs 2.5 billion in
Emaar MGF's two projects. Emaar MGF is a joint venture (JV) between the Indian lender
MGF and Dubai's Emaar Properties. PE funds, including Kotak Realty Fund, Citigroup, IL&FS
Investment Managers and ICICI Venture of the ICICI Bank have made a total commitment
of over $10 billion for the Indian real estate sector.
Public Funds
Public funds may be routed to the mall projects through two channels —public debt and
public equity. The public debt market in India, which comprises commercial mortgage-
backed securities and corporate bonds, is still in its infancy as can be seen from the
structured securitization products such as residential mortgage-backed securities that
have just begun operations. The contribution of the public equity is also insignificant.
The public equity may come through initial public offers (IPOs) in the stock market,
real estate investment trusts (REITs) or real estate mutual funds (REMFs). Vital public
funding options for shopping malls are as follows:
(a) Commercial mortgage-backed securities
(b) Corporate bonds
(c) Initial public offers
(d) Real estate investment trusts
(e) Real estate mutual funds

72 Mall Management
Commercial Mortgage-backed Securities
Commercial mortgage-backed securities (CMBSs) are secured by the loan on a commercial

property. A CMBS provides reasonable liquidity to investors investing in real estate and
shopping malls. The increased use of CMBS, like other types of MBS, is due to rapid rise
in real estate prices over the years. Because a CMBS is not standardized, there are a lot of
details associated with it and these make CMBS difficult to value. However, compared
to a residential mortgage-backed security (RMBS), a CMBS entails a lower degree of
prepayment risk because commercial mortgages are most often set for a fixed term.
Corporate Bonds
Corporate bonds are a major source of debt financing for companies. These bonds are
issued by corporate bodies (mall development companies) and are sold to investors.
These are generally backed up only by the payment ability of the company that is typically
money to be earned from future operations. However, in some cases, the company's
physical assets may be used as collateral. Corporate bonds are considered high-risk
instruments and hence they carry a higher interest rate (as compared to government
bonds). Quantum of funds mobilized through corporate bonds and the rate of interest on
the bonds depend on the company's goodwill and reputation in the market. The higher
a company's perceived credit quality, the easier it becomes to issue a debt at low interest
rates and vice versa. Corporate bonds may also have call provisions to allow for early
prepayment if the credit availability in the market improves and the prevailing interest
rates show a downward trend.
Real Estate Mutual Funds (REMFs)
Broad-based private equity participation in the real estate sector is constrained primarily
by regulatory impediments. In 2005, the Securities and Exchange Board of India (SEBI)
took a positive step by approving the formation of real estate funds (REFs). At present,
REFs are only open to high net-worth individuals, institutional investors and global
investors. But the expected entry of real estate mutual funds (REMFs) would herald a
new era and open new avenues for commercial retail investors in the real estate sector.
Although this segment has been growing at a decent pace, its huge potential is still
untapped, for example, it may attract huge investments from institutions such as pension
funds and insurance agencies. REMFs will offer the real estate developers another source
of funds, as the SEBI guidelines allow these funds to invest in the equity of public-listed
or privately held real estate developer companies as much as 65% of their fund size. In
a situation where the rising interest rates and reduced borrowing limits are leading to a
cash-crunch situation for many builders, REMFs may become a good alternative for them
to source capital. The SEBI guideline pertaining to the minimum investment by REMFs
has been thoughtfully formulated to promote pure investment in the sector rather than
speculation.
The guideline says that the real estate MFs will invest at least 35% of the assets in
those real estate properties that are already completed and usable. Under-construction
projects, vacant land or properties specified for agriculture use will not be considered
as "real estate property" for satisfying the 35% minimum investment norm under the
SEBI guideline.
Some prominent companies that have promoted real estate funds in India are
HDFC Property Fund, DHFL Venture Capital Fund, Kotak Mahindra Realty Fund,
Kshitij Venture Capital Fund (a group venture of Pantaloon Retail India Ltd) and ICICI's
India Advantage Fund. India's first real estate venture fund is HDFC India Real Estate
Fund with a cumulative corpus of Rs. 1000 crore. This fund is owned by the HDFC
Property Fund, a joint venture of India's largest housing finance company, the Housing
Development Finance Corporation (HDFC), and the largest Indian commercial bank, the
State Bank of India (SBI).
Real Estate Investment Trusts (REITs)
An REIT is a trust that invests funds in properties on behalf of many investors. It operates
just like a mutual fund but the difference is that it invests only in properties earning rents.
Its major incomes are rental returns, and it is obligated to distribute most of its profit as
dividend to its holders. It is a stimulating tool for accumulating income-making assets.
It is not sold through banks or agents like the way mutual funds are sold. REITs
are listed on stock exchanges. So, investors earn returns through capital appreciation
from price fluctuations and dividends just like those investing in other listed companies'
shares. An REIT's main income is from rental-earning properties like malls, corporate
offices and leasing properties. Since the rental properties generate consistent and high
returns on investments, REIT is a secure source of investing money. Thus, REITs are high-
yielding stocks and very attractive income-generating assets.
As investors, we need to invest just a small amount to own some percentage in

properties, like shopping centres, corporate plaza, etc. through REITs. We are free to sell it
at anytime through stock markets without any hassles. There is minimal cost involved in
exchange of property or buying and selling of property. The best part is that the investors
need not invest wholly in just one single property, they can invest in several properties
to diversify their risk. The safest and a high-yield bet is to invest in shopping centres as
returns are quite attractive and the probability of failure is low. The second best option is
office buildings and hotels.
Initial Public Offers (IPOs)
The most generic mode of mobilizing public money is through an IPO. Companies in
manufacturing and services sector have done so successfully in the past, and Indian stock
markets have been quite responsive to this mode. Barring a few cyclical fluctuations,
sensex has mostly shown upward swings during the recent past. The Indian real estate
sector, however, is an exception. Due to its inherent opaqueness, investors look at the real
estate companies with great suspicion.
Keeping in view the great bull-run in the stock markets between 2005 and 2007,
a number of players, such as DLF, Omaxe and Parsvanath, planned their IPOs in the
74 Mall Management
past. In fact, in 2006, the real estate IPOs were the second-largest mobilizers of funds
(Rs. 3993 crore) from the stock markets, second only to energy companies. But the
sudden crashing of stock markets after the Reliance Power IPO in January 2008 has put
a damper on IPOs, and market observers are a bit sceptical. Companies like Emaar MGF
and Rahejas found the environment difficult for an IPO in the year 2010. However, the
IPO mode has the potential to change the face and fate of the Indian mall business as
funds would be available in abundance for a long (practically infinite) term with no or
minimal commitment for returns. It would reduce the cost of capital and pressure to
monetize the project.
Sources of Revenue
The money invested in a shopping mall as capital expenditure and for meeting operational
expenses is offset by generating continuous revenues from multiple sources within the
mall. The main objective of revenue generation is to meet all the current expenses, create a
fund/corpus for future growth/modifications/contingencies and earn the expected return
on the invested capital. Major sources of revenue for shopping malls are:
(a) Lease rentals
(b) Renting common area for activation
(c) Retail merchandise unit
(d) Kiosk leasing
(e) Vending machines
(f) Sponsorship
(g) Event marketing:
(h) Advertising and promotion
(i) Temporary leasing of empty stores:
(j) Parking facilities
(k) Media activity inside the mall
(1) Food courts
(m) Miscellaneous sources
Let us know about these sources in detail.
Lease Rentals
Mall financing has undergone a dramatic transition from the way it was accomplished
when the mall culture had just started in India. Learning from the early malls, which can
be called 'first-generation malls', developers are now opting for the lease model instead
of the earlier outright sale model. In the early days of the retail business in India, the
retail market was neither well developed nor well organized. Also, the understanding
of the retail market was in its nascent stage. As a result, to minimize the risk and reduce
the money lock-in, developers preferred selling out the space. But, now the situation has
changed, and the developers have understood the market. Also, because of the availability
of multiple modes of financing, the financial risk has reduced significantly. So, the new-
age malls lease the shops rather than selling off the floor space.
Leasing provides mall developers an excellent method to maintain control over the
mall management. This is particularly important because if the developer has control on
the management, then he/she can develop an image of the mall in an overall, cohesive
manner which is difficult with the control shifting to multiple franchisees.
Globally, most malls use the lease model, but India is still in the initial stages of
using this model. Not all the malls have gone for the lease model. Malls abroad are
completely using the lease model,which allows the mall developer to focus on the
identity of the mall.
Renting Common Area for Activation
Today, malls and multiplexes have emerged as the favourite happening spots for the
young generation. Because of the impact of globalization and the portrayal of the changing
lifestyles on the electronic media, consumer habits are witnessing a marked change and
so are the marketing strategies to connect with them.
Activation strategies are all set to play larger roles in catering to the specific needs of
consumer segments,. Such strategies are common in shopping malls in metros—brands
keep the malls buzzing with their on-ground activities and contests. The activities work
because the customer is unhurried and in the right frame of mind to hear the sales pitch.
Also, the target group (TG) in a mall is much more filtered than the common man on the
street. These brand activations help attract the attention of a large number of audience
and interact with them face-to-face. As the malls today need to provide shoppers with an
ambience to enjoy, developers are left with no option but to leave large vacant spaces in
the malls as common area.
The "common area" is the area within and outside of the mall (other than the fixed
rental space) available to the tenants and their customers and is necessary for access
to the tenants' businesses. But, today mall managers are smartly utilizing such spaces
by allocating them for brand activation and promotion campaigns. All these events and
other associated services are completely focused on generating awareness among the
customers about the product or service offered by the client. This helps in driving sales
and building brand equity and offers creative ways to consumers and businesses to
interact with brands.
Since these below-the-line marketing activities are catching up quickly, they

provide mall managers an alternate source of revenue generation. However, still very
few promotional activities are organized in the majority of malls because developers
perceive that these events only help increase footfalls but not revenues.
76 Mall Management
Display of an SUV at Select City Walk Mall, Saket
A common practice in the developed retail markets such as the United States
and Europe is the use of the revenue share model for determining rent. Under this
arrangement, the tenant will either pay a fixed monthly base rent as minimum guarantee
and/or a 'percentage of sales' rent, whichever is higher. This is beneficial to both landlords
and retailers, as landlords are encouraged to organize promotional activities that would
increase retailers' revenues because they may have a percentage share in it. The model
works successfully in both bullish and bearish market conditions. This unique approach
is being adopted by Select City Walk, Delhi. The use of the revenue sharing model is
expected to gain momentum in the future as more and more Indian developers become
corporatized.
Retail Merchandise Unit

RMUs are retail boutiques and special-purpose kiosk that are strategically located in the
middle of the busy areas of malls where there is good flow of people. They replicate an
island and their location makes them ideal for specialist product sales, product launches
and test marketing. These small, desk-sized units were created to avoid lease conflicts
with existing stores
Retail Merchandising Units (RMUs), also called modern-day pushcarts, are known
by different names such as Retail Kiosk, Mall Kiosk, Display Island, Shop-In-Shop,
Vending Kiosk, Island Retail Unit, and Isle Kiosk. They have almost replaced the old
carts in the specialty retail industry by eliminating the traditional wheels and adding
retail fixturing and shelving. RMUs are illuminated with special lighting used in visual
merchandising. Apart from these visually appealing features, RMUs have many security
features, and the most significant being is their 360-degree exposure. Leasing space to a
business for an RMU that is owned by the mall and leased to the business is part of the
licence agreement.
Typically, the capital invested by a mall on purchasing RMUs generates ROI in a

one-year period, based on the size of the RMU installation plan and the projected licence
fees for leasing the units.
Kiosk Leasing
A retail kiosk (or mall kiosk) is a store operated out of a merchant-supplied kiosk of
varying size and shape. Such a kiosk is typically enclosed with the vendor located at the
kiosk centre and the customer approaching the vendor from across a counter. Although
small in size, carts and kiosks are popular for many reasons, including high profit margins,
low start-up costs, and the option of working only for a few months a year. Many kiosks
are permanent, occupied by companies round the year. These companies operate retail
or service businesses that do not require a lot of space. Information booths, cell phone
companies and watch and jewellery sale/repair are some examples of permanent kiosk
users. Malls also have temporary kiosks available for small businesses that operate only
during certain times of the year, usually holidays. For instance, Diwali is a lucrative
season for temporary kiosk renters, when they can make a lot of money in a short time.
However, they can also make money on other holidays. This business opportunity is
available to anyone who has a desire to earn more money and can fulfil the requirements
of the mall. These requirements are state sales tax licence, local business permit and
liability insurance. For these kiosks, some malls charge a base rent plus a percentage of
sales. So, new businesses that can demonstrate major revenue potential have an edge in
landing temporary kiosks.
A kiosk inside a shopping Mall
Due to the high visibility of these kiosks, mostly located in the common areas of
malls, the businesses running from them can often gain a relatively tractable monthly sales
figure after a three- or four-month trial. The benefits offered by these kiosks include low
78 Mall Management
overhead, small inventories, and low or non-existent common area maintenance (CAM),
tax, utility, and marketing fees as compared to their in-line storefront counterparts, which
can often have fees equal to or in excess of the rents themselves. The primary key to the
success of kiosk-based business is the product margin. Most kiosk and cart products
average 300 per cent or more mark-up. Players like Baskin Robbins have used kiosks
successfully in many Indian shopping malls.
Vending Machines
The term "vending machine" conjures up images of dropping coins in a slot to buy cola,
candy or chips. Since its inception in 1936, the vending industry has advanced by leaps
and bounds with solutions for diverse offerings of products and services across the globe.
Today's newest vending machines are high-tech "automated kiosks" that with the swipe
of a credit card dispense designer purses, clothing, iPods, digital cameras and beauty
products, to name just a few offerings. The snazzy machines are winning a following
from buyers in airports, grocery stores, malls and even inside department stores.
While traditional vending machines represent a mature industry whose growth

is slowing, their high-tech counterparts present a new strong growth area. A vending
machine is all about convenience demanded by today's consumers. With a huge amount
of footfalls, malls are a great place to locate vending machines. For mall operators, the
biggest advantage accruing from these business gadgets is the flexibility of locating them,
leading to efficient space utilization. Most malls enter into high-commission agreements
with large vending machine companies, which makes it a tough sector for small operators
to break into..
Sponsorship
Traditional media like TV, radio, and newspaper are becoming increasingly fragmented,
making it difficult for advertisers to reach a broad audience with consistency and
high frequency. Today, shopping malls have emerged as a new landscape for forward-
thinking brands searching for the latest consumer marketing experience. Malls have been
"discovered" by dozens of promotional marketing agencies and leading out-of-home
advertising providers, and even by media monitoring services. There is no question
about malls as an effective marketing medium.
As marketers seek new forums for customers to experience a product, the country's
top malls have emerged as an in-demand marketing solution. Mall-based marketing
partnerships provide the best elements of traditional media, including huge numbers
of impressions, exceptional reach, desired frequency within a trade area, and the ability
to target messages to specific demographic profiles. The best practitioners bring their
brands to life with experiential programmes that deliver a message to the key consumer
at a time when shopping is foremost in his/her thoughts. Malls host many events round
the year for the local customers. Retailers can become sponsors of several of the mall's
events. These events and programme sponsorships provide a tremendous amount of in-
mall media exposure and also external media and PR. They also provide mall owners an
opportunity to earn quick cash. Additional revenue is generated through advertising on
I
illuminated boards and mega posters hung all over the mall and its parking lots, and in
centre magazines and coupon books.
In future, malls are expected to launch a new sponsorship programme aimed

at making the mall stroller service a part of their media mix. The stroller advertising
delivers multiple exposures to consumers with greater frequency than other media
because strollers move the sponsor's message throughout the mall and in and out of
retail stores. Six merchandise categories or industries have been identified that are most
likely to become involved in shopping centre-related sponsorship in future; automotive,
beverages, consumer-packaged goods, finance, telecommunications and technology. At
a time when malls are looking for sources of income other than rents, there is going to
be an enormous effort to tap supplemental sources of income such as sponsorship once
malls understand the potential of this type of arrangement.
A good example of sponsorship is the Centro mall of Germany. In this mall, Coca-
Cola Oasis, a circular food court area, is a sponsored facility of the Coca-Cola Company.
Here the red-and-white Coke logo appears on everything from signage to cups and food
trays. A video wall broadcasts sponsors' (purchased) messages, and the Coca-Cola Stage
provides an in-house venue for concerts, fashion shows and other promotional events.
Possessing the exclusive rights to sell its products in most of Centre's venues. Coke rings
up 97 per cent of all beverage sales in Centro, making it the Coke's biggest point of sale
in Germany. Sponsorship yields further returns that are not financial in character. For
example, tenants at Centro benefit from the favourable electricity rates negotiated as part
of the power company's sponsorship contract. The mall has also linked up with non-
traditional sponsors, such as EVO, an Oberhausen-based regional power supplier that
has an agreement to furnish Centro with Christmas lighting.
Event Marketing
Almost every mall these days has some buzz in the air about an upcoming or an ongoing
event. These events were initially conceived as promotional activities, but at present mall
marketers use such events as brand building activity. Either way the idea is to generate
extra revenue.
The event marketing option works well for marketers since malls attract a large
number of people at one place and provide excellent exposure to the brand. A mall also
serves as a place where the brand can try to sell experience of using their products to the
mall visitors. Marketers pay substantial amount of money to malls for conducting events
as they promise to be a very strong avenue for below-the-line (BTL) activities, providing
the brand the right kind of exposure. They rent out the floor space on a day-by-day basis
and pay the appropriate amount to the mall, which also includes charges for electricity,
water, cleaning, etc. Events conducted in a mall may be categorized as:
(i) There are some events which are conducted by the mall itself. These include
celebrations like Independence Day, Republic Day or even Valentine's Day which
have a mass appeal. During such events, the entire mall is decorated with a particular
theme, the music being played in the mall matches the theme and different brands
can promote themselves using the same theme.
80 Mall Management
(ii) Sometimes the mall tenants arrange for events such as store launch parties, fashion
shows by apparel brands, and musical evening for their own brand promotion,
which includes visits by brand ambassadors and display of products.
(iii) Sometimes external parties can use the mall premises to conduct an event which
requires large exposure and participation. These brands need not have a store in
the mall but can just rent the mall space for their event. Such events where the mall
becomes a venue partner are witnessing an upward trend. Mall areas are rented
for brand launches, any events, and events in collaboration with various television/
radio channels.
(iv) Some brands also want to use malls as venues for organizing corporate social
responsibility-oriented events that are not aimed at colossal revenue generation
but certainly help mall retailers connect with customers. The events organised in
association with NGOs on occasions such as Women's Day and Labour Day along
with free health and yoga camp fall in this category.
Advertising and Promotion

A tool for brand building and creating a connect with the customers, which has significantly
grown over the last few years, is advertising and promotion. This is because of the huge
footfalls that malls are generating since some time. Today, the mall advertising market is
valued at approximately Rs 30-35 lakh per mall per annum.
The below-the-line advertising activities have grabbed a substantial share in the

overall advertising market. The promotional activities are now carried out in the way
that the customer can actually feel the product. Companies are effectively using kiosks
for promotion activities.
Inorbit
Promotional displays on the fagade of Inorbit Mall, Mumbai

All the advertising activities from the ideation stage to the execution stage are being
handled by advertising agencies.
Marketers pay huge amounts of money to the mall. Generally, leasing of advertising
space inside a mall is done on a monthly basis. Displaying a drop-down for a month
inside a mall could cost a marketer anywhere between Rs. 50,000 and Rs. 1, 00,000. The
cost is dependent on the size of the advertisement. Location is also a very important
criterion for determining the advertising cost. Ad space which is easily visible or just in
front of the entrance is more highly priced as compared to other places.
IP!
Promotional dropdowns at Spencer Plaza, Chennai
Following are some of the means of advertising inside a mall:
1. Billboards
2. Floor graphics
3. Standees
4. Drop Downs
5. Digital Signage
82 Mall Management
6. Bluetooth
7. Plasma Screens
8. Ambient Marketing
Temporary Leasing of Empty Stores
Vacant stores in malls are being leased out to vendors. The vendors utilize the stores
for various purposes, like setting kiosks for visual merchandise. Malls also generate
revenues by leasing out their vacant stores for gatherings or exhibitions. Other uses
include children playing area, salons, photo centres, etc.
Parking Facilities
Parking facilities play an important role in the success of a mall, and their significance is
increasing with time. Historically, parking did not enjoy such a premium status because
unorganized markets used the storefront, pavements, slip roads and roads as unofficial
parking lots. But shopping malls accommodate a large number of tenants and attract
customers from far-off places, resulting in a larger catchment area.
Primarily, there are two models for generating revenues from the parking
facilities: contract and non-contract models. In the contract model, a contract is
signed between the mall owner and an external entity (contracting agency). They
either enter into a revenue-sharing agreement or the contractor pays a lump sum
amount to the mall owner and keeps the entire revenue generated from the parking
facilities. The mall owner's revenue share varies between 50% and 70% and this share
is pure profit since it is the contractor who bears all the cost. Under the non-contract
model, the parking facilities are managed by the mall management through its paid
employees. The entire revenue generated from these facilities goes to the mall owner.
In this case, the profit from parking facilities is the difference between the revenues
generated and the cost incurred in maintaining these facilities.
Media Activity Inside the Mall
A lot of media activities regularly take place in malls, the most common being shooting for
movies. Several big Bollywood superstars are seen shooting for movies across different
malls in the country. For example movies like Garam Chai, Hide 'n' Seek, etc. feature
scenes shot inside malls. Even movie premieres are taking place in malls. Most of the
malls in India house a multiplex. This gives the movie producers a good opportunity to
organize the movie premier along with a party in front of a huge crowd of mall visitors.
Movies such as Raajneeti, Love Aaj Kal, and Jashnn were premiered in famous malls. Of
course, for all these activities, the movie producers pay a heavy sum to the mall owners.
All facilities of the mall are used during these activities including electricity, water,
parking, theatre, passage, etc.
Food Courts
The food orientation of the Indian culture is aptly exemplified by the number of people
who are found in a mall's food court at any time during the day. Malls are seen as places
where cost-effective foods of different cuisines are served. Needless to say, Food courts
are one of the best crowd-pullers for a mall, having a conversion rate of about 65% of the
visitors that visit the mall.
To cash in on the Indian culture's food orientation, food courts are generally located
on the top floors of malls. When the visitors come to a mall for eating high-quality and
cost-effective cuisines, they walk in front of several stores on their way to the top-floor
food court of the mall. This may induce some buying interest in the minds of the walking
consumers.
Inorbit Mall in Malad (Mumbai), realizing the growing importance of food court,
decided to expand its food court space by about 2000 sq ft. Apart from Inorbit Mall, High
Street Phoenix in Lower Parel (Mumbai) too has given due importance to its food court
that covers 10-15% of the total retail area.
Miscellaneous Sources
These sources comprise gift coupons, parking facilities, etc. The revenues from these
sources are basically used to fund the day-to-day operations for the smooth functioning
of malls. These activities are definitely an excellent source of revenue for malls even
though very few people use them.
Strategic Decisions in Mall Financing
While taking financing and revenue decisions, mall developers and managers come across
situations when there is a multitude of options available to them with each option having
a different repercussion in a different time frame. Some options seem highly lucrative as
they positively affect the top line/bottom line, but their long-term implications are not
so rosy. These decision dilemmas have strategic implications. Some of the issues that
confront mall developers while taking financing and revenue decisions are analysed in
the following sections.
Leasing vs Sell-off
Mall developers have to make a conscious choice between two tenancy options—
whether to lease out the mall space to retail tenants or sell off individual retail units
(stores spaces) to investors who either use them to run their own business or further rent
them out to other retailers. Selling-off the property to investors improves liquidity for
the mall developer. It is common in situations where credit availability is difficult, the
capital has been borrowed from short-term, high-cost sources and the capital has to be
rotated between different mall projects. However, selling-off has the disadvantage of the
developer losing control on the tenant-mix. It may happen that the investors may put the
retail space to a use that does not synchronise with the planned zoning. Then the mall
management may bring them in line either by imposing certain restrictions on possible
space uses through contract agreements or take the responsibility of identifying tenants
at a remunerative rental as part of sale agreement. Leasing by far is the most suitable
arrangement for shopping malls as the management retains absolute control over mall
84 Mall Management
operations and space use. It can also make desired changes in the mall with changing
requirements. However, a decision regarding leasing/sell-off is guided more by financial
considerations than marketing principles.
Long-term Debt vs Equity
The term or time limit to repay a debt is generally commensurate with the value of an
item or investment. Long-term loans are normally secured, first by the new asset(s)
purchased (up to 65%) and then by other unencumbered physical assets of the business
(for the remaining 35%), or failing that by additional funds from shareholders or personal
guarantees from the principals.
Creditors extend loans to those businesses that exhibit strong management ability
and steady growth potential. The principal loan amount these cases is repaid over a period
of time directly related to the useful life of the asset(s) (e.g. for land and buildings—up to
30 years and for computers—3 years). Loan carries both interest and principal repayment
provisions in a set repayment schedule. Early repayment may entail a penalty because
the lender had not planned an alternate investment for that money. The interest rate
normally remains constant for the entire loan term. Each payment against the principal
reduces the balance principal, and the subsequent interest is calculated on the reduced
principal. Different lenders provide different types of term loans. Term loans often carry
lower interest rates than that of operating loans because the term is fixed and the loans
are secured by assets (asset-backed).
Long-term loan lenders include banks, trust companies, insurance companies,

pension funds and various loan specialists. The mall management has to take a decision
on whether to opt for long-term loans or not. Long-term loans are advantageous as they
do not result in dilution of ownership. The only obligation on the part of the borrower
is to repay the loan on time. Such loans are beneficial because the paid principal amount
and interest are exempted from tax deduction. Despite carrying a relatively low rate of
interest, these loans' fixed monthly liability (repayment of the principal component and
interest) eats into the cash flow that cannot be fully utilized for business purposes. The
credit rating of a business may spoil with excessive debt.
A common alternative to debt financing is equity financing. In this form of

financing, a business is financed without incurring debt. With equity financing, the
mall developer need not take out a loan since the funding is already coming from an
investor in exchange for a piece of ownership in the mall business. Thus dilution of
ownership is one evil associated with equity financing. Another drawback of equity
financing is that equity mobilization does not solely depend on the credentials of a
company. The prevailing market sentiments also greatly affect equity mobilization.
Hence even fundamentally strong company may elicit a poor response to its equity
mobilization bid if the stock market sentiments are bearish. Other deterrents are
various costs and commissions associated with the launch of a public offer apart
from the mandatory public disclosure of vital information and meeting statutory
requirements that could be very stringent.
Refinancing
Refinancing is the process of getting a secured loan to repay an already existing loan.
At some point in the life of a mall, there could come a situation when the prevailing
rate of interest in the market is lower than the one at which the project mobilized funds
in the past. So the mall management has the option of paying back the costlier loan by
going for a new loan at a lower rate of interest, thereby reducing the cash outflow. One
thing to keep in mind is to consider the fees that will go into undertaking the option of
refinance. Refinancing also gives the option of adjusting the quantum of loan (upwards
or downwards) in the light of current needs. However, refinancing is not a viable option
when real estate prices are sliding down. It is not advisable if repayment of your previous
loan is being done for a long time and most of the equity has already been rubbed off.
Optimum Tenant Mix vs Higher Revenue Generation
A tenant that is good from the financial perspective may not be ideal from the marketing
perspective. Speaking clearly, the tenant who pays a higher rent may not be the best one
for the mall. Seeing either the popularity or potential of the mall, many retailers may be
willing to loosen the strings of their purses. But the question is — Do they really add
value to the mall? It is very important to select the right tenant mix to ensure the success
of the mall. The right combination of tenants with proper infrastructure appeals to both
the focused and impulsive customers. Tenants are traffic generators, especially anchor
and vanilla tenants. The right tenant mix generates the maximum footfalls.
Tenant selection is crucial for a mall's success. The right brand mix is essential to
ensure maximum profits. The right tenant mix increases sales and the overall return on
investment. In order to accommodate suitable tenants at a short notice in future, it is also
crucial to have a proper portfolio of retail options.
Revenue Sharing Model in Malls
When the mall concept started picking up pace, stores inside malls used to be leased out
to vendors or retailers on a fixed rate basis. If the mall developer kept receiving this fixed
amount per month/year, he/she was least bothered about the marketing and promotion
of the mall. With retailers receiving little help from the mall developer or management
with regard to building awareness about their stores, the high rent they were paying for
their stores started affecting their bottom lines adversely.
Retailers were discontented with this mode of operation and realized that carrying this
way was not a viable option. Mall developers took notice of the retailers' discontentment
and realized that if the retailers' problems were not solved, it could adversely impact
them (mall developers). Hence to tackle this issue, mall developers and retailers came
to a consensus and devised a win-win mechanism for both the parties. This solution is
called the "revenue sharing model".
Revenue sharing model has the following advantages:
• More number of vendors or retailers will get attracted towards the mall due to its
lower fixed rentals.
86 Mall Management
• When the sales are high, the mall owner would earn more from the retailers; when
the sales are low, he/she would ease things for the retailers, letting them continue to
operate in the mall.
• A low fixed rent would provide cushion against unpredictable sales to the retailer.
• A revenue sharing model will push the mall owner to participate more in the mall
positioning, mall management, and mall strategy or simply formulate the right
tenant mix for the mall.
Nowadays the total rent expected from a store in the mall is split between the fixed
and variable components. How the split occurs depends primarily on the negotiating
strength of the mall owner and the retailer. However, certain guidelines should be
followed to arrive at a mechanism that in the long run works for the mutual benefit of the
mall owner and the retailer. In any such this mechanism, the following two parameters
are significant:
1. Reasonable fixed rent
2. Retailer's Revenue
Reasonable Fixed Rent
Determination of the fixed rent will depend on the prevalent market leasing rates, size of
the property, facilities provided to the tenants, existing tenant-mix, anchor-tenants, etc.
A strong retailer would ideally negotiate for a lower fixed rent. He/she would want to
fix up a break-point, beyond which the revenue sharing process will commence. For the
sales recorded beyond this break-point, the retailer needs to appropriately compensate
the mall owner by revenue sharing. The mall owner would receive only the fixed rent
for the first few years when the retailer is trying to gain a foothold in the area. But with
the passage of time, as the retailer becomes stronger, the mall owner starts making
more money from the retailer. It thus becomes imperative that the mall owner carefully
evaluates the potential revenues from a retailer and the overall impact the retailer could
have on the mall.
The mall owner would want to earn higher rents every month. Ideally, the mall
owner would like to set a relatively higher fixed rent so that he/she is somewhat assured
of a reasonable monthly earning. However, he/she would also want to keep a portion of
the rent variable that is linked to sales. This would enable the mall owner make more
money when all the retailers in the mall are doing well. Under any circumstance, the
mall owner would not want to wait for a very long time to start earning the variable
portion of the rent from the retailer. To facilitate early earning of the variable portion of
the rent by the mall owner, a clause could be inserted by him/her in the contract with the
retailer, requiring the retailer to reach the break point within a stipulated time period.
If the retailer fails to to reach the break-point within a stipulated time period, he/she
could be asked to vacate the store or asked to pay higher rents from then on. In order
to maximize the retailer's sales and thus increase the mall owner's chances of earning
a higher variable rent, the mall owner can enter a clause in the contract prohibiting the
retailer from opening another store within a specified area.
Retailer's Revenue
It is important to identify what constitutes revenues and determine the appropriate amount
for the revenues because the mall owner will get additional income as a percentage of
this revenue, which is based on the success of the retailer. In order to arrive at the right
figure for total revenues, the mall owner can demand the retailer to maintain all sale
receipts which will be issued from within the leased premises. Such receipts could be of
1. Counter sales
2. Sales by sub-tenants and licensees, operating from within the premises
3. Sales with the help of the Internet, telephony, email or catalogue
4. Advertisements and promotions payments
5. Sales from vending machines
6. Service charges
The retailer can be asked to pay the additional percentage rents either for a year, quarter,
month, or any other time period decided upon by the retailer and the mall owner.
The mall owner should provide for the annual gross sales statements to be audited
by a chartered accountant for clarity in the process of determining additional revenues
for the mall. The mall owner should also reserve the right to ask a chartered accountant
to audit the books of the retailer and all his/her subtenants.
SUMMARY
^ y
Development of shopping malls is a capital-intensive business. It is a challenge for mall
projects to maintain a positive flow of cash after providing for the cost of funds. Funding
for this business comes from public as well as private sources. Indian shopping malls get
majority of funds from private sources. This sector badly needs public funding but it is
just not happening. It is primarily due to the opaque nature of real-estate business. For
generating adequate returns on investment, shopping malls need to add more options to
the convention revenue stream, i.e. rentals from retail stores. Leasing out stores is not the
only source of revenue for shopping malls. They generate revenues by providing space for
retail, promotional displays, promotional events and parking. Last three years have been
very difficult for mall projects as occupancy and rentals have moved southwards. Present
circumstances press for more collaborative approach towards rent determination.
88 Mall Management
: )
REVIEW QUESTIONS j
1. What are the different sources of financing available to mall developers in India?
2. The Indian malls have very less exposure to public sources of funding. Why is it so? What
impact does it have on the management, operations and performance of shopping malls
in India?
3. What are the risks associated with relying too much on the short-term sources of financing
for capital investment in shopping malls?
4. What are the different avenues for revenue generation in shopping malls?
5. "A good tenant for a shopping mall may not be the one who pays the highest rent."
Comment.
6. Which of the two is a better strategy for shopping malls in the long run: leasing out space
directly to retail brands or selling off the retail space to investors?
7. How can one minimize the negative repercussions of selling out the retail space to a large
number of investors who do not plan to use it for running their own business?
8. "Lease rentals are not the only source of income for a shopping mall." Explain.
9. Explain the significance of retail kiosks in a shopping mall from the finance perspective.
10. Discuss the merits/demerits of the revenue-sharing model for shopping malls.
. >
>
PRACTICE EXERCISES
1. Visit a shopping mall of your choice. Observe and note down different activities and
services that are contributing to its revenue generation. Identify the activities that are
potential revenues generators but are not being used. Probe why it is so.
2. Scan the secondary finance sources and develop a list of mutual funds that invest in real estate
and shopping malls. Examine the details of promoters and the investment pattern.
3. Prepare a list of the initial public offers (IPOs) launched by the companies engaged in mall
development. Find out the investors' response to these.
4. Observe and track the share price of a select group of companies engaged in mall
development. Do so for a year and compare it with the general movements in the sensex.
What does it reflect?
v
f
SUGGESTED READINGS J
1. Datamonitor (2008), 'Global Real Estate Investment Trusts', London, UK: Datamonitor
Group, report reference code 0199-2131
2. Hussain, S. (2008), 'Cash-strapped developers look to buyers to fund construction', The

Mint 27, May 7
3. Images F & R Research Analysis (2007), 'Mall space in India: a demand and supply analysis',
In: A. Taneja (Ed.), Molls in India: Shopping Centre Developers and Developments, New
Delhi, India: Images Multimedia, pp. 150-155
4. Mehta, R. (2007), 'A study on the Indian real estate market for investment: a qualitative
approach', MA (Finance & Investment) dissertation. University of Nottingham, UK
5. Newell, G. and Kamikeni, R. (2007), 'The significance and performance of real estate
markets in India', Journal of Real Estate Portfolio Management 13(2), pp. 161-172
6. Patil, S. (2008), 'The draft real estate investment trusts Regulations, 2008—a critique',
http://www.lndialaw.com, accessed on 14 May 2009
7. Roy, D. and Masih, N. (2007), 'Mall management: a growing phenomenon in Indian retail
industry'. New Delhi, India: report by Jones Land LaSelle Meghraj
8. Securities and Exchange Board of India (2008), Draft Securities and Exchange Board of
India (Real Estate Investment Trusts) Regulations, 2008, Mumbai, India: circulated for
public comments by Securities and Exchange Board of India
9. Singh, Fl. and Bose, S.K. (2008), 'My American cousin: comparison between Indian and the
US shopping malls', Journal of Asia-Pacific Business, Vol. 9(4), pp. 358-372
10. Singh, Fl.; Bose, S.K. and Sahay, V. (2010), 'Management of Indian shopping malls: impact
of the pattern of financing', Journal of Retail and Leisure Property, Vol. 9(1), pp. 55-64
11. Singh, V. and Singh, K. (2009), Prospects and problems of real estate in India, International
Research Journal of Finance and Economics, Vol. 24, pp. 242-254
12. Srinivas, S. (2008), 'Capital ideas: realty check', Business World, February, pp. 33-34
13. Taneja, A. (2005), 'Keynote address', 2nd annual ICSC—India Shopping Center and Retail
Conference, 29-30 August, Mumbai
14. r/ieF/nonc/o/Express (2006),'Mall developers prefer lease management', 31 October, http://

www.financialexpress.com/news/mall-developers-prefer-lease- management/182310/2,
accessed on 14 June 2009
15. Wang, Q. (2005), 'Economies of scale in shopping centre industry', Master of Science
Thesis, Royal Institute of Technology, Stockholm, Sweden, 291, April
16. Yadav, B. and Mahajan, S. (2006), Indian Real Estate, Hyderabad, India: Report for Karvy
Stock Broking Limited
□ □□
90 Mall Management
CASE
f -^Multiple Owners Can't Manage Mallsy n
In the early and mid-2000s, India saw a great mall rush with developers seeing them as the
best way to maximize profits. Developers looking for quick returns built malls, sold them
piecemeal to dozens of investors and exited, leading to multiple owners.
Anshuman Magazine of CB Richard Ellis says that until recently, almost 95% of the malls in
India were owned by multiple owners—sometimes in the 10s and sometimes even in the
100s. Maintenance and upkeep became the biggest casualty due to multiple owners. Centre
Stage suffers from this problem. The promoters of the mall, the Chadha Group and Shipra
Estate Ltd, sold almost 80% of the 350,000 sq. ft mall to various investors. "If a mall doesn't
have single ownership, it loses direction," says Magazine.
B. S. Nagesh of Shoppers Stop echoes Magazine's concerns, saying 60% of the malls failed in
India because of multiple owners. Shoppers Stop ensures that the developer plans to hold on
to the mall before signing on as a tenant/'That's a big factor because you are going there as
a tenant and if the owner himself is not an owner... you don't know what the fate of the mall
is going to be," says Nagesh. "Who will run it and who will maintain it?"
Experts say India's most successful malls—Select City Walk in Delhi, Forum Mall in Bangalore,
Inorbit Mall and High Street Phoenix Mall in Mumbai—are owned by single companies. "The
retailers are doing phenomenally well in these malls," says Anuj Puri, country head of Jones
Lang LaSalle.
The lessons have been learnt by developers, say Nagesh and Magazine. "If you look at some
of the last few malls that have opened, I would say, yes, things are beginning to be okay,"
says Nagesh, referring to new properties such as Inorbit Mall in Pune, City Centre Mall in
Siliguri and Mantri Mall in Bangalore. "These are the new malls which have been (made)
sustainable. From the real estate perspective, malls make money between the seventh and
the 15th years," said Nagesh. "So, unless you have a long-term perspective, a mall cannot be
successful."
Most developers are beginning to look at malls as long-term investments, says Magazine.
It took several decades for companies in the developed countries to understand mall
management, say experts. India, in their opinion, has come a long way in just one decade.
Source: "The Recipe for a Successful Mall", Rasul Bailey, retrieved from http://www.livemint.
com/Articles/PrintArticle.aspx?artid=C260D0CC-6F5C-llE0-B67E-000B5DABF613, accessed
on 6 May 2011.
v y
CHAPTER
Tenant Mix
LEARNING OBJECTIVES

• Understand the concept of zoning and tenant-mix as applied in shopping malls
• Get an idea of the role and significance of different types of tenants, like anchor tenants
and temporary tenants
• Know about the factors guiding the allocation of space to brands in a mall
• Understand how to maximize the productivity of the mall space by accommodating novel
formats, tenants and ancillary uses
• Know about the major issues concerning tenants and the tenant-mix management
IS IT REALLY 'ALL SOLUTIONS UNDER ONE ROOF'?
Mrs. Asthana is a housewife in her mid-forties. She recently moved to Gurgaon with
her husband and family. She was quite upbeat about being in the 'mall hub' of India,
but six months down the line, she is disheartened and confused at the way things have
turned out. Despite the tall claims of mall developers of providing all solutions under
one roof, she has never been able to complete her monthly shopping from a single mall,
as something or the other is missing in all the malls. Though all the malls look different,
when viewed from outside, it is difficult to spot the difference once you enter the mall
and stand in the atrium: similar products, services and brands everywhere! Presence of
the same brand and absence of a prominent brand in all the malls is not an uncommon
observation. To her utter surprise, in some malls stores are located in a weird manner.
Even for purchasing the convenience goods, she is compelled to traverse all the floors
92 Mall Management
as such stores are spread all over. Such a thing is not seen in our old city markets. How
come it is the case with multi-crore shopping malls built by renowned developers using
expertise of trained and experienced professionals!
Introduction
The problem faced by Mrs. Asthana is neither uncommon nor confined to a particular
geography. One comes across such situations in shopping malls in almost all Indian cities.
But these situations defeat the very purpose, that is, to provide comfort and convenience to
consumers, for which a shopping mall is developed. The major inconveniences faced by the
shoppers in such malls relate to two aspects. The first aspect is the choice of suitable tenants.
The suitability of a tenant for a particular mall is assessed in terms of characteristics and
expectations of the target customers. Taking care of this aspect means deciding the Tenant-
mix' for the mall. The second aspect is the location of specific groups of tenants inside the
mall. Developers cannot place any tenant anywhere in the mall. Certain locations inside
the mall are more suitable for types of tenants/retailers. Deciding on tenant locations means
applying the concept of 'zoning' on the mall.
Zoning
Zoning refers to the division of the mall space into tenant-specific zones. The idea is to
present each zone as the hub or one-stop solution for a particular need category for a
particular segment of consumers. Thus each zone is turned into a cluster of stores selling
complementary merchandise.
Zoning is necessary as it facilitates the financial feasibility of the tenant in the mall.
And, the success of the tenant's business, in turn, contributes to the success of the mall.
Generally, there are two types of consumers visiting malls—the focused buyers and the
impulse buyers. The time spent by a focused buyer in the mall is relatively lower than
that spent by an impulse buyer who also enjoys window shopping. Retailers can do
little to attract the focused buyers who usually know what they require and from where.
However, the formulation of the right tenant-mix following a diligent zoning exercise
leads to optimum retailer placement in the mall. This helps retailers attract both types of
consumers, especially the impulse buyers.
On the one hand, the right tenant-mix helps retailers attract and retain shoppers
by offering them multiple choices to satisfy their multiple needs. On the other hand,
it facilitates the smooth movement of shoppers within the mall, avoiding clusters and
bottlenecks. A hassle-free, pleasant shopping experience has a great impact on the
shoppers' mall preference and frequency of visits. It also helps in sketching a distinct
image of a mall in the minds of shoppers. A distinct identity is critical for the mall's
success, considering the large number of upcoming malls.
Another important advantage of optimum retailer placement is that it can actually

be used as a tool for controlling the circulation of shoppers within the mall. By placing
stores catering to different categories at different locations, one can ensure that all the
I
Tenant Mix 93
parts/floors of the mall get reasonable footfalls. For example, ensuring at least one anchor
on each floor and tenants like multiplexes, food courts and discotheques on higher floors,
results in guiding the shoppers to the places and floors that they would not have thought
of visiting without these temptations. Locating anchor stores at specific spots and
clustering vanilla stores around them is a smart zoning decision to feed off the shopping
traffic generated by anchors
The successful execution of the zoning plan in the mall is carried out through lease
management on an ongoing basis. Forging good leases with retailers is a prerequisite for
ensuring the presence of the right retailers in the mall.
Zoning in Forum Mall
Bangalore's Forum Mall is designed in a 'dog bone' fashion—an anchor tenant

at each end and vanilla retailers in the middle. Landmark and Westside are the
anchor tenants of this mall. Forum has positioned the food court on the top
floor to attract consumers vertically up. Built in 2003, Forum was the first mall
in Bangalore. Since the Forum launch, six new malls have been constructed in
the city and yet Forum continues to command the highest foot traffic. It also
continues to be one of the most successful malls in the city in terms of annual
revenues. It is widely believed that one of the factors driving the success of
Forum is its zoning and superior tenant-mix compared to its competition.
Concept of Tenant Mix
The term 'tenant' refers to someone who occupies space provided by someone else for
personal or commercial use. In the context of retailing, tenant is a brand that occupies
the space for carrying out retail activity. The premises from where retailing is carried out,
belongs to the landlord (the developer, in most cases), but it is the tenant who handles
the customer interface.
The term tenant-mix essentially refers to the cluster or combination of retail shops
occupying the space in a mall. As is the case of the 'marketing-mix', it is the synergy
aspect of the tenant-mix that needs to be understood. According to A.O. Kaylin, the
tenant-mix is defined as follows:
The tenant-mix refers to the combination of business establishments occupying space in a

shopping centre to form an assemblage that produces optimum sales, rents, service to the
community and financiability of the shopping centre venture.
The above definition of the tenant-mix stresses the underlying objective of

maximizing the shopping centre profitability, and is therefore investor-oriented.
In discussions on the tenant-mix, the provision of different types of merchandise is

almost always replaced by a proxy, namely various categories of retailers, to classify the
merchandise on offer. The retailer or merchandise classification focuses on characteristics
such as price and quality, appeal to different lifestyle groups, and service levels.
Kirkup and Rafiq (1994) provide a measurement-oriented description of the tenant-

mix as
94 Mall Management
"...a combination of factors, including the proportion of space or number of units occupied
by different retail/service types, as well as the relative placement of tenants in the centre" .
A grand view of tenants at MGF Gurgaon
Importance of the Tenant-mix
The marketing and financial success of a shopping mall is dependent on many factors.
The main success factors include the tenant-mix, the quality of location and accessibility,
catchment size and quality, car parking provision, internal layout and good ambience.
Among these success factors, the tenant-mix of a shopping mall widely recognized as
a critical factor for all parties concerned —consumers, retail tenants and the developer/
landlord.
From the marketing point of view, securing an appropriate tenant line-up is critical
to attract and retain customers, as the image of a mall is largely determined by the tenant-
mix. The tenant-mix has been identified as a critical factor in the success or failure of
special-purpose shopping malls that rely on a differentiated image as a key element in
their marketing strategy. Early lettings and strong tenants are particularly crucial for a
new mall to help entice customers away from their established shopping destinations,
to build a successful image, to establish appropriate positioning in the marketplace, and
to win market share. The initial line-up of tenants is a key factor contributing to the
consumers' first experiences in a new mall. And, good first impressions have been noted
as a vital component in building a successful mall.
Tenant Mix 95
A full line-up of strong and well-placed traders is also important to the retail tenant
whose performance is dependent on the level and type of footfall attracted and may also
be dependent on micro-retail linkages. The success of individual tenants and the success
of the entire mall are interdependent and enhanced by the cumulative synergy generated
by the mix of stores.
Clearly, in all shopping malls, the developer/landlord must ensure that the number
of unlet units and tenant failures are minimized. Vacant premises are more noticeable in
an enclosed mall, and they indicate failure of the mall to the shopper, hinder footfall and
retail synergy, and impact significantly on marketing and financial success.
Important Terms Related to the Tenant-mix
The tenant-mix design essentially focuses on provision of a range of merchandise

and services, carefully chosen to appeal to the catchment shopping population. These
services may include restaurants and other catering outlets, and lately these also include
leisure facilities such as cinemas. A thorough understanding of the concept of tenant-mix
requires understanding the following terms;
Comparison Goods
Comparison goods are the ones that are purchased at irregular intervals for long-term
use, with suitability, quality, price and style being important factors in their selection. The
comparison goods group is epitomized by fashion and footwear, jewellery and expensive
household equipment. The reason for the increase in sales when comparison goods
retailers cluster together is their attraction to shoppers wanting to compare similar goods
before making a purchase. R. L. Nelson while stating his Law of Compatible Retailing
explained the phenomenon as follows:
Two compatible businesses located in close proximity will show an increase in business
volume directly proportionate to the incidence of total customer interchange between them,
inversely proportionate to the ratio of the business volume of the larger store to that of the
smaller store and directly proportionate to the sum of the ratios of purposeful purchasing to
total purchasing in each of the two stores.
Comparison shopping is an important motivation for visiting shopping malls, and

this has long been considered a primary reason for designing and managing a tenant-
mix. The concept of comparison shopping used in the tenant-mix management therefore
needs to focus on the selection of tenants as well as their relative locations within the
shopping mall.
Convenience Goods
Convenience goods are the ones that are purchased regularly. Therefore in their use the
convenience of the seller location, selection and buying is important. The group includes
food, newspapers and drinks — products that are typically sold from local corner and
parade shops, supermarkets and unit shops, some of which are situated in shopping
malls. The relative importance of convenience shopping and comparison shopping in
96 Mall Management
the design and management of the tenant-mix varies according to the size and nature of
the shopping mall.
Anchor Tenant
An anchor store is always relatively large and well regarded in terms of quality, price or
function to be a destination in its own right. Other outlets will cluster around it and will
feed off the shopping traffic it generates.
Main Space Users
The choice of anchor tenants determines which main space users (MSUs) can be attracted
to the second highest units. MSUs are usually smaller than anchor stores. Some of them
may have sufficient appeal to be the shoppers' destinations, but many function only as
part of a comparison or convenience cluster. The anchor and its satellite MSUs together
determine the attraction of the shopping mall for many other retailers needed to create
a full range of comparison and/or convenience merchandise for maximizing the mall's
appeal in the catchment area.
Retail Demand Analysis
It is the process of estimating the retail demand potential of the catchment area of a
mall for all product and service categories. It is the very basis for identifying different
product/service categories and brands for allocating the mall space them.
Out-shopping
Out-shopping is the process under which customers residing in the natural catchment
area of a retail store or mall actually go to another store or mall for fulfilling some or all of
their needs. Out-shopping by people from the catchment area of a mall indicates inherent
weaknesses in the tenant-mix, management or promotion of the mall. Generally, mall
managers try to discourage out-shopping in their own catchment while inducing it in the
catchment areas of their competitors.
Five Attributes of the Tenant-mix
An 'ideal' tenant-mix strives to achieve a balanced diversification of the mall space while
accommodating retail shops, places for entertainment and leisure activities, facilities and
services like parking and wash room.
Prominent tenants for shopping malls include department stores, supermarkets,

apparel stores, book stores, food courts and multiplexes. Besides, there are 'magnet' or
anchor tenant stores that attract customers to a mall. Traditionally, department stores,
hypermarkets and variety stores dominated the tenant-mix of large shopping malls.
However, with the emergence small malls, other kinds of tenants have become more
prominent. The tenants who dominate small malls include restaurants and fast-food
outlets, apparel stores, institutional tenants (e.g. banks and post offices), retail service
(e.g. hairdressers), book stores and multiplexes.
Tenant Mix 97
SfWd Floor
Display showing tenant-mix of UB City Mall, Bangalore
Merchandising
Merchandising is the first of the 'big four' attributes of a shopping mall's image. A mall's
image is influenced by four merchandise-related parameters. These parameters are:
assortment, quality, pricing, and styling or fashion. Merchandising is an important image
attribute because it represents the 'core product' of a mall. It induces excitement in the
mall setting, thus influencing the mall's image in the consumer's mind.
Accessibility
The second of the 'big four' attributes, accessibility, concerns the ease of getting in and
out of a mall. Accessibility can be further divided into macro-accessibility and micro-
accessibility. Macro-accessibility concerns the condition of access road to the mall and
the mall's proximity from the customer's place of work or residence. Unlike macro-
accessibility, micro-accessibility refers to parking facilities and ease of navigation within
the mall. A shopping mall should be easily accessible in a reasonable time without any
psychological costs to consumers, like stress and frustration.
Services
Services constitute the third of the 'big four' attributes of a shopping mall's image. These
services relate to the behaviour of retail employees, such as courtesy, knowledge and
98 Mall Management
friendliness. Thus these services can be classified as personal services. Shopping malls
also provide communal services like ATM, vertical circulation options (such as escalators
and lifts) and amenities (such as parking and restrooms). Both personal and communal
services are central to the shopping centre image because they represent the 'augmented
product' that supports the merchandising (core product) and also adds value to the total
shopping experience of customers
Atmospherics
The fourth of the 'big four' attributes concerns the atmospherics of a shopping mall. Five
common atmospheric items measured are: ambience, colour, decor, music and layout.
Atmospherics are critical because they act as environmental cues that consumers use
to imply the quality of a shopping centre. Further, atmospherics have been reported to
stimulate consumer excitement at a shopping mall.
Entertainment
The retail strategy of integrating entertainment into a shopping mall's marketing mix
has been gaining popularity over the past few years. The level of shopping enjoyment
experienced varies from individual to individual, as people have different reasons for
shopping at malls. The mall shopping enjoyment can be affected by several factors such
as location, atmosphere, tenant-mix and promotions within the mall. The provision of
means of entertainment can extend a shopping mall's trading areas, lengthen shopper
stays and increase revenues for tenants. Entertainment (such as movie theatres, food
courts and fashion shows) can enhance the ambience of a mall making it conducive for
an exciting and pleasant experience by shoppers. Entertainment draws consumers to
air-conditioned shopping centres, offering visitors long-duration recreational attractions
such as music, movies, games and dining out. A mall visitor can meet with friends, enjoy
and play a game, and then see a hit movie at a multiplex within the mall.
Benfits of Tenant-mix
A shopping mall can significantly improve its prospects by taking care of decisions like
which tenant occupies space in the mall and when and where does the tenant set up his/
her shop. If due care is taken while zoning a mall and planning its tenant-mix, the mall
would surely gain easy acceptance among shoppers and admiration among tenants. A
targeted and balanced tenant-mix is the outcome of a systematic and conscious research
by the mall development company. The research would involve the retail demand
analysis of the catchment area with a focus on the expected demand potential over the
next 10-15 years. If planned in a meticulous manner, the tenant-mix would accrue many
benefits to the mall. These are discussed below.
Attracting Customers
Customers visit a shopping mall for satisfying their shopping needs in the most
convenient, pleasant and economical manner. Therefore while choosing brands, care
must be taken that the prospective shoppers should take interest or pride in visiting the
Tenant Mix 99
mall on a regular basis. The key lies in the customers developing a liking for the mall.
Placing brands that have strong acceptance and/or aspirational value for prospective
shoppers plays a vital role in attracting more and more customers on a frequent and
regular basis towards the mall. Perhaps the simplest expectation is that a mall should
attract as many shoppers as possible.
Providing Shopping Comfort
Shopping comfort and ease is one area where high-street locations often score over
shopping malls. Hence it is a challenge for the malls to provide superior shopping
comfort in all facets of shopping—be it visibility, approach, shopping timings, parking,
facilities or assortment. 'All solutions under one roof is by no means an ordinary
promise, and if kept by a shopping mall, it would definitely provide convenience and
comfort to shoppers. However, 'all solutions' doesn't mean that all the brands existing
in the market should be accommodated, as it would be wasteful, confusing and
unviable. All solutions' in this context refers to the solutions desired by the customers
living in the mall's catchment area. Hence if the tenant-mix is designed to cater to the
needs and attributes of the catchment area, the target customers would definitely feel
attracted towards the mall. Facilities like parking, circulation paths, floor plans, lifts,
escalators and wash-rooms should be designed to extend all-round comfort to the
shoppers.
Adding to Shopping Experience
In the era of stiff competition, increasing awareness, demanding customers and

undifferentiated malls, softer aspects like shopping experience would act as tie-breakers.
The overall shopping experience does depend on ambient factors like aesthetics,
temperature control, background music and ambient odour. However, the presence of
world-class brands also adds to the aura and experience associated with shopping in a
particular mall. Similarly, aspects related to location, number, variety and size of stores
contribute to the overall experience as the satisfied customers do recall their last pleasant
shopping trip.
Making Optimum Use of Available Retail Space
People visit shopping malls for purchasing myriad products and services having different
monetary value, functional/emotional significance and level of involvement. Similarly,
tenants available in the market also comprise retailers with different formats and space
requirements. No single size fits all. Hence an ideal tenant-mix would consist of anchors,
large stores, mid-sized stores, small stores and kiosks. Moreover, all the stores need not
be on the ground floor or on the front side. A diversified tenant-mix will help in optimum
utilization of all kinds of retail spaces in the mall.
Generating and Enhancing Rentals
To begin with, the tenant-mix should be such that it occupies all the available space in
the mall as per the guidelines discussed earlier. The rentals received from the tenants
100 Mall Management
would help in recovering the investments made in the project by developers/investors.

As shopping malls are project with huge investments and long pay-back periods,
the mall management must ensure that the revenue stream does not dry down with
time. It means that the mall's rental value (per square feet rental) does not decline.
It is possible only if the mall is managed in such a manner that customers continue
patronizing it by shopping and tenants patronize it by renewing their lease contracts.
An ideal scenario would be when more tenants are lined up than the space available
at the time of lease expiry.
Ensuring Mall Profitability
All the elements of tenant-mix management should be put in place in such a manner
that the shopping mall remains profitable not only in the short run but during its entire
life. It is possible only when the shoppers find the tenant-mix exciting, the tenants see
ever-increasing sales per square feet of retail space and the mall sees higher footfalls and
consequently higher rentals.
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-
List of tenants displayed outside Sahara Mall, Gurgaon
Enlarging the Catchment Area
If the tenant-mix of a shopping mall is unique, it may also attract shoppers from outside
its planned catchment area. It is not uncommon to see people travelling some distance
to reach a store or brand that is the only one in the locality. For example, Country Club
Tenant Mix 101
Mall in Vaishali (Ghaziabad) is otherwise a very small mall but because of the presence
of Brand Factory (the only such outlet near to Delhi's trans-Yamuna area), it has been able
to attract shoppers from East Delhi as well.
Holding Shoppers for a Longer Time
A comprehensive tenant-mix with stores aligned in the form of genuine clusters

representing different zones could be so fascinating and captivating that customers feel
like having a good look at all the stores. People spending more time willingly would add
life to the mall apart from increasing the chances of more sales.
Encouraging Cross-shopping and Impulse Buying
If stores are clustered appropriately in the form of zones catering to unique customer
needs, shoppers often end up buying much more than their shopping list. Smart
positioning of complementary products and services can either remind or kindle the
desire to buy the product/service even though it was neither on the customer's top of
the mind nor a priority. Lists of tenant highlight the importance of selecting a balanced
variety of tenants and locating them carefully within the mall in relation to the mall's
layout and in relation to each other. The location of anchor tenants and MSUs are critical
decisions, drawing people to the mall through specified access points so that maximum
possible number of tenants take advantage of the generated footfall.
Imparting Distinctive Image to the Mall
In the era of 'cut/copy and paste' development resulting in identical shopping malls,
the presence of unique and prestigious brands can have a telling effect on the image
and positioning of the mall. One major responsibility of the mall development and
management teams is to identify such brands and convince them to occupy space within
their malls. The tenant-mix should create a specific image for the mall, and position it
in relation to competing malls. The need to differentiate a mall from its competitors
has grown with the rising number of malls. Positioning a shopping mall in the retail
hierarchy is therefore largely achieved through unique and prestigious stores present
in the mall.
Ensuring 100% Location to All the Tenants
If left alone, every tenant would like to occupy the 'so-called prominent locations' such as
ground floor, front stores and corner stores without realizing that their business model,
retail format and customer segment may not require this. It has been observed that the
'first-come-first-served' model of mall space allocation results in a 'loose-loose' situation
for the developer, tenants and customers. The developer ends up violating the zoning,
leading to dead-zones at other locations/higher floors. The tenants end up paying a
higher rental which makes it difficult for them to break-even. And, the customer does
not get the convenience and/or the experience associated with shopping. For example, it
is a horrible idea to allocate the anchor space to an electronics store on the ground floor,
but it does happen.
102 Mall Management
Types of Retail Tenants
In every shopping mall, the most important element of survival are its tenants. The retail
tenants are usually categorized into two types: traffic attractors and traffic users. A traffic
attractor is the tenant who draws the human traffic to the mall. This type of tenants,
usually of a good reputation and with an extensive range of goods and services, are able
to draw huge crowds to them wherever they are located. Among traffic attractors are
anchor tenants like large department stores with a recognized name, and they generate
mall traffic that indirectly increases the sales of lesser-known stores.
The second type of tenants, traffic users, depend on the visitors drawn to shopping
malls. Such tenants range from specialized shops to small retailers, and it is perceived
that their survival depends on the success of the traffic attractors. Figure 5.1 gives
diagrammatic representation of different types of tenants accommodated in shopping
malls.
Anchor Tenants
Vam a Tenants Retai Tenants New Age Tenants
Entrepreneurial
Tenants
Figure 5.1 Types of retail tenants
Anchor Tenants
An anchor store, as defined by Konishi and Sandfort is a store that increases, through its name's
reputation, the traffic of shoppers at or near its location. The anchor tenant sets the tone and image
of the shopping mall. It takes up space ranging from 20,000 ft to over 200,000 ft. It can be a
major department store, a hypermarket, a discount store or a large home centre. In general,
shoppers are likely to visit a shopping mall because of its anchor tenant, and this in turn
helps generate sales and profits for the other tenants. The success of a shopping mall rests
on the anchor tenant. In fact, it is said that there will not be a shopping mall until there is
an anchor tenant. Anchor tenants are the determining elements in the initial design, layout
considerations and financial negotiations of a mall development. Later in the chapter, the
concept of anchor tenant has been discussed in detail.
Tenant Mix 103
Micro-mini Retail Space (New-age Tenants)
The importance of anchor tenants has been stressed earlier, yet it would be a mistake
to think that a shopping mall could prosper without independent small tenants. Small
tenants are essential for the success of a shopping mall. The new-age retail tenants
are undoubtedly a new phenomenon that has caught the retail industry, targeting the
teens and young adults, by storm. Even though some anchor tenants do provide a wide
selection of goods and services at a discounted price, they are not tuned in to fulfil the
ever-changing needs of consumers. On the other hand, small retailers may carry a limited
range of products and services, but they are more flexible and yet specific in catering
to consumers' needs. Moreover, small retailers yield higher rentals per square metre as
compared to anchor tenants in the same shopping mall.
Entrepreneur Tenants
The entrepreneurs' factory outlet model is highly commercialized because it represents

a high percentage of the overall business. Many independent entrepreneurs/small
unorganized retailers, who were early adopters of this model, have grown their business
within factory outlets and then diversified into high-street retail as opposed to the more
conventional way round. The entrepreneur tenants are typically highly opportunistic
and were attracted by the early inducements offered by factory outlet centre developers
and the low- risk profile of the model.
Vanilla Tenants
Vanilla tenants are next to the anchor tenants and they draw customers from the customer
base of anchor tenants. In other words, vanilla retailers cluster around an anchor tenant
and feed on the shopping traffic the latter generates.
Tenant Categorization on the Basis of Lease Contract
The successful execution of the zoning plan in a mall is carried forward through lease
management on an ongoing basis. Forging good leases with retailers is essential to
ensure the presence of right retailers in a mall. All the tenants housed in a mall do not
opt for lease contracts of uniform length. Even if it happens to be a possibility, sensible
developers prefer to have varying lease lengths with different tenants to make sure that
their revenue stream remains stable over a longer time period. On the basis of lease
length, tenants can be classified into the following categories:
Long-term Tenants
Among all tenants, the tenants of this category sign the lease contract for the longest
duration. Their lease contact ranges from 7 to 20 years. Mostly, the tenants in this category
are the anchors who occupy the mall space at highly concessional rates. They aim at
developing a large and loyal clientele. They also invest significantly for improving the
vanilla shell which would be a sunk cost if they have to vacate the mall early. Common
examples of long-term tenants are multiplexes, hypermarkets and department stores.
104 Mall Management
Medium-term Tenants
The tenants of his category occupy the mall space for an intermediate range, say 5-7
years. They are main space users dealing in a wide product range, and they pay rentals
higher than the anchors. Common examples are the tenants dealing in electronics, home
furnishing and, in many cases, apparels.
Short-term Tenants
The tenants of this category are generally vanilla stores who do not have very high exit
barriers in their way to switching locations. They generally occupy smaller spaces and
are clustered around the anchors. They pay the highest rentals among all the permanent
tenants. Their decision to shift depends primarily on the anchors' performance. They are
akin to the rats on a ship who are the first ones to leave the ship as it drowns.
Temporary Tenants
These include kiosks and stalls in malls. Normally, there is no defined space for them,
and most of them occupy common areas of the malls such as atrium and corridors. These
tenants pay the highest rental among all the tenant (permanent as well as non-permanent)
categories, occupy very small spaces, cater to seasonal and impulse needs and add to the
mall revenues significantly. Later in the chapter, the concept of temporary tenant has
been discussed in detail.
.•
os»m
Temporary tenants inside MGF Gurgaon

Tenant Mix 105
Tenant-mix Decisions
While deciding about the tenant-mix, a series of decisions need to be taken by those
responsible for planning it. These decisions relate to the following areas:
Retail Demand Analysis
It is an assessment of the demand potential for different products and services in the
mall catchment area during next 5-10 years. It is normally done by a specialist or by the
developer in consultation with some researchers or specialists. While working out the
demand potential, these factors are taken into account—the absolute population size,
rate and direction of population change, qualitative changes in the demographic profile
and macro/micro economic scenario including competition. The retail demand analysis
gives the aggregate demand for all the product/service categories. The aggregate demand
is then broken down into the expected/target market share for the shopping mall.
Selecting Prospective Tenants
For each product and service category, an exhaustive list of the available options (tenants/
brands) is prepared. This master list is then pruned on the basis of criteria like the
presence or otherwise of a potential tenant in the catchment area, whether the existing
tenant (brand) store is in a high-street location or a competing mall, whether the brand
would be willing to come and whether it fits in the developer's scheme of things in terms
of image, positioning and branding of the mall. The shortlisted brands are then contacted
and the final list is frozen after negotiations.
Tenants' Floor Area Requirements
The prospective tenants may assess their space requirement in the mall on the basis
of their standard norms or fanciful notions about the market potential. However,
equipped with the knowledge about the catchment and the retail demand analysis, it is
advisable for the mall developer to counsel the tenants about the actual area that would
be appropriate for them. Else the mall developer may end up committing too much or
too less space for the tenants. It can have a negative impact on the concept of the mall
as well as on the competing brands. Major considerations involved in space allocation
to the tenants' are:
(i) Deciding the ratio of the floor area taken up by comparison shops and convenience
shops to the total floor area of the mall.
(ii) Deciding the ratio of the floor space taken up by the large space users to the total
floor space.
Influencing Tenants' Location in the Mall
The tenants might get tempted to occupy the most prominent (and costliest) space in
the mall. However, it may not be the most appropriate location for them. Different
stores/formats require different sizes, frontage, perimeter wall and depth. So the mall
management team must ensure the allocation of the most appropriate location to the
106 Mall Management
tenants. It is also in the interest of the mall that the location of individual stores is in
consonance with the mall concept so that the overall synergies are maximized. Hence it
is advisable for the mall management to play the role of a consultant for the tenants and
give them reasons why the location being offered suits them the most.
Tenant Mix Modification to Flow with Times
An ideal tenant-mix should not be considered ideal for all times to come. As time changes,
the old tenant-mix may become obsolete, necessitating the need for refining it in the light
of contemporary needs. Retail formats are continually changing, and with the growth
of retailing via the Internet and interactive television, the changes are expected occur
at an accelerating rate. To make the tenant-mix respond to the changing times, the mall
management is required to continuously monitor and evaluate the evolving consumer
needs and accordingly mould the tenant-mix. Following are the reasons for the increased
difficulty in maintaining a successful tenant-mix:
• Heightened competition among malls, arising from their proliferation and due to
the increased consumer mobility, has created pressures for differentiation by the
means of tenant mix.
• Ever-changing demographics, fashion and consumer demand are leading to the

decline of some old retailers and the brisk expansion of new ones, often with
different space requirements.
• With more products, services and formats coming into existence, it becomes
imperative to accommodate them in the old concept so as to stay relevant.
For example, none of the pioneering malls in India (Spencer Plaza, Chennai;
Crossroads, Mumbai and Ansal Plaza, Delhi) has a Multiplex, as multiplexes had
just entered India when these malls were developed. But now multiplexes are
so popular that it is practically impossible to think of a shopping mall without a
multiplex as an anchor.
Modes of Tenant-mix Improvement
The tenant-mix can evolve organically through the operation of market forces;
unsuccessful retailers leave and are replaced by others. Alternatively, the mix can be
planned and actively managed. Whereas most commentators assume that the centre
(mall) asset manager is responsible for this process.
"...notwithstanding the centre manager's responsibilities...it is the ultimate responsibility of

the retailers in a centre to govern the retailer mix. Indeed, they are probably the only body...
who are fitted to do so."
The mall developer may engage an asset manager who, in turn, may appoint an on-site
centre (mall) manager. The mall manager is the day-to-day point of contact with the retail
occupiers. One or more letting agents may also be involved. All three management layers,
and potentially others, are involved to a greater or lesser extent in the management of the
tenant-mix.
I
Tenant Mix 107
Monitoring Tenant Mix
A prerequisite for successful management of the tenant-mix in any mall is to monitor its
performance —that is, the level of profit achieved by its retailers and its implications for
the mall's rental income and capital value. Constant monitoring of sales performance,
competition and demographics for this purpose is also important. The continuous
manager-tenant communication is necessary to allow managers understand the tenants'
business needs. The most obvious indicator of the need for a change in the tenant mix is
the failure of a retailer. This may result in an unexpected vacancy and a request to assign
or sub-let the lease.
Proactive Management
Proactive management of the tenant-mix is better than relying on changes instigated by

retailers. This can involve negotiations for surrender of leases, possibly involving a payment
to the retailer. More radically, a mall may be wholly or partially refurbished and the tenant-
mix repositioned towards a changed demographic or competitive environment. This may
also involve the merger or subdivision of units to meet new retail requirements.
Lease Management Case Law
Landlords and their agents have evolved management tools to deal with the complications
arising out of the leasing issues. Retail leases commonly include clauses requiring the
landlord's approval before a lease can be assigned or sub-let. There is also a user clause
that restricts the types of merchandise that can be sold from the leased retail store. These
tenant's clauses are the mall developer's main means of controlling which retailers trade
in the mall and the mix of merchandise on offer.
Anchor Tenants
An anchor store is the tenant occupying a place and space of prominence in a mall. The
anchor store is always relatively large and sufficiently well regarded, either in terms of
quality, price or function, to be a destination in its own right. Other outlets will cluster
around it and feed off the shopping traffic it generates. Therefore the choice of anchor
tenants is vital to the success of the overall tenant-mix. The location of anchors within a
mall creates pedestrian flows. By careful management, these flows can be used to attract
shoppers to all areas of the mall, thus maximizing the sales potential and the rental
income from the available floor-space.
Privileges of an Anchor
In most of the shopping malls, anchor stores are roped in by extending them special benefits.
Some of the privileges enjoyed by anchor stores in shopping malls are as follows:
Discounted Rentals
It is a common practice to extend heavy discount on rentals to the anchor tenant, ranging
from 25-75%. It is not a loss making proposition for the mall developer, as the loss in
108 Mall Management
revenue generation from the anchor space is made good by charging higher rentals from
other tenants who enter only because of the presence and proximity to the anchor. Many
malls have gone to the extent of revenue sharing arrangement with the anchors instead
of charging fixed rentals.
Tenant Improvement
Some tenants like multiplexes and hypermarkets need to make specific changes/
improvements in the vanilla shell. For example, hypermarkets may require ramps while
multiplexes may require theatre-like (stairs or ramps) flooring. Normally changes in the
vanilla shell are done and borne by the tenants. However, under special arrangements,
mall developers are more than willing to carry out these changes/improvements for their
anchors.
Special Displays
Display space and options for tenants are confined normally to their stores only and are
chargeable for other locations. However in the case of anchors, malls are magnanimous
enough to permit them to have displays within and on the fagade/frontage of the mall.
This facility is especially provided to anchors who are occupying space in the basement
and posterior of the mall.
Involvement at Design-board Stage
Anchors occupy large space and are supposed to be the magnets for attracting shoppers
and other tenants. As some of them may require special features in design/location, mall
developers consider it worthwhile to consult them during the designing phase of the
mall.
Preferential Location
Anchors are normally placed at locations from where they can appeal and service a large
number of customers. However, it does not mean that the location is allocated to them
solely as per their discretion, without giving a thought to the original concept, zoning
and planning of the mall.
Dedicated Infrastructure
A vital benefit extended to the anchors is the special infrastructure dedicated to them so
that they can carry out their retailing in a smooth manner. This infrastructure includes
special entry and exit points, service lifts, etc.
Significance of Anchor Tenants
Shopping malls extend various privileges to their anchor tenants because they gain from
the anchors' presence in the following ways:
First Ones to Come
Anchor stores are normally the first ones to move in. Malls are normally made operational
when one or more anchor stores are already in place. This helps is building traffic from
Tenant Mix 109
the word go. A case in point is Mahagun Metro Mall, Vaishali where Bharti Wal-Mart's
Easyday Hypermarket became the first tenant to become operational in February 2010
even though the mall was still getting its finishing touch. Anchors normally attract
shoppers from a larger catchment, hence the message spreads to a larger geography. The
traffic generated by such anchors is the best inaugural publicity for a Mall.
Major Space Occupiers
As anchors occupy a large chunk of space, they improve the occupancy ratio of the mall
significantly. As a result, the mall looks active and live.
Generate Revenue in Bulk
Even though anchors give lower rentals, the quantum of space occupied by them is so
large that they end up being the largest revenue providers in almost all the cases.
Impart Image to the Mall
Presence of a renowned anchor adds significantly to the image of the mall. It is especially
important for a shopping mall that does not belong to an established group and is a lesser
known and newer entity. On the contrary, its anchor could be an established player in the
market. Over a period of time, classical conditioning comes into play and people start
attributing some of the qualities of the anchor to the mall itself.
Result in Cross-shopping
As mentioned earlier, anchor stores attract a large number of people from long distances.
Even if a fraction of those shoppers spill over to the other smaller stores, it means
handsome business for them. That is why vanilla stores in the proximity of anchor stores
are valued the most in terms of rentals.
Temporary Tenants
Temporary tenants are those who occupy smaller chunks of non-regular space for a very
short period. The duration of a contract for a temporary tenant ranges from a few days
to a few months, but never more than a year. Even if a temporary tenant intends to stay
for a longer period, the contract is signed for a year at a time and renewed subsequently.
Temporary tenants are normally in the form of kiosks and stalls for which there is no
formal provision in the mall design. These are placed in common areas like atriums and
corridors. Though these occupy very small spaces, they end up paying the highest rental
per square feet. These tenants extend the following benefits to the mall:
Generate Revenues out of Common Areas
Common areas of the mall (atrium, corridors, etc) are supposed to be an expense head, as
the mall needs to spend money in their maintenance and upkeep. However, by placing
temporary tenants in common areas, shopping malls can generate revenues. What makes
this proposition more profitable is the fact that tenants pay for the upkeep of common
110 Mall Management
areas (by paying CAM charges), but the mall developer generates revenue from these
areas by renting them out.
Keeping the Mall a Happening Place
A number of kiosks placed strategically with a few customers around each kiosk makes
the mall a happening and lively place. It is especially important during off-peak hours
and days when most of the mall activities are is confined to the atrium around such
kiosks.
Filling Gaps in the Tenant-mix
There might be some gap in the original tenant-mix because an appropriate option
(tenant) was either not available or not willing to step in. In such cases, it is not a bad idea
to fill the gap by placing some temporary tenants who extend same or similar service till
the time an exact replacement is arranged.
Take Care of Seasonal Trends/Needs
Most parts of India are subject to the extreme climate—either too hot or too cold. The kind
of food or snacks required during these extremes also varies. It is not possible to place a
number of specialists in each category on a permanent basis, as the season keeps fluctuating.
However, a large number of kiosks take care of such seasonal trends and needs.
r%*r
«(i.
/ FACE S
/ CANADA
Kiosk in the atrium of Mahagun Mall, Vaishali

Tenant Mix 111
Ancillary Uses of Mall Space
Shopping malls are considered to be the shopping hubs, therefore every square inch of
the mall space should be dedicated to retailing of products and services. However, it is
not practicable, especially in India. Because of very high real estate costs, mall developers
in India are compelled to develop the plot fully by exhausting the FAR completely. As a
result, we come across malls that are 5-6-storey high. However, going by conventional
retailing wisdom, the retailing ends at the second floor. Beyond the second floor, it
becomes very inconvenient for the shoppers to browse and shop. There are a few
options available for higher floors in the form of multiplexes, food courts and fine-dine
restaurants. However, many malls are still left with unutilized mall space at higher levels.
The situation is further complicated by the fact the developer divides the mall space into
a large number of small stores as it is easier to sell/rent small stores.
In such cases, it is advisable to divert a part of the mall space, particularly the higher
levels, to other commercial yet non-retail activities. It can give the following advantages
to the mall:
1. The presence of other commercial services/activities will increase the focal-point

value of the mall.
2. It would start attracting a large number of shoppers belonging to diverse groups. It

is likely that some of these shoppers may actually opt for shopping in the mall while
carrying out their routine commercial activities.
3. As the mall becomes a hub for diverse activities, its significance as a place of
convergence and meeting increases, which again means higher footfalls.
4. Most important, it would result in utilization of upper floors which otherwisewould

have remained vacant.
Some possible uses of upper floors of a mall are:
1. Storage space for stores operating in the mall.
2. Show-rooms for B2B products and services.
3. Services like banks, insurance offices and health clinics.
4. Studios and work rooms like photographic studios and recording studios, and
hobby classes for dance and music.
5. Recreational options like indoor sports and gymnasiums.
6. Cultural and educational facilities like lecture rooms, conference rooms, library, art
gallery and museums.
7. Residential options like flats, hostels and studio apartments.
Fundamental Issues Related to Ancillary Uses
Opting for non-retail uses is a sensible decision for the optimum utilization of surplus
mall space, particularly at higher levels. However, one must address the following basic
questions before taking a call in this matter:
1. Is there a genuine demand for such commercial applications?
2. Would these activities result in increased footfalls at the mall?

112 Mall Management
3. Would it not affect the image and branding of the mall?
4. Are the mall design, architecture and column placement compatible with this use?
5. Would the ancillary activities interfere with normal retail activities of the mall?
6. Would the ancillary use consume a reasonable share of utilities?
7. Is it possible to apportion operating costs to the ancillary use?
8. Would ancillary uses synchronize with the mall timings?
Future Direction OF Tenant Mix Management
Until very recently, most Indian developers considered the mall management synonymous
with the facilities management. The realization that they are different and that the
professional mall management will affect the long-term viability and success of a mall
is sinking in gradually and is being accepted across developers, landlords and retailers.
The shortcomings pertaining to mall management in India have been discussed in the
introductory chapters of this book. To overcome these shortcomings, developers must
conduct professional mall management practices —starting from undertaking rigorous
feasibility exercise or market research to providing facilities, ambience and finance
management of a mall.
A common practice in the developed markets such as the United States and
Europe is using the revenue share model in determining rent. Under this arrangement,
the tenant will either pay a fixed monthly base rent as minimum guarantee and/or a
'percentage of sales' rent, whichever is higher. This is beneficial for both landlords and
retailers as landlords are encouraged to organise promotional activities that would
increase retailers' revenues because they may have a percentage share in it. The model
works successfully in bullish and bearish market conditions. When the market is weak,
retailers are protected from rising rental costs. This unique approach has been adopted
by Select City Walk, Delhi.
The tenant-mix determines the success of malls as shopping destinations, so the

tenant mix management is fundamentally important to shopping malls. The traditional
property asset approach to shopping malls tends to be far removed from the customers
who are the malls' life-blood. It is also too conservative. Shopping malls would be more
effectively managed as retail businesses, based on the marketing concept of business.
: )
SUMMARY
V
The success of a new shopping mall depends on its initial tenant-mix that is dominated by the
choice of anchor tenants. The tenant-mix strategies need to be based on a thorough research
of the local consumer requirements and the need for competitive positioning. The marketing
of retail units to potential tenants needs to be more targeted, with firm control retained
over the tenant-mix decisions. The positioning of the mall in relation to its competition,
its attraction to shoppers and its potential for drawing repeat patronage are all strongly
influenced by the tenant-mix.

Tenant Mix 113
: )
REVIEW QUESTIONS j
1. Define zoning. Why is it important to decide about zoning before the actual space
allocation to tenants?
2. Distinguish between 'anchor tenants' and 'main space users'. Is it advisable to have
multiple anchor tenants in a mall? Justify your answer.
3. Define tenant-mix. What advantages are accrued to a mall if its tenant-mix is in accordance
with the needs of its catchment?
4. What are the pre-requisites for a healthy tenant-mix?
5. Explain the process of tenant-mix planning by discussing the entire sequence of decisions
taken during the process.
6. Does the tenant-mix of a shopping mall remain the same throughout its life? Justify your
answer.
7. How does the tenant-mix of shopping malls evolve with time? What role does mall
managers play in catalyzing this evolution?
8. What are the privileges enjoyed by an anchor? Why do developers extend these privileges
to them?
9. Write a note on the significance of temporary tenants in a shopping mall.
10. How can the mall management milk the shopping mall to the maximum by looking beyond
the conventional tenant categories? What are the basic considerations to be kept in mind
while devoting mall space to ancillary users?
PRACTICE EXERCISES
1. Study the tenant-mix of a mall of your choice. See the floor-wise distribution of tenants.
Does the allocation of the mall space follow any pattern? What are the important product
categories that have been allotted space on the ground floor and around the central
atrium?
2. Visit at least 5-6 shopping malls in your city having multiple anchor tenants. Note down
their names and locations. Do you see any pattern in placing anchors at particular locations
and across floors?
3. Visit a few shopping malls and find out the following details:
(a) Temporary tenants that are occupying space for a whole year.
(b) Temporary tenants occupying space on seasonal basis.
What conclusions do you draw from your findings?

114 Mall Management
SUGGESTED READINGS
1. Abratt, R.; Fourie, J.L.C. and Pitt, L.F. (1985), 'Tenant mix: the key to a successful shopping
centre', The Quarterly Review of Marketing, Spring, pp. 19-26
2. Bloch, P.H.; Ridgway, N.M. and Dawson S.A. (1994), 'The shopping mall as consumer
habitat', Journal of Retailing, Vol. 70(1), pp. 23-42
3. Cushman and Wakefield (2009), 'Mall vacancies: cause for concern', A report by Cushman
and Wakefield, In A. Taneja (Ed.), Malls in India, pp. 58-63, New Delhi: Images Multimedia
Pvt. Ltd.
4. Greenspan, J. (1987), 'Solving the tenant mix puzzle in your shopping centre', Journal of
Property Management, Vol. 53(4), pp. 27-31
5. Gross, J. (1993), 'The magic of the mall: An analysis of form, function and meaning in
the contemporary retail built environment', Annals of the Association of American
Geographers, Vol. 83(1), pp. 18-47
6. Kaylin, A.O. (1973), 'In depth analysis necessary for shopping centre game', Shopping
Centre World, August, pp. 46
7. Kirkup, M.H. and Rafiq, M. (1994), 'Managing tenant mix in new shopping centres',
International Journal of Retail and Distribution Management, Vol. 22, Issue 6, pp. 29-37
8. Nelson, R. (1958), The Selection of Retail Locations, New York: F.W. Dodge Corporation
9. Ng, K. (2009), 'Strategies for challenging times', In A. Taneja (Ed.), Molls in India, pp. 164-
168, New Delhi: Images Multimedia Pvt. Ltd.
10. Sheikh, A.I. and Fatima, K. (2008), Mall Management, New Delhi: Flimalaya Publishing
House
11. Ward, J.C.; John, B. and Mary, J.B. (1992), 'Measuring the prototypicaliy and meaning of
retail environments', Journal of Retailing, Vol. 68(2), pp. 194-220
□ □□
Tenant Mix 115
CASE
^ Retailer-Developer partnership: a way forward^ ^
The fourth edition of The India Shopping Centre Forum, the mega congregation of shopping
centre developers and retailers was organized in May 2011 at Mumbai. The forum opened
with an in-depth deliberation among industry leaders on the key challenges faced by the
sector and the way forward for the retail industry especially shopping centres. This year the
theme was 'Challenges before Shopping Centres'.
During the forum proceedings, B.S. Nagesh, Vice Chairman, Shoppers Stop, spoke on the
changing retailer-developer relationship. Thomas Varghese, CEO, Aditya Birla Retail, chairman
CM, National Committee on Retail, and S. Raghunandhan, Chairman, SCAI, and CEO, Prestige
Retail Group, also touched upon the changing retailer-developer relationship and how both
can create a win-win situation through a mutually beneficial partnership. The panel agreed
that shopping centres are an integral part of economic growth. They symbolize the civilization
and lifestyle development of the economy.
Mr. Nagesh spoke about the changing scenario in the retail sector. The industry has gone
through multiple stages starting from bullish optimism six years ago to pessimistic bent and
then back to positive optimism last year. Today it is at the stage of truism. This is possible
because of the 'revenue sharing model' adopted by the mall developers. This model has
brought the trust factor in the partnership between the retailers and the mail developers.
Insisting on developing a partnership not limited to the retailers and the mall developers,
Nagesh emphasized the need to involve the entire eco-system including the customers, the
mall employees and the society as a whole.
Source: 'Retailer-developer partnership is the way forward', retrieved from
http://www.indiaretailing.com/PrintStory.aspx?newsld=5670, accessed on 14 May 2011

v J
CHAPTER
Leasing ndministration
LEARNING OBJECTIVES

• Familiarize the reader with key concepts and terms relating to leasing and its application in
the context of shopping malls
• Explain the process of leasing as applied in practice
• Discuss different clauses that are used to safeguard the interests of tenants as well as
landlords
• Make the reader aware of the nuances of leasing documentation
• Understand how leasing is administered and supervised at the ground level
ADVERSE LEASE CLAUSE TRANSLATES INTO BUSINESS LOSS
'Emotions, Gifts & Greetings' is an upcoming chain of gifts and greeting cards stores in
north India. In an attempt to expand its network, the company books a 2000-square-
foot store on the first floor of 'Exotica' shopping mall in Gurgaon for a five-year term.
Commercial prospects are bright as Exotica is a new and nice property catering to a
decent catchment area. The Emotions store at Exotica does well during the first year
but soon finds itself in rough weather. The reason: The Exotica management has
committed a 3000-square-foot store on the ground floor to 'Truly Yours', India's largest
brand in the social expressions business. The Exotica management sees a great future
thanks to their new relationship with Truly Yours. A field study conducted by Exotica
reveals that the presence of Truly Yours on the ground floor would add significantly
Leosing Rdministrotion 117
to the mall's prestige as its target customers hold the latter brand in high esteem.
However, Emotions is not enamoured of the entry of Truly Yours in Exotica, which is
bound to spell doom for its business. Emotions threatens legal action. But the Exotica
management explains to the Emotions management that the lease agreement between
them does not promise exclusivity for the gifts and greeting cards business to Emotions.
Stung by the fact, Emotions decides to book retail space in 'Grand County', another mall
coming up adjacent to Exotica. However, the Emotions management is shocked when
they receive a legal notice from the Exotica management. The notice mentions that due
to a specific clause in the existing lease contract, Emotions cannot open a new store
within a radius of two kilometres around Exotica. Emotions is unable to terminate the
lease contract as the terms of the exit clause are loaded highly in favour of the Exotica
management. Now, the managers at Emotions Gifts and Greetings realize that had they
been more cautious while signing the lease agreement they would not have stuck in the
present situation.
Introduction
A big debate is going on in India on the merits and demerits of two models of renting
out malls—fixed rental model and revenue-sharing model. The centrepiece of this debate
is the term Teasing'. Other related terms like lease rental and commercial leasing are
commonly used in the context of mall management. Going by retail researchers, improper
leasing is a major cause of failure of shopping malls. Let us first understand the meaning
of lease.
Lease is a contractual agreement through which a person is given the right to use
a property by its owner for a limited period of time, subject to certain conditions. The
property is given in exchange for something of value, and its ownership remains with the
original owner.
For giving a property on lease, it should be a legal property. A lease agreement is

entered into between the property owner (lesser) and the person taking the property on
lease (lessee). Through the lease agreement, the lesser authorizes the lessee to take and
use the property owned by the lesser for a certain period of time without becoming its
owner. A lease agreement also includes a statement of consideration; it means that the
lessee must pay something in value for using the property of the lesser.
Lease creates a right to use a property for the lessee. Unless there is a transfer of such
an interest, there can be no lease. Section 105 of the Transfer of Property Act 1882 defines
what a lease is. As per the Act, 'a lease of fixed property is a transfer of a right to use the
property, made for a certain time, express or implied, or in perpetuity, in consideration of
a price paid or promised to the transferor by the transferee, who accepts the transfer on
such terms'.
118 Mall Management
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Brands that leased space at Tl Mall, Indore
Important Terms Related to Leasing
A lease contract involves two parties: a lessor and a lessee. One who owns the property
and transfers the right to use the property to another person is referred to as the lessor.
The transferee who is given the right over the property for a specified use is called the
lessee. The money is called rent for the lease. The two parties to a lease are bound by a
legal document called lease agreement (contract). The period for which the property is
offered on lease in called the term of lease.
Types of Lease
Depending on the mode of rental payment, the leasing arrangement between two parties
(lessor and lessee) could be of two types:
(a) Gross lease: It is an arrangement under which the lessee pays a single component as
lease rental. There is no separate payment for operating/maintenance charges as the
gross lease amount is expected to take care of these charges. The gross lease is also
called 'full service' lease.
(b) Net lease: Under this arrangement, the lessee pays rental only for using retail space,
and the operating/maintenance charges are payable separately. For the same space,
the amount payable as net lease is generally lower than the gross lease amount, as
it does not include additional payment for maintenance.
The net lease is considered better because it provides transparency in mall

maintenance operations. It is possible for tenants to find out how much money is collected
for maintenance, and how much of it is actually utilized. It also proves very useful in
distributing the lease rental between the investors, who own individual retail units, and
the mall developer, who controls common areas and mall management. In such cases,
the net lease rental goes to the investors, whereas the maintenance charges go to the mall
developer or mall management company.
Prerequisites for a Lease
For a lease to exist, the prerequisites are:
(a) There should be a transfer of right from the lessor to the lessee.
(b) The lessee should have a separate alienable interest in the property.
(c) The interest should be in the fixed property.
(d) The interest should entitle the lessee to the right to the possession of the property in
accordance with the lease agreement.
(e) The right to use the property under lease should be for a certain period of time.
(f) The right should be given in return for some consideration to be paid periodically
or on certain specified occasions.
In case of a lease, there is a separation of the right of possession of property from

the ownership of property. It is because in case of a property lease, the lessee generally
requires to possess the property in order to use it. Thus the word 'use' includes possession
also. However, it is to be noted that a mere occupancy or possession of fixed property
will not constitute a lease. It should be backed up by a contractual arrangement between
the two parties. The lessee has only the right to use the property, and the ownership of
the property continues to remain with the lessor.
A lease can be made from year to year. If the term of a lease exceeds one year, the
rental may still be decided or revised on a year-to-year basis. A lease can be made only
by way of a registered document. Both the lessor and the lessee or their duly constituted
authorities should execute such registered instruments. The instruments that create a
lease need to be properly stamped, executed and registered.
Major Provisions of A Lease Agreement
Names of All Leaseholders
Every partner in the business who occupies a rental or leased unit should be named as the
leaseholder and should sign the lease or rental agreement. This makes each leaseholder
legally responsible for all terms of lease, including the full amount of the rent and proper
use of the property. This means that the lessor can legally seek the entire rent from any of
the leaseholders should the others skip out or be unable to pay. If one leaseholder violates
an important term of the lease or rental agreement, the tenancy of all leaseholders, covered
by that agreement, can be terminated.
L
120 Mall Management
Lease Term
The lease term is the duration or period of the lease agreement. This term states the
starting and ending dates of the agreement. Using the lease term, the lessor can lock
the tenant for the period specified in the term. But the term does not rule premature
eviction of the tenant by giving a prior notice. This option is generally provided in the
exit/termination clause.
Rent Payment
The lease agreement mentions the amount of rent and its due date for the leased
property. The mode of payment (by cash or cheque or any other mode) is also stated in
the agreement. The lessor can also add an additional clause stipulating fine/penalties in
case of late or insufficient payment of rentals by the tenant. Else, these may be mentioned
as a part of a separate heading called 'Fees, fines, charges' as discussed subsequently.
Maintenance Charges
In most cases, tenants are expected to pay a charge for the maintenance of common areas.
It is called CAM (Common Area Maintenance) charge. The lease agreement must clarify
whether this amount is meant only for maintenance operations or may also be used for
marketing and promotional activities. The agreement should also clarify whether the
maintenance charge is only for routine/preventive maintenance or it may be used for
major overhauling/modifications/structural changes.
Fees, Fines, Charges
The lease agreement can mention the charges that the tenants are required to pay in case
of late rent, rent shortage, bounced cheque, etc. This provision also mentions the utilities
that the tenant can use if the charges for utilities are not mentioned..
Security Deposit
The owner of a real estate property has the right to charge an advance payment of equal to
the monthly rental for a few months. This is nothing but a security for damages or unpaid
bills. The lease agreement does indicate a process for it, the duration for which it is to be
held, the time/date of its refund and permissible/due deductions at the time of refund.
Number of Occupants
The tenant should state the total number of persons who would use the real estate
property. If needed, the lessor can put a restriction on the total number of occupants by
inserting a special clause to this effect.
Hazardous Materials
The lessor may put restrictions on the storage/handling/use of materials that he considers
risky for the property. Materials may be unsafe, inflammable or explosive that may
cause accidental fire around the property. The lease agreement should mention details
of such materials.
Responsibilities
This provision includes each and every responsibility of both the owner and the tenant.
It should be mentioned who is going to share the responsibility for certain repairs,
maintenance or damages.
Usage
This provision determines certain prerequisites governing the use of property by the
tenant. Some important prerequisites are:
(a) The property has to be used exclusively by the tenant as per the agreement.
(b) No permission is granted for illegal businesses.
(c) The tenant cannot change the nature of the agreed upon use of the property during
the lease period
Significant Clauses and Exigencies Concerning Lease Agreement
Apart from the salient components mentioned above, the lease agreement also contains
clauses covering different aspects of the property and the business. Application of these
clauses is purely circumstantial, hence varies from case to case. Some of these clauses
are enforced by the lessor to ensure security of his/her ownership and property, whereas
others are requested by the lessee to ensure continuous occupancy and flexibility required
to run his/her business. Some important clauses are discussed below.
Use Clause
This clause is put in by the lessor for clarifying to the lessee how the property space has
to be used. It is suggested that the lessee (tenant) must review this clause cautiously
and, if needed, discuss it with the lessor (property-owner). The reason is that the use
clause may impose unreasonable restrictions on the way the lessee plans to grow his/her
business. The lessor imposes this clause to protect his/her property, but its improper
interpretation regarding space usage may restrict the lessee's ability to properly conduct
his/her business.
Exclusivity Clause
This clause is generally inserted at the insistence of the lessee who does not want competing
businesses to come up next door. The lessee may ask for the total absence of any other
competing store in the vicinity or may seek restrictions on the number and location of
competing stores. In other words, restrictions could be requested in terms of either no
space to a competing tenant/player/brand or no space to a competitor on the same floor
or within a specified distance from the lessee's store. Imposition of this clause requires
serious thinking on the part of the lessor, and it cannot be imposed whenever requested.
There are certain retail formats where it is mandatory for a mall to have multiple brands,
and in some cases these brands need to be clustered together. It is especially true in case
of comparison goods.
122 Mall Management
In special cases, even the lessor can impose the exclusivity clause when he/she is
apprehensive of the intentions of the lessee. It happens when the lessee is a prominent
brand and is seeking permission to open more stores in the upcoming malls in the vicinity.
In due course the lessee may observe the performance of its stores in all those nearby
malls. Then after analysing the stores' performance, the brand may settle in favour of the
mall where its store is most successful, shutting down the stores in the other malls. To
rule out this possibility, the lessor may impose the exclusivity clause barring the lessee
from opening more stores in the vicinity.
Premises
The premises stated in the lease need to be defined clearly. For example, if one is leasing
a store does it include the parking facility? If one is leasing office space in a mall, does it
include a kitchen area or bathrooms? What is the boundary of the store stated in the lease
and what is defined as common area? To avoid any ambiguity or conflict in future, these
things should be spelt out clearly.
Security
Another major aspect to be dealt in the lease agreement is security. Both the parties should
work to include in the lease agreement the relevant clause(s) that address the following
security-related questions:
(a) Who is responsible for securing the premises?
(b) What does security constitute?
(c) Is a security system there? If not, will the mall management install one?
(d) Does the mall management intend to have way in the tenant's area?
Repairs and Maintenance
The best defence against rent-withholding hassles and other problems is to clearly set
out in the lease agreement the responsibilities of the mall management and the tenant
regarding repair and maintenance. The clauses on repairs and maintenance should
address the following aspects:
(a) The leaseholder's responsibility to keep the rental premises clean and sanitized and
to pay for any damage caused by his/her abuse or neglect of the premises.
(b) Requirement that the tenant would alert the mall management about defective or
dangerous conditions in the rental property.
(c) Specific details about the procedures for handling complaints and repair requests.
(d) Restrictions on repairs and alterations to be done by the tenant, for example,
installing fitments and fittings or painting walls without permission.
Entry to Rental Property
To avoid the tenant's complaints about illegal entry or violation of privacy rights, the
lease or rental agreement should clarify the legal right of the mall developer and his/
her representatives (the mall management team) to access the property—for example, to
make repairs. It should mention the period for which an advance notice will be given to
the tenant before entering the property.
Restrictions on Tenant's Illegal Activity
To avoid trouble among the tenants, to prevent damage to the property and to rule out
lawsuits from people living in the neighbourhood, the mall developer should include in
the lease agreement an explicit clause prohibiting disruptive behaviour, such as excessive
noise and illegal activities.
Other Restrictions
The mall developer/managers must ensure that the lease agreement complies with all
relevant laws including rent control ordinances, health and safety codes and occupancy
rules. Any other legal restrictions, such as limits on the type of business a tenant may
run, should also be spelt out in the lease agreement. Important rules and regulations
covering parking and use of common areas should be specifically mentioned in the
lease agreement.
Rent Changes in Leasing Agreement

Lease agreements are signed for durations ranging from one year to 20 years. During the
term of the lease contract, the lease rental does not remain the same. There are inbuilt
provisions in the lease agreement to enhance the rental. In many cases, the initial lease
contract also spells out conditions for rent determination on lease renewal. Normal trend
is that the lease rental increases by a specified percentage each year during the lease term,
whereas on lease renewal it undergoes either a percentage hike or revaluation based on a
benchmark. Some methods for determining the lease rental are described below:
Flat or Fixed Rental
Under this arrangement, the lease rental remains the same during the entire lease term.
The fixed rental is is normally charged in cases where the lease term is very small, say one
year, or when there is a huge demand-supply mismatch loaded in favour of the tenant.
Graduated Rental
This is the most commonly prevalent method. It mandates that within the currency of
the lease contract, the rental is liable to increase after a specified duration. The lease
rental is generally increased every year for lease contracts whose duration is more than
a year. For long-term contracts, say with anchor tenants, an upward revision could be
due after 3-5 years. The hike is generally in terms of a percentage of the base rent for the
preceding year.
Revaluation
Generally, revaluation of the lease rental is contemplated during lease renewal. People
tend to feel that rentals can only go up with time. However, the trend may reverse,
especially when the real estate is hugely overvalued and recessionary trends lead to
124 Mall Management
corrections in the market. In such situations, many tenants ask for a rental revaluation.
The benchmark for such a revaluation are prevailing rental rates in the market. Sometimes
the lessor also agrees for rental revaluation when new tenants are hard to find and the
current rental rates in the market are not very attractive, and they expect a steep increase
in rentals in future.
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Accommodating unique tenants requires different leasing terms-

EDM Haat on the lines of Delhi Haat at EDM, Kaushambi
Index-based Rental
When both the parties (lessor and lessee) agree for rent evaluation during the lease
renewal, there should be a benchmark that is objective and acceptable to both the
parties. The most objective method is benchmarking the rental against some index.
Some examples of index are: the Wholesale Price Index (WPI), the Consumer Price
Index (CPI) and the Share-market Index (sensex). However, the most relevant index for
shopping malls would be indices related to real estate, retail or construction sectors.
In the western world, shopping malls periodically compile and declare their footfalls,
and this footfall index becomes the basis for rent escalation. However, this trend is not
yet prevalent in India.
Percentage Rental
A very stable and suitable mode of rent revision in uncertain times is the percentage
rental. Under this arrangement, the lessor shares a certain percentage of the gross sale
revenues generated by the tenant. For this mode to succeed, it is mandatory that the
lessee agrees to share its sales data with the lessor. In most of the cases, the lessor also
pays a minimal amount as a fixed commitment towards maintenance.
Leasing Process
So far our discussion hovered around the concept of lease and the lease document. It
may give a false impression that the leasing activity comes into picture only when the
mall has been built and tenants are required to fill the empty mall. But the reality is
that leasing as a process starts right at the drawing-board stage of the proposed mall.
This you will understand by learning about the different stages of the leasing process
described below.
Determining the Tenant-mix of the Proposed Mall
Though not strictly a part of leasing, determining the tenant-mix is the foundation on
which all the leasing activities of future depend. The mall developer decides the tentative
tenant-mix considering the attributes of the mall catchment area and the specified zones
for placing different product/service categories in the upcoming mall.
Developing a Leasing Plan
It is an action plan to lease vacant space. In other words, the leasing plan outlines the
action that the mall management will take to lease the vacant space. This is an elaborate
document containing details of available retail spaces and tentative lease rentals that
may be collected from each retail space. Rather than specifying the exact rental amount
for a retail unit, it indicates a range of possible rentals. Estimation of the rental range
depends on various factors like the prevailing rental rates in the market, the expected
hike in rentals by the time the mall is operational, and the growth rate of specific industry
segments. The leasing plan gives a range of gross revenue that can be generated from
the project. This mode of estimation of a leasing plan is called 'bottom-up approach'.
Another approach for doing this is called 'top-down approach' in which the estimators
start from the total investment on the mall project. Then they arrive at the expected gross
revenue on the basis of the expected return on investment from the project. Finally, the
expected gross revenue is divided among the mall floors and retail units to arrive at the
rental per square feet for each retail unit.
Preparing a Portfolio of Retail Options
Technically, this task comes in the domain of sales and marketing. Flowever, commercial
leasing cannot be done effectively if this process is not carried out diligently. Depending
on the intended tenant-mix, a portfolio is prepared by including all valid options
available for each product/service category. This shortlisting is done on multiple criteria,
like positioning of the brand, its relevance for the target consumers and its availability
or otherwise in the catchment area. Once the portfolio is ready, the leasing team starts
approaching specific targets (prospective tenants) for leasing.
■
126 Mall Management
Approaching Prospective Tenants
During this stage, the leasing team members approach the prospective tenants and
motivate them to book retail space in the shopping mall. However, direct contact is just
one of the many modes available for contacting the prospective clients. Some popular
modes of approaching the prospective tenants are described below.
Tenant Contact Database
The tenant contact database contains the contact details of many retailers. The database
provides important information about the names/designations, addresses, phone
numbers and e-mail addresses of the relevant people in the target organizations.
Leasing Brochure
A brochure containing vital details of the project (mall) should be prepared. The
information provided in the brochure should reflect rosy business prospects to motivate
the prospective tenants. However, one should not compromise with facts and reality
while presenting such information. Even after the completion of the initial leasing phase,
the shopping mall management should seriously consider preparing another leasing
brochure when the mall may well be into business for some time (say, 18 months). It is
because vacancies may also crop up if some tenants do not renew the lease agreement
after the expiry of the initial lease agreement.
Cold Canvassing
This can be done either in person or by phone. For this purpose, the mall management
team may develop a script that should be read out. However tele-callers should be
suitably trained so that they may handle queries that come up after the script has been
read. A specimen of the script is:
"Good morning Sir, my name is XYZ. I work for so and so company. We are currently
looking for a category retailer for the ABC Shopping Mall. Would you have any interest
in this opportunity?"
If the potential tenant is interested, you should describe the mall and its premises
in simple and honest terms, detailing its size, floors, anchor-tenants, connectivity
and catchment area. If the potential tenant remains attentive to your description, it is
important to commit him/her to action. There is a particular method to ask questions to
ensure action. You may frame your questions in the following way;
(a) When would you be able to visit the mall to view the site?
Or better
(b) Can we make an appointment to visit the mall on Thursday?
But never say
(c) Give me a call if you want to view the site.

Direct Mail
A standard letter i prepared detailing the location and strengths of the mall together with
details of available vacancies. Forward this letter to the retailers who deal in businesses
for which stores are vacant in the mall. To find out the addresses of such retailers, the
Yellow Pages, the tenant contact database and the directory published by the retail trade
associations are good options.
"For Lease" Signage
In some cases a "For Lease" signage is erected on the shop front. In a mall where there are
a number of vacancies, the mall manager should choose the best locations for hanging this
signage. One should not go for too many signboards as it conveys a negative impression.
All signboards within the mall must conform to the standard signage format adopted by
the mall management.
Print Media Advertising
The mall management may decide in favour of giving an advertisement for vacant stores
in a newspaper. Adequate budget must be approved for it. While opting for newspaper
advertisement, the real challenge is to select the specific newspaper, supplement,
page number, day of the week, frequency (in case of a series of advertisements) and
the advertisement size. The advertisement may or may not contain the name and exact
details of the property.
Letter of Interest and Intent
These documents are prepared before the signing of the actual lease agreement. These
are normally used when the mall is in the development stage and the actual possession is
expected to take some time. Flowever. these are also used in cases of re-leasing when the
mall management is sure about the non-renewal of the lease agreement by some tenant(s)
and the actual day/date of lease expiry is a few weeks/months away. Once the prospective
tenant shows the intention to lease the property, the leasing team might present the draft
letter of intent to be signed by him/her. It is a formality to elicit some sort of commitment
from the prospective tenant and helps the mall management know the occupancy status
of mall from time to time. The letter of intent generally contains the salient features of
the mall and major terms and conditions of the deal. The signing of the letter of intent is
generally accompanied by some advance payment by the prospective tenant so that the
mall management could reserve the desired property for the said tenant and stop looking
for clients.
In some cases where it is too premature to sign a letter of intent (especially when the
project is in very early stages with no certain commitment of deadline for completion),
the leasing team may opt for getting the letter of interest signed before presenting the
letter of intent.
Signing the Formal Lease Agreement
The formal lease agreement is signed by the two parties at a stage when things are
quite in shape in terms of project completion and business commencement. The formal
128 Mall Management
agreement is an exhaustive document covering all aspects of business. Signing of the

agreement is generally kept closer to business commencement so as to have the most
relevant estimate/quotation for mall rentals. It is also a normal practice to treat the date/
time of the agreement signing as the base year for calculating rent escalations. However,
the tenant may press for an alternate base year (the year business commencement) and
may also seek a rent-free period.
Fit-out Letter
Once the mall construction is complete, the developer writes a fit-out letter to the tenant
offering temporary possession of the premises to enable the latter to get the fit-outs work
done. This letter is important for the tenant as many permissions and licences needed to
run the business require furnished and ready retail stores. The fit-out period specifies the
duration within which the task must be completed along with necessary dos and don'ts
for the tenant during this time.
Occupancy of the Store
Once all the formalities in terms of documentation, payments and licensing are over, the
developer hands over the retail store to the tenant so that he/she can start his/her business.
The rent starts accruing from this day only. However, as stated earlier, the tenant may ask
for a rent-free period.
Documentation Used for Interaction with Prospective Tenants

The letter containing lease details for the prospective tenant and the lease application
form are the documents that are used for interaction with prospective tenants.
Letter Containing Lease
This letter is to be used in any discussion held with regard to the premises up for leasing. It
contains suitable details to enable a prospective lessee to make a commercial decision with
regard to the premises. This letter should always have a floor plan attached in which the
said premises is highlighted. It can also have details of the mall, if required by the tenant.
Lease Application Form
The document requires the applicant to provide substantial details about his/her business.
It is a healthy practice to use this document as an 'agenda' for meetings with potential
tenants. This will ensure that the mall developer covers all areas in a methodical way.
Best Leasing Practices

The following are the best leasing practices:
Vacancy Report/Leasing Report
The leasing report is to be maintained and updated on a minimum monthly basis or as

instructed by the lessor. The mall manager should liaise with the leasing operatives to
ensure accuracy in communication.
Meetings with Tenants
Good business practice dictates that the mall manager should, whenever practicable,
personally discuss all leasing matters with the lessee (tenant). If possible, a second
member of the staff should be in attendance at this meeting and sign off on the file note.
Draft Lease to be Available to Applicant
One set of complete draft lease except for details of the lessee, term and rent must be
available at the mall manager's office before a shop is offered or advertised for lease. It
should be available for the prospective tenants to review on request.
Database Development
All enquiries relating to permanent lease, received at the office of a shopping mall, should
be passed on to the leasing department. This will facilitate in providing information to
the prospective tenant about any opportunities in other malls developed by the same
developer. Besides, details about the prospective tenant will also get added to the tenant
contact database for future reference.
Misrepresentation
As per the law, it is not acceptable to misrepresent information to the prospective tenants.
Therefore it is the responsibility of the mall manager to clearly state all facts in a true and
correct manner. It is his/her responsibility to ensure that the prospective tenants get a
clear understanding of their responsibilities before they commit to the lease agreement.
Bank Guarantee
This is a document provided by the tenant's bank to verify that the security money, if
stipulated by the lessor, has been put aside in the landlord's name, to be drawn by the
landlord if the tenant defaults on certain terms of the lease. The document must exactly
match the lease in stating the names of the tenant and the landlord. The bank guarantee
is valuable to the landlord who usually keeps it in a safe or bank. The only tenants who
are exempt from providing bank guarantees to their landlords are usually well-known
and respected businessmen or national chain operators.
Advance Rental Payments/Security Deposits
Security deposits are to be held by the mall's accounts department in a local bank into an
interest-bearing account. These should be deposited for a duration corresponding to the
tentative date of refund.
Measurement of the Premises Area
The correct area of a shop is important as it forms the basis of the lease rental and CAM
charges and in some instances the base rent. It is important that scale drawings for the
area already constructed are available so that the factual position may be verified. The
measurement of any area needs to be carried out by a qualified surveyor.
130 Mall Management
Fit-out of Premises
The fit-out of a premises is the single most important issue that affects the appearance of
the interior of a shopping mall. At the commencement of a fit-out, the mall manager must
ensure that adequate services are available for it. All tenant fit-outs are to be approved
by the mall management and the lessor's architect, if required. The mall manager must
make every effort to ensure that the tenants undertake to upgrade their premises on the
renewing of the lease.
Fit-out Prior to Lease Execution
Most shopping malls follow the policy that no lessee can commence fit-out or take
occupation of the premises until the lease is executed and returned or without the lessor's
approval. Fit-out plans should also be approved by the lessor prior to handing over the
premises to the lessee.
In certain circumstances and only on the lessor's written authority, the lessee may be
granted permission to commence fit-out prior to lease execution. But in this case also, the
lessee must complete the standard letter of indemnity before starting the fit-out work.
Under no circumstances should the lessee be allowed to take possession of the

premises without first consulting the lessor's solicitors as to the possible implications of
the lessee's proposal for occupancy.
Lease Preparation
Generally legal representatives or solicitors prepare lease agreements on the instructions

of the mall developer or the mall management team. This is done to ensure total adherence
to local and current lease legislation. Although this method of lease preparation is costly,
it can save the mall developer from incurring significant expenses due to damages
caused by an improper or wrong lease documentation. The mall manager provides all
the relevant details including special lease conditions to the solicitors. He/she is also
required to thoroughly check the lease documentation for accuracy prior to forwarding
it to the tenant for signature.
Leasing Administration
The leasing work does not end after signing of the lease agreement. Due care must be
taken to ensure that no clause of the agreement is violated. This task is generally delegated
to the mall management with occasional guidance and support from leasing specialists
as and when required. The signed lease agreement (master copy) is generally kept in the
head office in case of organizations having multiple malls. However, a copy of the same
is kept with the officer/manager in charge of the mall.
Record of Tenant and Lease Details
Before the retail tenant commences business, his/her tenancy must be accurately
recorded on the mall's database. Due care must be taken while collecting and recording
the following information about the tenant:
Leosing fldministrotion 131
Shop number
Shop area (in square feet)
• Shop name
• Retail category
• Lease term (including commencement and end dates)
• Base rent (in Rs.)
• CAM charges (in Rs.)
• Marketing fund contribution (if applicable)
• Base rent review dates and method of review
• Revenue share (in %)
• Lessee name and address
• Address, contact name and contact number for leasing matters
• Address, contact name and contact number for rent collection
• Address and contact name and phone number for sales figure collection
Rent Collection
Collection of rent as specified in the lease agreement is an important function of the

mall management. It is also a frustrating, time-consuming and difficult task for the mall
management. Usually rent is due from every retailer on the first day of every month.
Rent collection means receiving all monies payable under the lease (i.e. base rent, CAM,
promotion key, etc.). The mall management reviews all recurring charges and also
calculates any special charges to be levied. Normally, invoices are issued to all retailers in
last week of each month. Once retailers pay their rent, it is necessary to receive, record,
deposit and allocate it properly.
Rent Reviews
Lease terms of three to five years are commonly observed. Some leases, as in the case
of anchors, may have a longer term. The method for determining the rental increase is
agreed upon during the finalization of the lease agreement. This method may go by the
market review of rental rates or may opt for fixed rental increases or take into account
an increase in specific index, say consumer price index (CPI). In many instances, the rent
increase is based on two or more of these methods: The following example illustrates it
for a mall over a five-year time-horizon. The lease agreement provides for an index based
rent hike up to the third year and provides for a market review during fourth, which is
followed again by an index based rent hike for subsequent years.
Year Lease Rental
(i) Year 1 Rs. 45,000
(ii) Year 2 Year 1 + index-based increment
(iii) Year 3 Year 2 + index-based increment
(iv) Year 4 Market Review
(v) Year 5 Year 4 + index-based increment

132 Mall Management
All commercial leases other than those of a very short term contain some form of
rent review.
Maintenance and Repair Issues
The lease agreement clearly delineates the responsibility of the mall management for
certain categories of maintenance and repair activities that are to be carried out using
CAM charges. However, any act of maintenance or repair (especially the ones within
the tenants' stores) is beyond the CAM mandate and its expenditure must be borne by
the tenants. It is the responsibility of the mall management to get such work done in a
tenant's store and present the bill for the same to the tenant. Key issues in maintenance
and repair are: categorizing maintenance and repair work under free and payable heads,
promptness in heeding to the tenants request and issues relating to courtesy.
Subleasing and Lease Assignment
The only legal way to get out of a lease is to sublet (subleasing) or transfer (assignment)
your lease. Once the decision to either sublet or assign the lease has been made, the
landlord should be notified in writing. In certain cases, there may be restrictions on the
right to sublet or transfer the lease. Let us understand the difference between subleasing
and assignment.
Subleasing
Although the term sublease (sublet) is widely used, it only applies when the person who
signed the lease intends to vacate the unit for a short period of time and expects to return
to it after the said period. Under a sublease, the landlord is not obliged to agree to an
extension of the current lease with the sub-tenant. If the sub-tenant wishes for any reason
to file a claim, it must be done by the person who holds the lease and not the sub-tenant.
While the landlord should be notified as to who will be replacing the original lessee, and
for how long, it is the person who holds the lease who should work out the arrangement
with the sub-tenant. If the original lessee does not intend to assume the leased space
again in future, it is better to assign than to sublet. The reason is that in a sublet, the
holder of the lease continues to be responsible for any damages to the apartment and also
for the payment of rent for the duration of the sublease.
Assigning the Lease
If the person who signed the lease does not intend to run his/her business from the leased
premises then the lease must be assigned (transferred) to a new tenant. In assignment
of lease, the lessee hands over all his/her rights to the assignee. The lease assignment
(transfer) releases the original lessee as tenant from all the rights and responsibilities
from the date of assignment.
When a lease is assigned, the new tenant assumes all the legal rights and
responsibilities for the retail space and can take action against the landlord directly. In
most cases, the assignment is a superior option for the lessor as well as the lessee. It is
good for the lessee as he/she gains immunity from any liability arising out of the lease
agreement. The lessor gains in the sense that he/she deals directly with the person who
directly occupies and uses the retail premises.
Table 6.1 lists some titles related to subleasing and assignment of lease.
Table 6.1: Titles relating to subleasing and assignment of lease
Term Description
Sub-lessor The occupier who sublets the retail space to the sub-tenant.
Sub-tenant The person to whom the occupier sublets the retail space.
Assignor The occupier who is assigning his lease.
Assignee The person to whom the occupier assigns the lease.
Tenancy Schedule
It is the main reference document for the mall and contains all tenancy details. Most
landlords require the mall management team to audit the tenancy schedule against
individual leases on an annual basis to ensure that there are no discrepancies. Most
automated systems rely on the dates and details recorded in the schedule to prompt
events such as rent reviews. Therefore an error in the documentation due to wrong
recording or missing of a rent review can prove costly for the landlord. .
Lease Renewal and Re-leasing
Tenants sign lease agreements for occupying retail space in shopping malls for different
terms and at different times. Consequently, all the lease agreements do not originate
and end at the same time but are staggered over a long time period. Sometimes the mall
leasing and mall management teams purposefully keep the lease expiry staggered so as
to avoid sudden workload and the risk of sudden vacancy in the shopping mall. Ideally,
there should be a few lease renewals every year. The concerned section should prepare a
schedule of lease expiry and set trigger/reminder for lease renewal 3 to 6 months before
the actual expiry.
Renewal of lease to an existing tenant within a mall management is an easy decision.

Each renewal must be examined taking into account the actions outlined in the mall
business plan and the current situation. It is very important that no informal comment
is made prior to any formal lease renewal decision as it may give the existing lessee the
wrong impression of the impending lease expiry and subsequent renewal.
It is important to start following up the tenants 3 to 6 months before lease expiry

because of the possibility that some of them may not opt for renewal. In such a case, the
leasing team must identify suitable replacements for them in due time. A ready portfolio
of retail options in the market always comes handy to do so efficiently.
Monthly Holdover
If a lease is not to be renewed, the landlord and tenant may agree to maintain the lease
arrangement on a monthly holdover basis. This agreement is usually ended by either
134 Mall Management
party giving one month's notice in writing. This is the usual practice when the landlord
plans to redevelop the mall or part thereof and cannot provide security of tenure to the
tenants by way of fixed term lease.
Expiry and Termination of Lease
The contractual relationship between the lessor and the lessee as defined by the lease
agreement exists as long as the lease agreement survives. The lease agreement may
cease to exist in two cases: (i) The lease expiry in a natural way (ii) Termination of the
lease before the expiry of its term. The lease expiry takes place at the end of the term as
specified in the lease agreement if both the parties do not agree to extend it further on the
same or modified terms and conditions. Normally, a notice specifying that the lease will
not be renewed is given to the other party 3 to 6 months before the end of the term, either
by the landlord or the tenant. The lease agreement also outlines the conditions about
the state of the premises under which the tenancy will be handed back to the landlord.
So an inspection of the premises is arranged, and when the lessor is convinced that the
premises are in a satisfactory condition as per the lease agreement, the bank guarantee (if
asked under the lease agreement) is returned to the tenant.
In case of premature termination, the initiative may be taken by either party. The
procedure for termination is governed by the exit clause included in the lease agreement.
A notice to this effect is given to the other party in this case as well. When the tenant
places the request/notice for termination of lease, it is called lease surrender. Basic
considerations in lease termination are: reason for termination (contractual violation of a
serious nature), length of the notice period, compensation payable to the aggrieved party,
dispute redressal mechanism and issue of jurisdiction in case of a legal suit. It may be
noted that the tenant may have legal rights to renew a tenancy for the premises which are
occupied for business purposes, and which have not been excluded from protection. The
law generally prohibits contracting-out, but such an application may be permitted if the
lease is for a fixed term and a joint application is made to the court by both the landlord
and the tenant.
SUMMARY |
Mall lease is a contractual agreement through which the mall developer gives the right
to use his/her mall space (retail store) to the other person (tenant/retailer/brand) for a
limited period of time, subject to various conditions. It is a win-win situation for both the
mall developer and the tenant as both make money by leveraging on other's competence
while limiting their exposure to their area of expertise. A lease agreement defines the
relationship between the landlord and the tenant. It contains a number of clauses and sub-
clauses that safeguard the interests of both the parties. A good lease agreement ensures that
critical events like occupancy, possession, operations, rent determination and revision and
termination/assignment of lease are clearly delineated. Both the parties need to follow a due
process for signing a lease contract and must complete documental formalities in the form of
various pro forma and letters.

-
Leosing Rdministration 135
REVIEW QUESTIONS I
1. What are the different modes of occupying retail space in shopping malls?
2. Define leasing? What are the different types of leasing prevalent in India?
3. Distinguish between the 'right of ownership' and the 'right to use' in the light of a lease
agreement.
4. What are the prerequisites for signing a lease agreement?
5. Discuss major components of a lease agreement.
6. Describe the clauses in a lease agreement that aim at safeguarding the interests of mall
developers?
7. Discus some clauses of a lease agreement that tenants may insist upon to safeguard their
interests.
8. Explain the entire process of commercial leasing for shopping malls in India?
9. What are the different options available to a tenant if it doesn't want to continue doing
business from a shopping mall after having occupied a retail space on lease for a long
term?
10. "The task of leasing does not end after the lease agreement has been signed". Comment.
, >
: )
PRACTICE EXERCISES /
1. Visit a nearby shopping mall and find out the number of tenants (brands) in each product
category. Try to identify the product/service categories for which there could be an
exclusivity clause in lease agreements. Also confirm the same from either the tenants or
the mall authorities.
2. Contact any prominent mall development and management company and find out
the structure of its leasing department. Find out whether the structure centralized or
decentralized.
3. Select a shopping mall of your choice. Find out the total number of lease renewals effected
in the mall last year as a percentage of total leases that were due to expire. Would you like
to label your finding as 'successful' in terms of the lease renewal?
4. Select another mall of your choice. Examine the new brands that came in as a result of re-
leasing after initial lease agreement expired. Flow many of these non-renewals were at the
behest of; (i) Mall developers (ii) Tenants. Do your findings convey any meaning to you?
136 Mall Management
: )
SUGGESTED READINGS
1. Benjamin, J.D.; Boyle, G.W. and Sirmans, C.F. (1990), 'Retail leasing: the determinants of
shopping center rents', Real Estate Economics, 18, pp. 302-312
2. Dillman, RJ. (2007), The Lease Manual, IL: ABA Publishers
3. Gilbert, D. (2003), Retail Marketing Management, 2nd edition, New Delhi: Pearson
Education
4. Magazine, A. (2009), 'Leasing of space', In A. Taneja (Ed.), Malls in India, p. 22, New Delhi:
Images Multimedia Pvt. Ltd.
5. Real Estate Education Company (1989), Successful Leasing of Retail Property, NY: Grubbs
& Ellis Company
6. Roy, D. and Masih, N. (2007), Mall Management: A Growing Phenomenon in Indian Retail
Industry, New Delhi, India: report by Jones Land LaSelle Meghraj
7. Singh, H. and Banga A. (2010), 'Lessons from India's pioneer malls'. Shopping Centre News,
November-December, pp. 36-38
8. Singh, H.; Bose, S.K. and Sahay, V. (2010), 'Management of Indian shopping malls: impact
of the pattern of financing', Journal of Retail and Leisure Property, Vol. 9(1), pp. 55-64
9. r/?eF/noA7c/o/Express (2006),'Mall developers prefer lease management', 31 October, http://

www.fi nancialexpress.com/news/mall-developers-prefer-lease-management/182310/2,
accessed on 14 June 2009
10. Wheaton, W.C. (2000), 'Percentage rent in retail leasing: the alignment of landlord-tenant
interests'. Real Estate Economics, 28, pp. 185-204
□ □□
CASE
s ^Retailers down shuttersy- n
India's leading real estate and mall-development company, XYZ Retail Developers Ltd, faced an
awkward situation in April 2009 when retailers at two of its malls in Delhi went on indefinite
bandh, pulling down shutters. "The rental in these malls is exorbitant and business is nearly
zero which is totally because of the company's failure at marketing and promoting the mall,"
said a retailer who has a store each in both the malls.
The bandh resulted in all big brands shutting shop in protest. Their demand for the reduction
in rent comes after XYZ began giving incentives to new entrants, which include rent-free
spaces till November 2009, contracts signed on pure profit-sharing basis, no fit-out charges
for the new retailers to enter the mall.
The rentals, which were decided three to five years ago, were anywhere between Rs 200 to
400 per sq ft which lead to a rent of up to over Rs six lakh a month. But shop owners felt they
didn't need to be burdened if there is no business.
"The mall developer (XYZ) has been intimidating us for the past one year to open our
respective shops when the mall is not even functioning. They have been continuously giving
us opening dates of the mall since early 2008 but their failure to give the precise date of
opening has damaged our merchandise over the past year," said another retailer.
The president of the Malls Welfare Association of the area said, "We are being treated like
bonded labour just because we supported them, made initial investments and tied up for
several years."
The managing director of XYZ Retail Developers Ltd said, "These malls have been recently
opened after obtaining all clearances and house some of the top international and domestic
brands. We are committed to make them successful and will be shortly introducing the hugely
successful multiplex in both these malls."
Retailers shared that the malls opened with less than 40% occupancy. The completion
certificate for both the malls came months after the developer actually forced the retailers
to open the stores. And once the mall got the completion certificate, they tampered with the
structures and made additions to it.
Out of the two malls in question, ABC Mall is located next to Premier Cakewalk, a popular
mall in that locality and which does not seem to be undergoing any recession blues as crowds
are still flooding it every day. A multiplex was expected to open with the mall early last year
but was nowhere close to opening for at least another month.
"XYZ has been a sad experience for us," said a retailer, who revealed that the revenue from
his store in a mall in Ghaziabad is five times more than XYZ mall, simply because when people
don't know even about the opening of the mall how can one expect customers."
"Our experience indicates that a mall usually takes at least one year to pick up a high number
of footfalls. We are sure these two malls will emulate the success of our other malls. We would
expect our retail partners to move along with us in a collaborative manner," said MD of the
company. But the retailers were looking for options including taking legal action against the
^XYZ and suing them for claims from Rs 4 crore to Rs 200 crore for the investments made. ^
CHAPTER
Marketing and
Promotion Pctivities
for Shopping Malls
LEARNING OBJECTIVES
• Understand the concept and need for marketing and promotional activities for a shopping
mall
• Know about different marketing and promotional activities that are relevant to shopping
malls
• Relate the marketing and promotional activities with specific stages of a mall's life cycle and
development
• Appreciate specific characteristics of and conditions for carrying out these activities
PROMOTION BRINGS FOOTFALLS TO MAGNA
Magna Mall, built by a leading mall development company of India, was inaugurated on
April 1, 2009, in the city of Hyderabad. The half-a-million square feet mall was located
on the highway joining Hyderabad with Chennai but was four kilometres away from the
nearest residential cluster. The developer was sure to overcome this barrier as the mall
had excellent ambience and an enviable tenant-mix. All the leading brands in India were
present in the mall. However, footfalls never reached the expected level. Tenants blamed
it on the overconfident mall management team that believed the developer's name
and the tenant-mix alone would be sufficient to attract shoppers. Independent studies
carried out by some tenants revealed that a large proportion of the target segment was
not aware of the mall or the brands present in the mall. Results of the studies were
placed before the mall management team. Thereafter, the management team worked
out a series of promotional events to improve shoppers' awareness of the mall, and the
tenants also agreed to share a part of the additional expenditure.
Morketing and Promotion Activities for Shopping Molls 139
The management team prepared supplementary promotional calendar for the next
year. One major event was planned every month. The events included live performances
by various artists, appearances by film and TV stars and visits by sportspersons. These
events were widely publicized through FM, hoardings, and insertions in newspapers and
leaflets. Each week, a select group of shoppers was allowed to meet the visiting celebrity.
Between each major event, each weekend was packed with at least one promotional
contest for which freebies and gifts were sponsored by the tenants. These contests were
promoted through targeted leaflets, displays near schools and colleges and FM radio.
Thanks to the high-voltage promotional campaign, Magna Mall witnessed a sustain
inflow of shoppers every week. Once people visited the mall, the ambience and stores
were good enough to make them patronize it.
Introduction
Malls compete with other retail establishments and leisure activities to grab a share of
the customer's free time. Besides, continuing growth in mall development means that
consumers have several alternative malls to choose from for their leisure or shopping trip.
This competition has forced mall developers to provide more stimulating environments
and greater potential for leisure satisfaction. It is also observed that traditional leisure
activities are being emphasized to attract people to the mall.
Another challenge before mall developers is to attract tenants. Prominent high-

street locations can ensure huge footfalls for a mall, enticing retailers to make a beeline
for every square feet of retail space available there. However, very few shopping
malls can claim to have this privilege. Due to various reasons, retailers are not always
enthusiastic to occupy space in all shopping malls at all times. Market sentiments keep
fluctuating and mall developers need to convince prospective tenants that their offer
(mall space) gives value for their money. There are numerous instances of shopping
malls seeing gradual decrease in their occupancy level, malls opening with less than
optimum level of occupancy and, worse, mall projects being put on hold due to lack of
takers for mall space. Thus, mall developers need to present their case before prospective
tenants in an effective and credible manner. This is where marketing and promotions
come in the picture.
Classification of Marketing Activities in Shopping Malls
Shopping malls are engaged in a wide range of activities under the major head 'marketing'.
Some of these start as early as the drawing-board stage of the mall project. Some activities
commence when construction is going on and some relate to launch of the shopping
mall, whereas a host of activities become a regular feature of the mall when it becomes
and continues to be operational. However, a few of these activities cut across different
timelines and continue through all these stages.
There are three distinct sets of stakeholders who are relevant for mall marketing
and promotional activities—investors, tenants and customers. Different marketing
140 Mall Management
activities carried out during the life of a mall are aimed at different stakeholders. One
set of activities targets the investors who put money in the mall project, another set of
activities targets the prospective tenants to persuade them to occupy space, and yet
another bunch of activities aim at the shoppers to generate footfalls for the shopping
mall. Chronologically, marketing and promotional activities in a shopping mall are
categorized into the following two main phases:
(a) Marketing and promotion during planning and construction phase
(b) Marketing and promotion during launch and operations phase
Marketing and Promotion during Planning and Construction
Phase
Though all three stakeholders (investors, tenants and customers) could be targeted at this
stage, the focus is on investors and tenants. No project can see the light of day without
arranging adequate finances. Identifying, approaching and persuading investors to put
money in the mall project constitute the key activity at this stage. As identification of
prospective tenants and negotiations with them may also take some time, this activity also
starts at mall conception stage. Finally, it is not a bad idea to create curiosity, sensation or
awareness among target customers even before the mall is inaugurated. These marketing
and promotion activities, specific to each category of stakeholders, in the planning and
construction phase are discussed as under:
Targeting Investors
As discussed in Chapter 4 on Financing and Revenue Model of Malls, the money for mall
development comes from multiple sources —public or private, debt or equity (long-term
or short-term), a small number of large creditors or a large number of small sources.
Different tools used to tap these sources are discussed below.
Detailed Portfolio of the Mall Project
Preparing a detailed portfolio of the mall project is strictly not a marketing task. The detailed
portfolio is a complete set of documents that are generally demanded by prospective
lenders like commercial banks and financial institutions. Most high net-worth individuals
also insist on these documents as they get the offer vetted by experts/consultants. The
detailed portfolio consists of documents relating to dimensions, valuation and title of
the property, approved construction plan, project brochure (if ready), tentative business
plan, construction estimations, received approvals (if any) and audited financial reports
of the mall developing company.
Project Brochure
It is a concise, artistically designed document containing vital details and graphics of the
proposed mall. Information contained in the brochure is not highly technical, as it focuses
more on business potential and visual appeal of the mall project. Computer-generated
graphics are a vital part of the brochure. Project brochures invariably contain contact details
of persons concerned. They may also contain details of investment options either in the
body of the brochure or as a separate sheet accompanying it. Project brochures are either
given personally during a personal interaction or posted and followed up subsequently.
Project/Company Website
Today, the Internet is a widely used and effortless source of information. It must be put to
good use by mall developers. People generally identify a mall website with its customer
(shopper) interface. However, during the initial stage of mall development, there is
nothing to sell. Still it is essential to develop a website carrying relevant and positive
information about the project, as prospective investors are expected to cross-check/
verify the information after receiving the investment offer. If the proposed mall has a
website, the potential investor is likely to come across favourable information rather than
pieces of information posted by someone else. The website also comes handy in case of
casual investors who are looking for investment options on the Net. The website may be
designed to generate leads and develop a database for further follow-up.
r«RUM
rm
l - —. m •
Landing page of 'theforumexperience'
Mass Media
The mass media is a very effective means if mall developers aim at attracting public
finances through an IPO or mutual fund. Mass media advertisements (electronic and
print) evoke trust among potential investors. However, financial institutions are least
interested in the mass media portrayal of the proposed mall. Casual and retail investors
who invest through real estate brokers (discussed next) may develop faith in the mall
project through such advertisements.
142 Mall Management
Real Estate Brokers
Brokers play a vital role in mall financing, specifically speaking mall refinancing. Mall
developers start mall development work using personal funds or those generated from
private sources at a relatively high cost for a short duration (say, 3-5 years). To repay
this loan and replace with low-cost (practically no-cost) funds, developers look for retail
investors, and real estate brokers help in identifying such investors. These investors
are generally individuals who wish to park their surplus in a project that gives them
capital appreciation as well as assured income. The assured income comes in the form
of monthly rental coming from the stores. Monthly rental expected from a mall store
is converted into capital value to be charged for the store (capitalization). Key issues
involved in individual investments are return on investment (ROI), payment terms
(white versus black component) and payment schedule. Brokers have a network of
offices through which they initiate contact with prospective investors. Some brokers also
use print advertising and leaflets/brochure to contact the investors.
Role of Real Estate Brokers
Real estate brokers play a significant role in arranging finances for the mall. Their
intervention is specifically towards refinancing of the project. Instead of waiting for 15-20
years to recover investment and arranging fresh funds for each new project, developers
resort to capitalization that provides liquidity within two to three years. And, the funds
thus generated are invested in other projects. This way the same funds could be rotated
over a number of projects over a period of time. It is not possible without the active
support of real estate brokers.
Brokers are generally individuals or partnership entities. Most of them are

unregistered and operate as stand-alone shops. The more successful ones open multiple
offices or collaborate with like-minded brokers to form a sort of consortium. However,
there are very few big brokers operating as a professional entity. Most of the brokers deal
in both residential and commercial real estate. There is no central or state authority that
trains, certifies, regulates or controls the working of these brokers. Most of them are not
highly qualified though the bigger ones do employ qualified managers and executives.
Working of Brokers
Brokers operate from their offices in a locality. For awareness and promotion, they
use display media. Prominent publicity tools used by them include signboards, wall
paintings, banners, print advertisements (classified ads in the real estate supplements of
newspapers), leaflets (either distributed through newspaper or handed over door to door)
and advertisements in local cable TV. Their offices also contain display and informational
material like posters, brochures, layout maps and building plans. These are meant for
customers who visit their offices.
It is not uncommon for brokers to patronize or sponsor events and festivals organized
by the local community. They use these social, cultural or political platforms to develop
a rapport with the community. The deciding factor in this business is the element of trust
that they command. They also have associates who work with them on a part-time and
commission basis.
Arrangement with Mall Developer
The mall developer may appoint one or more brokers for selling the mall space to
investors. The appointment may be formalized (a written agreement) or informal. As
influence of brokers tends to be local and they are appointed in such a manner that all
potential geographies/localities are covered. Sometimes, the developer identifies one large
broker for each locality/area who, in turn, identifies sub-brokers for smaller geographic
divisions. Selling/brokerage rights for a mall are generally not given to a single broker.
It is particularly true in case of large projects where more than one broker is involved.
Under highly systematic arrangements, different parts of malls (different retail units)
are assigned to different brokers to avoid selling of the same unit to different customers
through different brokers. Each broker has the exclusive right to sell the assigned stores
for a specified time period. This right is called mandate. In lieu of mandate, brokers
may be required to deposit a specified security amount. Progress made by the broker is
reviewed from time to time, as the developer cannot run the risk of waiting till the end of
the mandate period because it may spell doom if the broker does not perform. Depending
on performance of the broker, the terms and ambit of the mandate may be modified.
Brokers are advised to sell the space to investors at a price specified by the developer.
Remuneration varies from case to case. In some cases where brokers are supposed to sell
the space at a fixed price, remuneration comes in the form of commission which is an
agreed upon percentage of the sale proceeds. In other cases, brokers are conveyed a floor
price at which they earn a fixed commission. Any increase in the space price beyond the
floor rate may be passed on fully or partly to the broker. A typical example is given in
Table 7.1.
Table 7.1 Broker-developer arrangement: an example
Model 1: Price/rate Broker commission
(a) Range: Rs 125-150/sq. ft
(i) @125: 2%
(ii) For incremental gain i.e. 3%

between 125 and 150
(iii) @>150: 4%
Model 2: Price/rate Broker commission
(a) Floor rate: Rs. 150/sq. Ft
(i) At the floor rate 2%
(ii) For incremental gain To be shared by the broker

beyond the floor rate and developer in an
agreed-upon proportion
144 Mall Management
Precautions while Appointing Brokers
Brokers are independent entrepreneurs with their own objective (profit maximization).
Since they carry the developer's mandate while negotiating the deal with customers
(investors), they represent the developer. During the deal, their behaviour is guided by
their objectives but they should not compromise the image of the mall developer while
doing so. To ensure this, the developer must take due care while appointing brokers.
Some major concerns and precautions in this regard are listed below:
1. Brokers should be having their own offices in the area where they intend to sell the
retail space. They should also have a network of close associates. Only then they
will be able to carry out the task.
2. They must be operating in the area for a considerable time and must have a decent
reputation. A thorough check of their history and credentials must be done.
3. It must be ensured that brokers share all the details of the project with the customer
fairly. They should not make any claim that the developer does not support or cannot
fulfil. When a false promise made by a broker is not honoured by the developer, it
may lead to customer dissatisfaction and litigation.
4. Brokers must be advised to report every finalized deal as early as possible so that
the developer is aware of the latest status. It becomes all the more important when
the same retail units are allocated to different brokers. In such cases, the same retail
unit may be sold by different brokers if the developer is not updated in time.
5. Brokers must abide by the price advice given by the mall developer. They should
not try to manipulate prices as different prices quoted for the same or similar retail
units in a mall can tarnish the image of the mall.
6. Brokers should have adequate and appropriate manpower to handle the work.
Targeting Retail Tenants
Attracting retail brands to a shopping mall might take considerable time, hence this
activity is initiated as soon as the architectural details are ready. While initiating efforts
to attract tenants, it is assumed that a detailed analysis of the catchment area has already
been done and vital information regarding the market potential and existing competition
is already available. Another prerequisite is the preparation of the tentative tenant-mix
plan in terms of product/service categories and proposed zoning scheme. The task of
attracting tenants overlaps with the work of the leasing team. The tools used in this task
are described below:
Portfolio of Retail Options
In the light of the proposed tenant-mix and available options under each product/service
category, the marketing/leasing team should prepare a list of all retail tenants that may
be considered for each category. From the exhaustive category-wise lists of potential
retailers, the following cases are excluded:
(i) The ones who are already present in the catchment area and doing good business.
(ii) The ones who would not like to come to this mall. Reasons could be rentals, image
or strategy.
(iii) The ones whom the mall would not like to accommodate. Reasons could be their
paying capacity, brand image and past experience with the brand.
Database of Target Tenants
Contact can be initiated with the selected potential retailers if the marketing/leasing team
has access to an updated database of retailers. Vital pieces of information required in the
database are the names, designations, addresses, phone numbers and e-mail addresses of
the persons who take leasing decisions in the target retail companies. Such information
may be collected through company websites, public offices (SEBI, ROC) and databases
sold by trade associations. While using data bought from trade associations, due care
must be taken to validate it.
Website of the Shopping Mall
The website of a shopping mall does not sell retail space, but it does supplement selling
efforts of the mall sales team. After the mall has made initial contact with a retail brand
through an e-mail, mailed brochure or a telephone call, it is common for the retailer to look
for more information about the proposed mall. The most convenient mode of doing so is
the Internet. The person concerned in the retail company can get much more detail from
the mall website as compared to what could be encapsulated in an e-mail, brochure or a
telephonic conversation. Attractive visuals, audio-visual effects, floor-plans, architectural
and engineering details, three-dimensional graphics and virtual tours provided in the
mall website can make a deep impact on the prospective tenant. A good website also
handles queries by the visitors and helps in developing a database.
Leasing Brochure
It is the document that contains vital marketing details in an appealing manner. It is

developed in soft as well as hard copy formats. The soft copy of the leasing brochure
is mailed immediately to a large number of targets, but its hard copy is despatched to
select targets after screening the database. Though the soft leasing brochure has the
advantages of cost and speedy delivery, providing its hard copy is also necessary as
many organizations have a tall hierarchy and the leasing proposal needs to be put up
before a number of people for approval. The hard copy is definitely more appealing
because the print-out of the soft brochure, if taken by the recipient, is likely to be black
and white. A leasing brochure contains contact details of the persons who should be
contacted for leasing the space.
PowerPoint Presentations
Once the sales/leasing team succeeds in securing an appointment with the person/
authority in charge of the leasing decision in the target retail company, the team must
prepare a detailed presentation containing all vital details about the space being offered on
lease. The presentation should be crisp and may include details regarding the catchment
146 Mall Management
area, target customers, business potential, break-even estimates, charges and rentals and
services offered. A good PowerPoint presentation should not try to answer everything but
also stimulate a few questions. Excessive details should be avoided as they could make
the presentation monotonous, leaving no scope for interaction/clarification during the
question-answer session after the presentation. Selection of presenters is very important. The
presenter must be have a clear idea of whatever is presented on the slides. The presentation
could be handled by a team of two or more persons. Of whom, the more communicative
ones give the presentation, whereas the most logical ones handle the Q & A session.
Mass Media Advertising
The decision to opt for retail space is a B2B decision and is highly rational. Such decisions
are seldom affected by mass media advertisements. However, a mass media advertisement
can make retailers aware of the retail space offer even before the marketing/leasing team
approaches them. In some cases, retailers might themselves initiate the deal if the mall
happens to be at a happening location.
Targeting Customers
It seems too premature to think of targeting customers during the planning and
construction phase, that is, before the mall is ready or operational. The customer can
get the real feel of a mall only when it is operational. However, the developer may try to
create a sensation or aspiration in the minds of customers about the proposed mall. The
marketing tools used to introduce the proposed mall to customers during this phase are
described below:
Mall Exteriors
The exteriors of a mall under construction are sufficient to evoke interest among customers.
If they see it developing day by day, they may develop a curiosity to visit it when it opens.
If the pace of construction is rapid and uninterrupted, it conveys the message that the
mall is a good project. It is advisable to display logos or names of the prospective tenants
at strategic locations of the under-construction mall as and when they sign the letter of
interest/intent. However, permission must be taken from them to do so.
Hoardings
There should be a large hoarding in front of the mall project so that people passing by
could see it regularly. The hoarding should contain the name of the mall, its developers
(especially, if they are prominent ones), the graphic of the completed mall and the logos
of prospective tenants (with their permission). In addition, the marketing team may
decide to have more such hoardings at major locations in the catchment area.
Leaflets
Distribution of leaflets is generally done at the time of mall inauguration. However, leaflets
may also be distributed when the shopping mall is at an advanced stage of construction.
The leaflet should contain information as specified for hoardings.
Advertisements
Print advertisements are rarely issued before the completion of the shopping mall.
However, a series of smartly scheduled advertisements can actually raise the consumer's
level of curiosity about the upcoming mall,, especially if it is a large project. Advertisements
could also be in a 'teaser' format. Such advertisements may generate the valuable word
of mouth about the mall.
Marketing and Promotion during Launch and Operations Phase
The marketing and promotional activities during this phase focus primarily on tenants
and customers. Under ideal circumstances, the initially planned tenants should be in
place and the focus must be on finding temporary tenants and for re-leasing (after the
expiry of initial lease contracts). Connecting to customers is the key issue during this
phase. Different activities planned in this phase vary in terms of time orientation. Some
activities have short-term, tactical goals (such as mall launch campaign and placing
suitable kiosks for seasonal/festive occasions), whereas others aim at achieving long-term
objectives (like customer relationship and customer loyalty). The launch and pperations
phase comprises two sub-phases:
1. Launch phase
2. Operations phase
Activities During the Launch Phase
It is important to make prospective customers aware about the launch date of the new
mall. It becomes more important in the following cases:
• When the new mall is away from the population cluster.
• It is at some distance from traffic arteries, and its construction work was not noticed
by many people.
• The view of the mall is obstructed significantly by other buildings.
• A number of buildings of different nature are coming up in the catchment area, so

the new construction does not evoke much interest.
• Competition is intense in the form of already operational shopping malls or

upcoming ones due for inauguration very soon. In such cases, the developer is
desperate to ensure initial footfalls so that the mall gets a fair chance to impress
upon the customers.
148 Mall Management
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An attempt is made to create a buzz or hype around the new mall and its launch to
ensure that people living in the catchment feel tempted to visit the mall during initial
days. Important tools used to make the mall launch splendid and attract people are
described below:
Inauguration ceremony/event
The mall may be inaugurated after a small havan/prayer/religious ceremony that is a

personal, non-glamorous affair. However, the developer may decide to invite a celebrity
for the occasion. Film stars, sportspersons (especially cricketers), TV actors and politicians
are generally preferred in the same order to cut the ribbon. Many people make it a
point to be there just to have a look at the celebrity. The fact that a celebrity is being
invited to inaugurate the mall must be widely publicized through display media and the
mass media. If the developer wants a prolonged presence of customers, a performer (a
prominent singer or dancer) may be invited. The entry should be free and this information
should also be widely publicized. It works really well provided the performer is selected
intelligently.
Even in case of a simple havan, the list of invitees may include 'who's who' of the
area/region. Once publicized, it may have a positive impact on the people's perception
about the mall.
Inaugural Decor
The mall should present its best foot forward in terms of decoration on the inauguration
day. It assumes significance, as a large number of people visit and gain the first impression
about the mall at the inaugural. The inaugural decor may include use of flowers, colours,
banners, props and lights (depending on the time of the day). Apart from aesthetics,
due care must be taken about issues like approach, congestion, parking, drinking water,
complimentary snacks/sweets (if planned), upkeep of wash rooms, condition of lifts/
escalators and collection/disposal of trash.
Hoardings/Display-boards
The marketing team must identify the locations where congregation and flow of people is
decent at certain or all points of time. The display media (hoardings and display boards)
must be installed at these places to convey the message of mall launch. Some of these
locations may be having pre-existing hoardings or frames. The marketing team needs to
identify the persons or the agency that holds rights for these places and negotiate the rates
for display. At other places, the team must negotiate with the property owners and take
approval from the municipal authorities by paying the required fee. Locations falling in
the latter category are complicated to handle because one first needs to install metallic
or wooden pillars and frames. Banners can be of good use in many situations, especially
across the roads. Another task is to manage the layout and contents of hoardings/banners,
but it is generally outsourced to a creative agency. However, specifications regarding
content and base material are to be conveyed to the agency.
Newspaper Advertisement/Leaflet Insertion
Shopping malls cater to a small geographic area, whereas newspapers generally target
a larger territory. Hence advertisements in the main body of newspapers will not be
cost-effective. But advertisements may be given in local supplements of newspapers that
target a smaller area. These advertisements are more effective and economical. A series of
advertisements starting a few weeks before the inauguration makes a good impact on the
potential visitors. Still a more economical option is leaflet insertions in newspapers. The
marketing team may get leaflets printed and approach the local newspaper distributor
to distribute leaflets along with daily newspapers. Whereas an advertisement is confined
to a single newspaper, leaflet insertions could be done in all the newspapers distributed
in the target area resulting in much higher penetration. However, due to their size and
nature, leaflet insertions may not be taken seriously by the readers. Many companies
develop large insertions equivalent in size to a newspaper page. Such insertions are
folded like a newspaper page and distributed along with it conveying the impression of
being a dedicated supplement.
Door-to-door Campaign
Not ready to take any chance, most developers arrange distribution of leaflets to each
and every home using a field force. Leaflets may simply be put in the letter-boxes of
residential units or a field force may hand them over personally along with a verbal
150 Mall Management
invitation or request. The verbal invitation makes more impact if the mall has invited
a celebrity or a performer. It is also necessary when either the mall or some tenants are
offering special promotional schemes to mark the inauguration. Sometimes these leaflets
are designed like invitation cards requesting people to come.
Roadshow/Announcements
The most penetrative method of announcing the mall launch is a road-show. It consists
of a group of people specially dressed up and stationed atop an open vehicle along with
promotional displays and props. The vehicle has a public address system and pre-recorded
messages. Sometimes there is an announcer on the vehicle making announcements. The
vehicle may be accompanied by more people on four-wheelers or two-wheelers. The
convoy passes through major traffic routes, conveying the message of the mall launch to
people. Some promotional material and goodies/souvenir items may also be distributed.
However, the organizers need to take prior approval from the local administration for
the roadshow.
Advertisements on FM Radio
FM radio channels serve as an excellent and cost-effective medium for reaching out
to people in urban areas. These have excellent reach and acceptability. The marketing
team must identify the FM channel(s) most admired by the target segment. Promotional
messages and jingles may then be broadcast on these channels.
Cable-TV Advertisements
In towns where the DTH penetration is not very high, cable TV is a good option for
announcing the shopping mall inauguration. Deal is negotiated with the cable operator and
promotional message/content is given to him. Advertisement could be in the form video,
still pictures with background announcement or a liner at the bottom of the screen.
Activities when the Mall is Operational
During the initial days, the shopping mall might attract footfalls due to its their
'novelty-value' but the real challenge is to sustain and enhance customer footfalls. It
becomes more important when competition crops up in the form of newer malls in the
vicinity. Dwindling footfalls may have a negative effect on lease renewals. The tenants
might shift to other malls having higher footfalls or push the rentals downwards
while re-negotiating the lease. Many developed countries have a system of declaring
footfalls every month and the lease rentals are fixed as per the movement of the 'foot-
fall index'.
Apart from attracting customers, the marketing and promotion activities also act
as a supplementary source of income for shopping malls. This income is particularly
valuable to the management team in those malls whose retail stores have been sold
to investors. As the lease rental goes to the investor-owners, the mall management
team is left with only the CAM charges. As time progresses, a higher proportion of
CAM charges gets exhausted in routine maintenance (unless otherwise provided for)
resulting in a lower level of motivation for the management team to run the mall.
However, the management team's exclusive claim over the income generated from
the utilization of common areas can re-kindle their interest in the mall. Different
marketing and promotional activities carried out during the operations phase of a
mall are described below:
Temporary Tenants
Temporary tenants include kiosks, stalls and carts accommodated inside a mall apart from
the existing shops. These tenants are temporary, as almost all of them have contracted
for durations less than a year (ranging from a few days to a couple of months except
for players like Baskin & Robbins). The retail space for temporary tenants is very small
(generally less than 100 square feet) and their shops are not a permanent construction.
These tenants generally pay very high rental when calculated on per square feet basis,
but the rental includes electricity, water and other municipal charges. They are located
in the common areas like atrium, corridors, near lifts/escalators and at parasite locations
near major stores (such as super-markets, multiplexes, food courts and entertainment
zones). It is wrong to treat temporary tenants only as a source of revenue, as they play
a very significant role in infusing life in the common areas (if not done in excess) and
bridging the gaps in the tenant-mix to fulfil customer requirements that are purely
seasonal in nature. For instance, people expect varied options for cool/chilled/frozen
items during peak summer, but their demand remains only for a few weeks. Kiosks are
also a very suitable mode to test the acceptability of a new product/service/brand. If
successful, the same product/service/brand may be accommodated as a regular tenant.
Kiosks also bring the window-shoppers and low-income segments into the shopping
domain by offering low-value items. Once a bond is developed, some of these customers
may upgrade to costlier items/formats.
Advertising Displays
These include hoardings, banners, posters, standees and drop-downs. Prominent

locations for their display are mall facade, mall entrance, atrium, base and side panels
of escalators, inside lifts, railings, walls near utilities and frontage of vacant stores. Rates
are negotiated on the basis of size of display, location, duration of display and timing
(whether it coincides with festive season or not). Many shopping malls make special
provisions for display frames on the profile and facade of the mall. Drop-downs are
huge, elongated strips of display that hang downwards from the ceiling in the atrium.
Special provisions like chains and pulleys must be incorporated during the designing
and construction stage of the mall if drop-downs are to be used as a regular feature.
Apart from generating revenues, these displays add to the aesthetics of the mall and
make it look like a happening place.
152 Mall Management
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Digital Display Screens
These are large LCD/plasma screens installed at prominent locations inside the mall. These
screens break monotony and provide positive distraction for shoppers who are waiting
for something. Important locations to install these screen are: in and around atrium, in
front of lifts, in front to seating space (benches) and any other place where people are
expected to stop and wait for some time. The marketing team generally gets in touch
with a specialized agency dealing in such media and negotiates a contract. The agency
would pay the fee (as per the agreed amount, schedule and terms/conditions), install its
display screens, approach prospective advertisers and broadcast their advertisements.
The fee for a digital display generally depends on the duration of the advertisement and
the timing of display (festive season or otherwise). It is very common for advertisers to
sign bulk deals if the agency holds display rights for multiple locations/malls.
Product Displays and Promotions
This opportunity can be encashed when companies wish to showcase, display or

demonstrate their new product to prospective customers. It is better than door-to-door
canvassing, especially when the demographics of the target segment overlap with that
of mall visitors. People are more open to stop, observe and try new things in a pleasant
environment as compared to a road-side location. The shopping mall provides good
places where new products can be displayed. Prominent locations for such displays are:
just at the entrance and in the middle of atrium. However, smaller products/displays
can be arranged elsewhere as well. The mall management negotiates fee on the basis
of location, size of display space, duration of display and its timing. The mall provides
infrastructural support for the display.
Promotional Events
Shopping malls organize various events to attract visitors. Such events form an integral
part of mall management. Activities like food festivals, handicraft exhibitions and celebrity
visits increase foot traffic and, in turn, sale volume. Organising cultural events has time
and again proved vital in attracting consumers to a mall. These activities also act as a
differentiator for a mall. At times it becomes necessary to organize promotional events to
thwart the challenge from existing or upcoming shopping malls. Some promotional events
are planned by the mall management team on its own as part of its promotional events
calendar. Such events are funded out of their regular funds (CAM charges or promotional
charges decided beforehand). The inability to carry out any of these events would be a
breach of contract. Individual tenants may tie up with the mall management/marketing
team to piggyback their offers and schemes onto the promotional events to take advantage
of them. Shopping malls also organize promotional events at the behest of one or more
tenants. Clearly, such events are funded by the tenants who request for them.
Ansal Plaza, the first mall in Delhi, is an example of a successful mall led by good
promotions and marketing mall management practices. Regular promotional activities
at Ansal Plaza including cultural events have ensured steady foot traffic in the mall since
its inception in 1999. The mall also has an amphitheatre dedicated to these promotional
activities. Organization of promotional activities has been a major factor behind the
success of Ansal Plaza that has a less optimal design and tenant-mix compared to new
malls in the NCR.
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Re-leasing
Though not strictly a marketing activity, re-leasing has a strong association with it.
Efforts put in re-leasing are inversely proprotional to the efforts put in for marketing and
154 Mall Management
promotion of the mall. If the mall carries out a series of promotional activities successfully,
it would be able to generate and sustain footfalls and that in turn would sustain the
interest of the existing tenants in the mall. Consequently, a larger proportion of tenants
would prefer to get their lease contracts renewed at the terms and conditions favourable
to the mall developer. If the tenants are to be replaced, the marketing team must identify
and target suitable replacements. Re-leasing includes the following steps:
(a) Identifying weak links
(b) Identifying gaps in concept
(c) Identifying bright prospects in the market
(d) Approaching and negotiating with prospects
Efficient re-leasing requires development of a portfolio of retail options. Developing

such a portfolio is a continuous process and can be suitably handled by the marketing
team.
Mall Promotion Calendar
This calendar is a tool that shows what marketing events, media campaigns and
merchandising efforts are happening when and where, and what are their results. The
mall management develops a marketing calendar as part of its mall marketing strategy to
keep track of what is going on and where the mall should turn its attention next.
It is good to announce events that coincide with some major festivity of the relevant
community. For instance, Indian malls organize special promotional schemes and events
near Deepawali, Holi, New Year, Republic day and Independence Day. Then there are
more options like Mother's Day, Father's Day, Friendship Day, and April fool's day etc.
However, if one can not think of a great tie-in promotion during these events, one should
consider declaring one's holiday or event. Do not let a marketing opportunity pass by.
Promotional calendar of a typical Indian mall would contain a multitude of promotional
activities as depicted in Figure 7.1.
PROMOTIONS
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MARKETING
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Malls opt for promotions with the hope that customers would be encouraged to
purchase something from the mall stores. Promotions depend on the kind of format
that one operates in. An in-store promotion for a Food Bazaar will be different from a
Pantaloon promotion and will differ for a Shoppers Stop or a Lifestyle. Various kinds of
promotions are described below.
Theme-based Promotions
These promotions are held on a theme, like adventure, environment, tradition, etc.
Appropriate decoration and fixtures in the common areas are done so as to create an
environment conveying the spirit of the theme. Though it is an initiative made by the
mall management team, its success requires collaboration by key tenants in the form
of additional promotional discounts/schemes. Such promotions are generally planned
during vacations or coincide with major festivities
Brand Promotions
Brand promotions are of two types—in-store and national.
In-store Brand Promotions
In this type of promotions, the store manager will concentrate only on the various in-
house brands, popularly known as private labels, for example Bare and John Miller.
National Brand Promotions
These promotions are run within the store but for the national brands like Reid and
Taylor and Allen Solly. In these promotions, the store manager will concentrate only on
the sale particular national brands.
Festivals
India is a land of festivals. The store promotions have to be based on festivals of different
states. Since visual merchandising has also to be changed as per individual state's
preferences, one cannot have a combined promotion for the entire country.
Event Marketing
Events like Miss World and fashion shows can be organized to promote the brand of the
outlet, for example Father's day was an event held by Oberoi Mall in association with
Central Mall.
Entertainment
Different entertainment-based promotions are done by the mall stores to make

customers feel that something is happening in the stores, for example. War of DJ's. Again
entertainment-based promotion will depend on the kind of store. If it is a store like Big
Bazaar, it may have different entertainment for its customers.
156 Mall Management
Strategic Tie-ups
Strategic tie-ups for promotion happen for a particular time period, depending on the
relationship of the particular mall with the promoter. For example, OSIM the massage
chair has a tie-up with Central Mall where it sells its chairs at a discount.
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From Marketing to Relationship
It is important for mall managers to plan and execute promotional events as these generate
footfalls. Yet the promotional events do not provide a competitive advantage as most of
the planned activities, once executed, are known to all (including competitors) and can be
copied. Many researchers argue that due to this reason marketing and promotion do not
provide competitive advantage. They say that the ideal scenario for a capital-intensive
project like shopping mall would be where shoppers not only prefer but patronize a
shopping mall. For that to happen, mall developers need to take the relationship with
customer to the next level.
As discussed in chapter two, the shopping mall is not only a place for shopping
but also a venue for social interaction and congregations. Therefore how fast the mall
can make itself an inseparable part of the community decides its success. To move in
this direction, malls must organize events and create platforms like walking clubs. Some
shopping malls in Delhi NCR have been regularly organizing aerobics and yoga sessions
in the morning. Similarly, Inorbit Mall in Mumbai has decided to permit morning walkers
and joggers inside the mall. Some shopping malls have also been providing kiosks for the
'Pulse Polio Day'. These decisions bring the mall closer to community without interfering
with its regular business. Mall managers are providing facilities to enhance traditional
recreation available inside the mall. Some malls provide day care centres to look after the
kids while their parents browse leisurely in shops that are not suitable for small children.
Food courts, movies, arcades, home improvement expos, art exhibits, auto shows and
live entertainment are all being developed and emphasized to increase the recreational
options available to customers during their mall visit.
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SUMMARY |
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In the fiercely competitive scenario, shopping mails compete not only with one another but
also with popular high-street locations. For ensuring decent footfalls and a healthy occupancy
rate, the mall management should involve prospective shoppers through marketing and
promotional activities. These activities may be chalked out during the planning phase,
launch phase or operations phase. Selection of marketing and promotional activities during
each of these phases would vary as the marketing objective also varies during each phase.
Different activities are also targeted towards different stakeholders like investors, tenants and
shoppers. Generally, malls prepare a calendar of events and more events can be added to it
in consultation with the tenants on a collaborative basis. Rather than just adding to footfalls,
the promotional activities should aim at developing a long-term relationship between the
mall and its shoppers.
158 Mall Management
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REVIEW QUESTIONS |
1. Comment on the pervasiveness of marketing activities in a shopping mall.
2. What are the different categories of marketing activities in a shopping mall? How do these
differ from each other?
3. How do mall developers identify and persuade prospective investors to invest in the mall
project?
4. Why is it important for mall developers to maintain liaison with real estate brokers? What
are the possible pitfalls of working with these brokers?
5. What does a prospective tenant look for in a new shopping mall? How does the mall
marketing/leasing team persuade retail tenants?
6. If shopping malls are managed with a focus on long-term sustenance and growth, why is
a short-term, one-time activity, like launch of the mall, given so much importance?
7. Looking beyond mall rentals, what are the other sources of revenue generation for
shopping malls?
8. What are temporary tenants in a mall? How they add value to a shopping mall?
9. 'Organizing events, contests and shows is a gainful distraction for a shopping mall/ Comment.
10. What are the different types of promotional activities undertaken by shopping malls?
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PRACTICE EXERCISES
1. Visit three to four shopping malls in your neighbourhood. Observe the various displays
outside as well as inside these malls. How many of these relate to existing tenants and
how many are for outside brands? Rank these malls in terms of displays by outside brands
as a proportion of total displays in malls.
2. Collect brochures of some upcoming malls. Find out the information components that
are common to all the brochures. What is the significance of each of these elements in
brochures?
3. Visit a shopping mall of your choice. Note down the temporary tenants present in that
mall. Which of these tenants are at an inappropriate location? Are there any locations that
could have accommodated more temporary tenants?
Marketing and Promotion Activities for Shopping Molls 159
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SUGGESTED READINGS
1. Ahluwalia, R.; Burnkrant, R.E. and Unnave, H.R. (2000), 'Consumer response to negative
publicity: the moderating role of commtment', Journal of Marketing Research, Vol. XXXVII,
May, pp. 203-214
2. Anderson, J.C. and Gerbing, D.W. (1988), 'Structural equation modeling in practice: a
review and recommended two-step approach', Psychological Bulletin, Vol. 103, No. 3, pp.
411-423
3. Arora, R. and Stoner, C. (1996), 'The effect of perceived service quality and name familiarity
on the service selection decision', Journal of Services Marketing, Vol. 10, No. 1, pp. 22-34
4. Bansal, H. and Voyer, P. (2000), 'Word-of-mouth processes within a services purchase

decision context', Journal of Service Research, Vol. 3, No. 2, pp. 166-177
5. Bone, P.P. (1995), 'Word-of-mouth effects on short-term and long-term product judgments',
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160 Mall Management
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□ □□
CASE
s ^Summer Carnival at Oberoi A/lall, Mumbai y x
To attract kids, Oberoi Mall came up with a host of promotional activities under the banner
'Toon World Summer Carnival' in May 2010. During the carnival, the mall offered games
based on popular cartoon characters. It created huge spacious houses, especially for cartoon
characters like Doraemon, Hello Kitty, Garfield and Archie to ensure that kids have a rollicking
time during summer holidays. Each house had a number of games set inside it. Nature of
games selected for each house depended on the characteristics of the cartoon character. For
example, lazy Garfield had a golf game inside the house, the Archie house had a dartboard
game and the Hello Kitty house had a ring throwing game.
Apart from attracting kids towards the mall, the carnival attempted at mixing fun with
education. According to Nirzar Jain, General Manager of the mall, the event tried to subtly
tell kids to be aware about the environment they live in. The character Doraemon along
with his friends Nobita, Suneo, Jian and Shizuka was spreading awareness about being eco-
friendly. They highlighted topics such as cycling to school, saving water, saving electricity and
controlling noise pollution.
The carnival also included useful and creative activities like personality development, origami,
art and craft to engage children in creative learning activities. Children learnt how to make
paper bags out of old newspapers and to have fun with basic mathematics. There were also
workshops on singing, salsa, book reading, yoga, and flameless cooking.
Thecarnival was very well received by thetargetgroup and well appreciated by the community
and industry. Even though Toon World was targeted at kids, it received an overwhelming
response from the young and old alike. This event won the 'Best Retail Marketing Campaign
of the Year Award' at the 7th edition of Reid & Taylor Awards for Retail Excellence held by the
Asia Retail Congress.
Commenting on the award, Nirzar Jain said, "At Oberoi Mall, we have always ensured that
we have a strong value proposition for our customers through our various marketing and
promotional campaigns. The award is a reassurance of our belief to offer our customers a
fulfilling shopping experience which entails on-ground activities along with the fine blend of
fun, food, fashion and films that the mall offers. "
Sources: 'Tune in to the Toon World Summer Carnival at a Mumbai mall', Ankit Ajmera, retrieved
from
http://www.dnaindia.com/lifestyle/report_tune-in-to-the-toon-world-summer-carnival-at-a-
mumbai-mall_1386223-all, accessed on 28 May 2010
'Oberoi Mall bags Best Retail Marketing Campaign of the Year Award', India Infoline New Service,
retrieved from http://www.indiainfoline.com/Markets/News/Oberoi-Mall-bags-Best-Retail-
^ Marketing-Campaign-of-the-Year-award/5078396554, accessed on 28 May 2010. ^
CHAPTER
Facilities Management
in Mall Operations
LEARNING OBJECTIVES

• Understand and appreciate the role of the facilities management in the overall management
of a shopping mall
• Get an idea of the various facilities provided in a shopping mall
• Understand specific do's and don'ts associated with each facility
• Help develop an integrated view while planning and maintaining facilities for a shopping
mall
POOR MAINTENANCE, FALLEN LIFT, AND BRUISED IMAGE
Gandharva Mall in Mumbai was in the limelight but for the wrong reason. All the TV
channels and newspapers were discussing the accident of a lift falling from the first floor to
the ground floor of the mall. Though the lift occupants miraculously escaped any serious
injury, the accident did injure the reputation of the mall. Gandharva Mall is situated in
the heart of Mumbai, attracting close to 20,000 footfalls on weekdays and 35,000 on
weekends. The lift accident created panic among the shoppers and footfalls registered
a sudden downhward shift. Complicating things further, one injured shopper filed a
complaint with the police against the Gandharva promoters. Some local politicians also
joined the issue, and an inquiry was ordered to pinpoint the causes of the lift accident.
The inquiry came out with startling revelations. The lift was carrying load higher than its
capacity. Ideally, the lift should not have moved when overloaded, but its load control
system was dysfunctional for three days prior to the accident. Though the company that
installed the lift was informed about the malfunctioning load control system, neither the
Facilities Management in Mall Operations 163
lift company nor the Gandharva management showed alacrity in rectifying the problem.
The inquiry further revealed that there was no liftman to regulate the entry of people
into the lift. Worst still, the mandatory lift inspection and certification was overdue.
The inquiry revelations provided enough ammunition to the media to target the
Gandharva management. The management realized late that they could have easily
avoided the negative publicity by being proactive on the maintenance front. As an
accident is easily etched in the minds of people, Gandharva is likely to suffer a great loss
in its reputation and goodwill among the visitors for a long time.
Introduction
Noise, crowd and chaos fail to deter shoppers from shopping in their favourite
marketplaces. Similarly, the ambience and facilities at a mall figure among key factors that
influence people who generally go for satisfying decisions instead of optimum decisions.
Because of these two factors, the facilities management plays a key role in the shaping
of a mall as well as the experience it provides for the people who visit it for shopping.
The facility management activity begins at the mall designing and development stage
itself. "We shape our buildings; thereafter, they shape us," said Winston Churchill in
1943. About 60 years on, today a topic of great interest for the property and facility
management industry is how much the building environment shapes the success or
failure of a mall venture. A well-planned and laid-out mall environment will include
aspects that bring ease in the facility management activity without making it intrusive to
the people visiting the malls.
The facilities management is a continuous process and also an integral part of

the mall management .The advent of technology has made the facilities management
even more important as state-of-the-art systems, used in managing a mall, need to be
maintained in a useful operational condition to ensure their optimum and profitable
utilization.
Security is key area of concern in the present world order and also a focus of the
facilities management in the malls. The malls are seen as soft targets of disruptive elements
and terrorists for deriving maximum impact from their nefarious acts. Therefore the malls
use equipment for surveillance, access control and physical security to prevent intrusion
and attacks. In case of any untoward incidents, provision for shoppers' evacuation and
reducing the impact are key aspects that must be considered during the formulation of
the mall building plan.
It is often argued that the definition of product varies from place to place, time to
time and segment to segment. Maybe a shopper visiting a shopping mall looks something
more than products and brands. This could be viewed in typical marketing parlance as
different levels of a product/service.
Core benefit: Shopping of goods and services under a single roof and also
enjoying the experience of shopping in the best of the facilities
and comfort
164 Mall Management
Basic product/service: An assortment of stores to carry out sales
Expected product: A certain level of comfort and support that is considered an

inseparable part of a shopping mall in contrast to a common
marketplace which caters to all tastes and flavours during
shopping
The above factors associated with the shopping in a mall make it necessary for the
mall manager to try to create an ecosystem in which the shoppers feel comfortable during
their trip to the mall. For this to happen, they need to provide an array of services and
facilities in the mall for the shoppers.
Facilities Offered in a Mall
Managing facilities in a mall is a challenging and thankless job. All the activities
related to the facilities maintenance need to be carried out without affecting the routine
activities. The facilities management in a shopping mall includes planning, operation
and maintenance of infrastructure required to extend suitable services and utilities to the
tenants as well as customers. The facilities management in a mall broadly deals with the
provision of services and facilities in the following areas (Figure 8.1):
• Utilities
• Health and Hygiene
• Security and Safety
• Parking
• Amtience
• Buliding Management Systems
Facilities
Management
'
Health Security Building
Utilities and and Parking Ambience Management
Hygiene Safety Systems
Figure 8.1 Facilities management in a mall
Utilities
Utilities consist of basic amenities like water, electricity and lighting, sewage and
communications. These essential and critical services need to be available at all times.
A well-planned mall building will have provision to ensure the required availability,
proper maintenance and upkeep of these essential services.
Water
The provision of water for general use in wash rooms, toilets and cleaning activities is
critical for maintaining clean and hygienic conditions in the mall. To ensure the required
availability of water, regular monitoring of water resources is called for. For this a
water management system is put in place, an important task of which is to indicate the
water levels in storage tanks. Usually, the malls depend on ground water sources and
supply from municipal /external agencies. Water is essentially required for the following
categories of services/facilities in a mall:
1. Washrooms
2. Kitchen/pantry services
3. Drinking water in water dispensers
4. Internal and external housekeeping activities
5. Fire hydrant systems
6. Chilling plants for FIVAC systems
For each service category, ideally, water should be supplied through separate
pipelines. Dry and wet areas need to be segregated in washrooms and pantry areas to
ensure maintenance of healthy and hygienic conditions. External bottled plants usually
cater to the requirement of drinking water and they need to be checked and replenished
at regular intervals.
A separate wet area for housekeeping activities along with storage for tools and
tackles, used in cleaning activities, is usually maintained in all malls. This helps in
segregating the cleaning activity and keeping it invisible to the shoppers.
The malls need to install fire hydrant systems as an essential firefighting measure.
The installation of a fire hydrant system is also mandatory for obtaining a fire safety
certificate for operation of a mall. A fire hydrant system typically consists of a set of
pumps and a pipe network running across the building, with outlets for connecting hose
reels. The pipe network of the fire hydrant system requires water maintained at a high
pressure, and the set of pumps facilitate automatic continuous supply of pressurized
water at all times. The hydrant system must be designed to carry water to all reaches of
the mall building to tackle fire. The storage capacity of the hydrant system is calculated
depending on the area to be covered by it in case of a fire outbreak. One or more filtration
plants are also installed in a mall for providing clean water for drinking and cooking (in
food courts and eating joints).. The water hydrant system and filtration plants need to be
maintained in optimum running conditions at all times. The main maintenance problems
are water leakages due to rusting of pipes and diverting water meant for fire hydrant
system to other uses like cleaning, in washrooms, etc., leaving inadequate supply or
pressure of water in the fire hydrant system.
Water conservation through rainwater harvesting is another mandatory requirement

for the malls and big buildings in many cities. A separate water tank needs to be
maintained for rainwater harvesting. The water tank roof has to be made waterproof,
and rainwater water outlets and drains are to be cleared on a regular basis to prevent
water stagnation that may lead to water leakage.
166 Mall Management
Drainage and sewage systems connected to the mall water facilities are to be kept
free from blockage and spillage. Otherwise, because of high usage of these critical systems
due to high footfall in a mall will lead to health and hygiene problems, reflecting poorly
on the mall reputation. A routine maintenance schedule and strainers at each floor will
help in isolating blockages and clearing of debris.
Electricity and Lighting
Malls are power-hungry infrastructures. They are highly dependent on uninterrupted

power availability round the clock for their smooth functioning. Their state-of-the-art
infrastructure is useless without uninterrupted power supply. Monitoring of electricity
consumption and load distribution is a key aspect to be considered while planning
the electrical distribution system for a mall. Monitoring electricity usage is a critical
area of the electricity facility management due to the large number of business outlets,
with each outlet requiring a separate metering unit. Apart from lighting for business
outlets, signages and neon boards are another major source of electricity consumption
in a mall.
A mall's power requirement is met by the power supply from electricity boards,
diesel generators and UPS systems. High-order maintenance of substations, busbars, LT
and HT panels, UPS systems and diesel generators is a critical activity of the electricity
management system. Trained technicians who can react quickly and appropriately
to sudden problems are required to restore power supply in case of any failure. .
Appropriate distribution of load for lighting and high-voltage equipment like drives,
pumps. Heating Ventilation and Air-Conditioning (HVAC) systems, elevators, lifts,
hydraulic lifts for cars in automatic parking lots with necessary protection is essential
for ensuring Minimal Mean Time Between Failures (MTBF) and Mean Time to Repair
(MTTR) of critical systems.
Most of accidental fires at mall buildings break out due to electric short circuiting.
Faulty circuit breakers and sub-standard electrical appliances and fittings are the main
cause of fire accidents. Since the wiring is concealed, the risk is high for such accidents. It is
essential to ensure that standard and authorized light fittings and equipments are used by
the mall management and business outlets. Therefore strict monitoring of power supply
related parameters and adherence to standards and good practices must be enforced to
prevent any accidents. Safety and protection features to prevent any short circuit and
protect equipment and fixtures from voltage surge can be incorporated at the design and
installation phase itself. Fire alarm systems form part of these protection features. On
sensing fire-like conditions, fire alarm systems get activated, tripping electrical mains
and stopping elevators/lifts automatically.
Diesel generators are used for backup, and considering the heavy load usually
two DG sets are installed operated alternatively to overcome redundancy. Routine
maintenance of the DG sets is required to ensure uninterrupted power supply at all times.
The sites for storing diesel and other inflammable materials are to be kept away from the
main building and proper fire safety measures followed to prevent any fire accident due
to these inflammable materials.
Emergency lights operated on UPS or batteries are usually fixed at entry/exit paths,
staircases and other locations to ensure lighting of these areas during emergencies or
sudden blackouts.
Health and Hygiene
A healthy environment and hygiene are maintained in the mall by keeping its premises
and surroundings clean. This is a continuous activity and due to the usage of the mall
utilities by a large number of people, it requires monitoring and attending on a regular
basis. The mall areas are usually divided into different parts for assigning cleanliness
tasks. An activity plan is prepared to carry out routine housekeeping activities in each
area according to a schedule. The implementation of the activity plan is monitored by a
check list and activity charts. The cleanliness tasks need to be carried out without causing
any problems to the mall visitors and occupants.
Housekeeping Services
The housekeeping function deals with the maintenance and cleaning different areas
and facilities within the mall. It is important to ensure cleanliness of common areas and
basic utilities. Unkempt common areas that spoil the aesthetics of the mall building may
repulse the mall occupants and visitors and also pose serious health hazards to them.
The housekeeping function is handled with an aim to ensure the health of the
mall occupants and visitors by creating hygienic conditions. To handle this function
efficiently, the mall's housekeeping section formulates operational guidelines to
provide high-quality services and develops systems and procedures to implement these
guidelines. The housekeeping section continuously evaluates the outcome of its actions
against the stakeholders' expectations and Key Performance Indicators (KPIs) to make
suitable improvements.
This housekeeping function includes maintenance and cleaning of areas like atrium,
corridors, lobbies, stairs, terrace, washrooms, landscaping in and around the building,
parking areas and areas relating to drainage and sanitation. It also includes mechanical
areas and equipment. Key issues involved in this cleaning exercise are frequency and
scheduling of cleaning/mopping operations, providing specific schedules for specific
areas, and mode of cleaning and materials to be used for cleaning of specific areas
and surfaces. Specific cleanliness actions involved in housekeeping include sweeping,
dusting, mopping and polishing; removing stains, smudges and streaks; removing
cobwebs; spraying disinfectants; checking and replacing consumables; pest control and
documentation relating to all these actions. It is the responsibility of the housekeeping
staff to observe and communicate damages and defects (such as breakages, fused bulbs,
damaged fire-sprinklers and smoke detectors) to the concerned section so that remedial
action is taken immediately. They are also supposed to report immediately to their
supervisor if find anything left by a visitor.
Guidelines for effective Housekeeping
(i) The whole mall may be divided into areas or zones. Portions/items included in a
168 Mall Management
single zone should be homogeneous to the extent possible so that its maintenance
and cleaning could be delegated to a single person/team.
(ii) It is important to note down the characteristics of each area in terms of size, footfall
density, daily and weekly footfall frequency and materials used in construction.
Frequency/in tensity of cleaning and agents used for cleaning depend on these
things.
(iii) Detailed guidelines should be prepared for housekeeping work in each zone. These
should include specific guidelines for specific areas and also list the tools and
equipment required for the housekeeping of that area.
(iv) For carrying out the housekeeping work systematically, it is important to create
a personnel hierarchy naming the supervisors and other housekeeping staff for
specific areas.
(v) The housekeeping staff should be briefed daily on issues demanding immediate
attention.
(vi) The housekeeping manager should inspect the work while taking round of the
premises and note down his/her observation in a register. Deviations, if any, should
be shared with housekeeping supervisors to elicit their response.
(vii) While preparing a checklist of cleaning tasks and schedules, it must be ensured that
the housekeeping staff finds it easy to read, comprehend and fill.
(viii) If the housekeeping staff observes any defect/damage, there should be a set
procedure for bringing it to the notice of the concerned departments. Instead of
verbal transmission of information about the damage, there should be a proforma
to be filled and sent to the respective department for appropriate action.
(ix) There should be a store containing all tools, equipment and materials related to
housekeeping. It should be under the control of a person/position. Any receipt or
issuance out of this store should be duly recorded in a register or proforma. The
stock position of different items in the store should be maintained following the
principles of inventory management.
(x) Conformance to guidelines should be strictly checked. It must be ensured that the
housekeeping staff follows the set procedure/sequence of actions while carrying
out his/her work. The tendency to adopt short-cuts might endanger the staff, other
people around or the premises. These risks should be drilled into the minds of the
housekeeping staff during their initial training and also reinforced from time to
time.
(xi) It must be ensured that all housekeeping staff members wear the prescribed uniform.
It must be checked whether the uniform is washed and pressed. The staff should
maintain a high level of personal hygiene while carrying out housekeeping work.
(xii) The housekeeping staff should be advised to be courteous if they get to interact
with the mall occupants and shoppers. In case of any problem with these
people, the staff should report the matter to the supervisor and not enter into an
argument them.
Security Services
A mall accommodates a large number of people at a given point of time, and this large
gathering might lead to safety and security issues. Threat to the security of people in the
mall might come from many sources. Some of these sources are listed below:
(i) Uncontrolled crowd (stampede)
(ii) Rowdy shoppers.
(iii) Criminal activities
(iv) Acts of terrorism
(v) Accidents inside the mall.
n i
•-
.V
a
Security people at the entrance of a mall
Uncontrolled Crowd
The large number of people entering the mall should be guided, properly directed and
controlled so as to avoid a stampede. During the mall designing itself, provisions are
made in the form of open spaces, huge atriums and divergent corridors so that the crowd
gets distributed immediately after entering the mall. However, despite these provisions,
certain situations see a huge, sudden influx of shoppers leading to crowd formation at
particular places. It happens during festive occasions and special events and on visits of
celebrities. Evening hours and weekends also attract higher footfalls. The areas prone to
problems in such situations are the points of convergence, corridors, lifts and stairs. It is
170 Mall Management
advisable to have multiple and separate entry and exit routes on the days of unexpectedly
large crowds. Reasonable restrictions can be also imposed on the visitor mobility by
demarcating rows or lanes (using queue managers or otherwise).
(i) The rate of visitor ingress can be reduced by permitting the visitor entry though a
row and by instructing the security staff to take more time in frisking the visitors.
While adopting these measures, it has to be ensured that the environment outside
the mall entrance is comfortable and engaging so that people can tolerate delay
in entry. It is advisable to depute trained volunteers inside the mall to keep an
eye on the customer flow. These volunteers should be connected with the security
supervisor through a walkie-talkie so that they may convey to him/her a sudden
change in the visitor flow and seek directions if required. The live interaction with
the volunteers helps the security supervisor get a complete picture of the customer
traffic inside the mall at any point of time.
Rowdy Shoppers
Every shopper entering the mall may not behave according to the acceptable norms of
behaviour at public places. There are situations when people refuse to cooperate while
undergoing mandatory frisking at the mall entrance. Mall rats are another group who
might indulge in socially unacceptable actions and behaviours inside the mall. Because
of the rowdy shoppers' impulsive behaviour, abrupt fights may erupt inside the mall.
Key to handling these situations is keeping a close watch on the visitors inside the mall. It
could be done by the security staff or by using technology such as close circuit TV cameras.
Sometimes, the very feeling that they are being observed keeps rowdy shoppers under
control. In cases of extreme misbehaviour, the security staff may intervene physically
and remove the involved parties from the scene as early as possible. They should neither
indulge in fight or arguments with the rowdy elements nor let them create a scene for a
long duration inside the mall.
Criminal Activities
Generally, serious shoppers in a mall belong to the affluent sections of society who
transact in and carry valuables. They unwittingly tempt persons with criminal intent
to enter the mall in the guise of shoppers and execute their evil designs. In such cases,
it is the responsibility of the mall management to ensure the security of materials and
life of shoppers. The management can take steps to debar persons with criminal intent
from entering the mall. However, it is difficult to single out criminals at the point of mall
entry, as a criminal intent cannot be observed by looking at one's face. Even if the security
personnel are convinced about the evil intention of a person, they cannot block the person's
entry because that would result in unnecessary loud protest by that person, drawing
other shoppers' attention. However, the security staff should be thoroughly trained to
take note of certain observable parameters. If they consider a person to be of doubtful
credentials or appearance, the person may be frisked thoroughly and consciously—even
to the extent of making him/her realize that he/she has been identified. It might put the
person on defensive.
The other measure to check criminal activities is to keep a strict vigil on the activities
of shoppers inside the mall. For this, the entire mall should be divided into zones of varying
traffic density. There could be certain areas that are more prone to criminal activities, like
basement parking, areas around washrooms, dead ends and clusters of closed stores at
higher levels. It is important to maintain a high level of vigil at such places. Technology can
be used to make vigilance more stringent at these places. The security personnel placed
at such places may be armed with small firearms or batons so as to face the criminals
effectively if needed. Another requirement is to connect these security personnel with
major points of ingress and egress with the help of walkie-talkie or cell phones. It will help
in ensuring that culprits do not escape after committing the crime.
Acts of Terrorism
Terrorism is a global phenomenon and all the countries in the world are prone to
becoming targets of terrorist violence. However, the situation in India is particularly
serious as the country in the past had seen numerous terrorist acts. The attacks carried
out in three top Mumbai hotels on November 26, 2009 reveal that terrorists want to inflict
maximum casualties and spread panic. Shopping malls are highly prone to suffer from
the death and destruction by terrorist violence, as in malls a large number of people
gather during limited hours of the day. Eliminating the risk of terrorist violence requires
much more elaborate arrangements in terms of manpower and technology. Apart from
basic frisking, tools like metal detectors, explosive detectors and electronic gates/tunnels
are used for routine security checks. However, the management may supplement these
tools with body scanners (which could pose a serious cultural challenge) and x-ray
machines for scanning bags and purses. On special occasions or in response to a specific
threat, the mall management may get in touch with local administration and police for
extra measures like sniffer dogs. While adopting these practices, it must be ensured that
preventive measures are applied covertly, as an over-enthusiastic approach to security
measures application might create a panic in the minds of shoppers and repulse them.
Still, a certain level of activism is required to send a message to terrorists that this mall is
not suitable for carrying out their evil designs.
Accidents Inside the Mall

Accidents do happen inside the mall even in the absence of miscreants, rowdies, criminals
and terrorists. Common among these accidents are parts of construction or fitments
falling off, slipping on the floor, toppling over the railings, getting stuck inside lifts and
accidents on escalators. These accidents occur partly due to the negligence of the mall
management team and partly due to the laxity on the part of shoppers. The negligence of
the mall management is reflected in the form of inappropriate design and materials used
in the mall construction, oversight of minor errors that escalate into major issues, lack of
supervision by trained personnel and the inability to display guidelines and instructions
for shoppers. It is natural for shoppers to show laxity while using the facilities inside a
mall, as they may not be adept at using similar facilities at home. Specific interventions
on the part of the mall management include a thorough check of the strength and
durability of vital components like railings, ensuring no gaps inside railings, prominently
172 Mall Management
displaying instructions to shoppers not to lean on the railings, deploying security staff
at higher levels to enforce these instructions and deploying a liftman inside each lift. If a
large proportion of shoppers come from a background or age-group that is not adept at
using modern facilities like escalators, it is necessary to deploy staff to help them out if
they need it.
Parking Services
First impression is the last impression. If this statement is valid for shopping malls then
parking holds the key to a mall's image, as it is the first point of interaction between the
shopper and the mall. Hence due attention should be given to the parking facility. In
an era of rapidly rising car ownerships and terrible traffic jams, a good parking facility
can vastly improve a mall's reputation. In fact, a good parking facility can even improve
the profile of shoppers visiting a mall, as people with refined tastes and good profile
might prefer driving a couple of kilometres more to reach a mall that offers hassle-free
parking. This way it also enhances the catchment area of the mall. Key issues involved in
managing the parking facility of a mall are described below:
Location and Type
The most common practice is to provide parking space in the basement of the mall building,
as it gets easily integrated with the mall. However, shopping malls keep provision of
surface parking as well. In some special cases, shopping malls even have parking at
higher levels. For example. Spencer Plaza, Chennai has parking space on the fourth floor,
whereas Crossroads, Mumbai (now SOBO Central) has roof-top parking. Underground
parking could be single, double or triple basement, depending on requirement.
Size
It refers to the capacity of the parking space in terms of the number of vehicles that can
be accommodated at a time. It is a function of the size of the store, size and attributes
of the catchment population and expected footfalls. The parking space capacity also
depends on whether there is any on-street or public parking space available close to the
mall. The availability of ample open space around the mall building that can be used
as surface parking also reduces the parking requirement. The nature of mall tenants,
especially anchor tenants, also affects the parking requirement. For example, anchors like
multiplexes hold shoppers for a longer time. Consequently, the parking space is blocked
for a longer duration necessitating provision of higher capacity in basement parking.
If most of the tenants are high-end, a higher proportion of shoppers is likely to arrive
in cars, which is a fit case for having more parking space. The regulatory requirement
of having the parking space in a certain proportion to the retail space also affects the
parking size.
Parking Control
It refers to the systems and procedures used in shopping malls to control, manage and
regulate the movement and parking of vehicles inside the shopping mall. It includes
identifying a path for vehicles from the entry point of the mall campus to the parking
entry point. It must be ensured that this path does not interfere with the pedestrian traffic
entering the mall. Barriers and speed-breakers may be erected along the way to make
vehicles enter the mall at an appropriate speed. The parking facility may use mechanical
and/or electronic devices to regulate the movement of vehicles and record their entry. For
collecting parking charges, any of the following three arrangements could be opted for:
(a) Free entry and pay on exit
(b) Free entry and pay before exit
(c) Pay on entry and free exit
The first two arrangements ensure seamless entry of vehicles, preventing vehicle
queues in front of the parking entry. The third option minimizes the risk associated with
payment collection.
A good parking management system comprises a reporting structure, defined

roles and responsibilities and guidelines for meeting eventualities, like a vehicle getting
damaged inside the parking area or a shopper losing the parking ticket.
Parking Standards
Parking services offered by shopping malls are judged on the basis of the following
parameters;
(a) Way finding: It should be easy for a driver to reach the parking entry, locate the
parking lot and remember it when he/she returns. To facilitate easy way finding,
underground parking lots should have decent illumination, signages of adequate
size (preferably glow signs) at appropriate locations, graphics for easy understanding
by all types of shoppers, digital display screens informing parking space status and
personal assistance whenever required.
(b) Safety: The parking space should be designed and managed in such a manner
that there is no conflict between vehicular and pedestrian traffic. This is necessary
for movement inside as well as outside the parking lot. Generally barricades and
walkways are used to put in place such an arrangement. The gradient of the slope
and the length of ramps should also facilitate safe entry, exit and manoeuvring of
vehicles.
(c) Security: The parking lot should be safe for people who use it. To ensure this, the
parking lot should be properly illuminated. It is better to have the parking design as
simple and open as possible. Protrusions and edges should be avoided. Surveillance,
both manual and technology-based, should be beefed up.
(d) Comfort: The parking lot should offer comfort to the users in terms of its location,
capacity, connectivity and control options. The shoppers should not waste much
time in locating or reaching the parking space. They should not be compelled to
wait for long during entry or exit, as all this adds to their discomfort. Angularities
of parking bays, the number and location of columns and pillars inside the parking
lot and adequate reservoir space are other requirements for making the shoppers
174 Mall Management
feel easy. (Reservoir space is the space, 20-30 feet, just at the entrance of the parking
where vehicles can queue up.)
(e) Space utilization: Being a commercial project, every square inch of the mall space
should be put to productive use. The same holds true for the parking space. Different
categories of people use the parking space. Among them are shoppers, tenants,
employees (of the mall management as well as tenants) and suppliers of tenants.
Each group has its distinct parking requirements in terms of location, duration and
services. The parking space should be sensibly allocated among different users so
that each group is able to derive maximum benefit from it.
Services in the Parking Area
Parking lots are meant to park vehicles but to make it happen conveniently, a number
of services should be added to the core facility of parking. Some of these services are as
follows:
(a) Occupancy status and circulation pattern: Automated system for car parking and
multi-tier parking systems with hydraulic jacks are used in modern parking systems.
These systems are also integrated with digital occupancy status indicators. It is better
if the level-wise occupancy status is displayed on digital screens at the parking
entry. As there will be multiple exit/entry points, it is necessary to have signages
and floor-wise circulation pattern and parking plans with proper identification for
the customers to lead them to the correct parking slot.
(b) Entry into the mall: In a mall where anchors like supermarkets occupy part of
the basement space, there is direct entry from the parking lot to the supermarket.
This helps the shoppers take the trolleys carrying the purchased stuff directly to
their cars. However, due care must be taken to ensure that there is no collision
between the trolleys and the incoming/outgoing cars. Almost all malls connect
the basement parking with the mall's operational area through lifts. However, the
location, number, carrying capacity and speed of these lifts should be carefully
planned. Escape routes and floor plan are to be displayed to enable people to exit
the basement in case of emergency.
(c) Ventilation: Ventilation can become a serious issue for underground parking lots in
most parts of India during certain period of the year and people may start feeling
suffocated. There is a limit to which air circulation could happen naturally. Therefore
it becomes mandatory to use artificial means to ventilate the stale basement air.
(d) Water-proofing and drainage: The waterproofing of the roofs and walls of the
basement parking lot is necessary to prevent them from becoming damp. Provision
for a good drainage system along with pumping facility should also be there in the
basement parking.
(e) Dustbins: Many a time shoppers consume eatables on the way to the parking and throw
the food packaging in a dark comer of the parking resulting in garbage accumulation
there. It is advisable to place a few dustbins at key locations in the parking to facilitate
proper collection and disposal of garbage accumulating in the parking.
Building Management System
A modern Building Management System (BMS) is a complete information delivery

system that monitors and controls a variety of systems and functions at an optimal level
of efficiency.
The systems design of the BMS consists of the following components.
Fire Management Services
Though civic and fire service regulators have imposed lots of conditions and safety norms
on multi-story buildings like shopping malls to make them fire-safe, still the possibility
of fire accidents cannot be ruled out completely. Some materials (such as wood, plastics,
textiles, chemicals and paints) used in mall construction may act as catalysts to turn small
sparks into a conflagration. A mall accommodates a large number of people and electric/
mechanical gadgets. Any of these could provide a spark required to start a small fire
that may be abetted by the atmospheric oxygen to develop into an inferno. The fire can
cause serious damage to the mall and its occupants and customers. Thus it becomes
important for shopping malls to have a comprehensive fire management system. A good
fire management system should have at least the following components:
(a) Fire detection system: This system comprises of tools and technology for timely
detection and reporting (fire alarm) of a fire outbreak inside the shopping mall. A
typical fire detection system would include any of these detectors—photo-electric
type, ionization type or heat detection type. It would catch specific signals (smoke
or sudden rise in heat) from the mall environment and raise an alarm. In some
cases, the fire detection system is coupled with an automatic firefighting system,
say sprinklers.
(b) Firefighting system: Fire extinguishers constitute the most elementary type of
firefighting system. Fire extinguishers could be based on water, carbon-dioxide,
powder, foam, vapourising liquid or wet chemicals. According to fire safety
norms, it is mandatory to provide fire extinguishers at strategic locations in a mall.
However, most of the malls rely on the sophisticated sprinkling system to fight fires.
A sprinkling system comprises a network of overhead pipes attached to a source of
water supply (a water pumping system) and a number of sprinkling nodes spread
all over the area to be protected from fire. This system is generally tagged on to a fire
detection system and gets activated as soon the alarm rings. Fire hoses at different
locations within the mall are another option for localised control of fire. These hoses
are attached to valves that carry water at high pressure.
(c) Planning and training system: The above two components of the fire management
in a mall need to be planned in advance. This planning starts with an assessment
of the sources of fire inside the mall. A structure for the fire management system
outlining reporting relationships is created within the mall management. It creates
management positions and defines responsibilities associated with each position.
Then a decision is taken on the appropriate mix of tool and techniques needed
176 Mall Management
for fire detection and fighting. Protocols related to procurement, maintenance

and upkeep of equipment are also developed. The concerned staff members are
trained to use the firefighting equipment and deal with sudden outbreaks of fire.
Guidelines are also framed to manage the crowd of visitors and occupants in the
mall during a fire crisis. Conducting regular mock firefighting drills is also an
integral part of fire planning.
Escalators and Elevators (Lifts)
Escalators and elevators form a critical component of the BMS. Generally, separate elevators
for passenger and goods are available. Escalators and elevators have to be in perfect
running condition round the clock to enable the customers and occupants reach any part
of a huge modern mall with ease. Their proper maintenance is utmost necessary to save
the users from becoming victims of accidents caused by faulty escalators and elevators.
The security and housekeeping staff is to be trained in the emergency procedures for
evacuation of passengers in case of failure of elevators/escalators. Emergency procedures
should also be displayed prominently in elevators. The mechanism to stop the elevator
movement when it is overloaded must remain functional always to prevent accidents or
elevator malfunctioning. Elevators must have proper ventilation systems.
Escalators at Select City Walk, Saket
Monitoring Systems
CCTV and access control systems are used for monitoring people inside the mall for
proper crowd management and also as a security measure. These systems are usually
placed at the exit/entry points for monitoring the movement of people and vehicles by
senior security staff stationed the central control room of the mall. These systems help
in controlling the crowd, monitoring unwanted activities and getting alerts on rogue
elements inside the mall. Public address systems are installed for sounding alerts, and
alert messages may also be displayed on digital boards. Automatic door opening systems
are installed to minimize dust accumulation and ensure the effectiveness of climate
control equipments in maintaining ambient temperatures inside the mall.
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Signages, Ansal Plaza, Delhi
Ambience
The mall ambience and outlook is a major attraction for customers, resulting in increased
footfalls. The malls decorated according to the themes of occasions like festivals or
special sales act as a great pull for the customers, especially in the catchment area.
Proper use of signages and boards and increasing the visibility of advertisement
hoardings are necessary to impart a decent attractive look to the mall. However, it has
to be ensured that signages and hoardings do not obstruct easy movement of people.
Besides, these should be fixed at the places that can bear their load. Otherwise, their
fall may lead to accidents. For creation of natural ambience inside the mall, plants and
vegetation may be used. However, to grow plants, proper ventilation and water should
be available inside the mall. Outside the mall, fountains and garden give it a natural,
eye-pleasing ambience.
178 Mall Management
C ^
SUMMARY
Facilities play a definite role in defining the shopping experience offered by a shopping mall.
These assume significance for mall revenue generation, as shoppers consider experience as
a vital component or deliverable of a shopping trip. It is important to plan and visualize
all the facilities during the mall designing stage itself. The facilities management in a mall
broadly deals with the provision of services and facilities in the following areas: utilities,
housekeeping, security services, parking services and creation of ambience. A comprehensive
Building Management System (BMS) ensures a coordinated effort for providing these services
and facilities. The level of support offered in terms of facilities by a mall depends on customer
expectations, stringency of law and affordability of the mall management.
: >
REVIEW QUESTIONS j
1. 'In India, the mall management is considered synonymous with the facilities management.'
Comment.
2. What are the vital components of the facilities management function for a shopping mall?
3. Do people visit shopping malls to consume products/services or to consume the experience?
4. Which are the different utilities that a shopping mall should offer to its customers? How
do good shopping malls plan and manage their utilities?
5. What is meant by 'housekeeping' in context of a shopping mall? What are the health and
hygiene concerns of shopping malls?
6. What are the different security threats inside shopping malls? How do mall managers
attempt to minimize these threats?
7. If one believes in the adage 'first impression is the last impression', one must manage
parking facilities inside the mall with due care. Comment.
8. Suggest a few guidelines to be followed while managing the housekeeping function inside
a mall.
9. What is the Building Management System (BMS)? Discuss the vital components of a
shopping mall BMS?
10. How does efficient facilities management make a shopping mall superior?
s
PRACTICE EXERCISES
1. Survey a few shopping malls in your locality and note down the utilities offered by them
to the customers. Which of these malls offers the widest variety of utilities? Which of the
facilities are common to all the malls and which ones are most uncommon?
2. Examine the deployment of security personnel in a few nearby shopping malls? Are there
any areas where you feel that these malls could have deployed security personnel?
3. Visit a few shopping malls and make observations about deficiencies in their facilities
management. Identify the areas with maximum deficiencies.

: )
SUGGESTED READINGS [
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York, NY
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centre', The Quarterly Review of Marketing, Vol. 10, No. 3, pp. 19-26
3. Alexander, A.A. and Muhlebach, R.F. (1992), Shopping Center Management, Institute of
Real Estate Management, Chicago, IL
4. Barren, K. (1998), 'Be a careful shopper', Forbes, Vol. 16, No. 6, pp. 60-62
5. Bartels, R. (1968), 'The general theory of marketing', Journal of Marketing, Vol. 32, pp.
29-33
6. Bass, F.M.; Tigert, D.J. and Lonsdale, R.T. (1968), 'Market segmentation: group versus
individual behavior', Journal of Marketing Research, Vol. 5, August, pp. 264-270
7. Berry, L.L. (1995), 'Stores with a future', Retailing Issues Letter, Vol. 7, No. 2, pp. 1-4
8. Brown, S. (1992), 'Tenant mix, tenant placement and shopper behavior in a planned
shopping centre', The Service Industries Journal, Vol. 12, July, pp. 384-403
9. Calantone, HJ. and Sawyer, A.G. (1978), 'The stability of benefit segments', Journal of
Marketing Research, Vol. 15, August, pp. 395-404
10. Carn, N.G.; Rabianski, J.S. and Vernon, J.D. (1995), 'Structural trends impacting retail
business'. Economic Development Review, Vol. 13, No. 2, pp. 10-12
11. Cox, Jr. W.E. and Cooke, E.F. (1970), 'Other dimensions involved in shopping center
preference', Journal of Marketing, Vol. 34, October, pp. 12-17
12. Day, G.S. and Wensley, R. (1983), 'Marketing theory with a strategic orientation', Journal
of Marketing, Vol. 47, Fall, pp. 79-89
13. Dillman, D.A. (1978), Mail and Telephone Surveys: The Total Design Method, John Wiley &
Sons, New York, NY
14. Edelman, D.C. and Silverstein, M. (1993), 'Up close and personal', Journal of Business
Strategy, Vol. 14, No. 4, pp. 23-31
15. Fickes, M. (1998), 'Expanding the limits of the regional mall', Shopping Center World, Vol.
27, No. 2, pp. 62-67
16. Green, P.E. (1977), 'A new approach to market segmentation', Business Horizons, Vol. 20,
February, pp. 61-73
17. Haley, R.I. (1968), 'Benefit segmentation: a decision-oriented research tool', Journal of
Marketing, Vol. 32, July, pp. 30-35
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Sons, Inc., New York, NY
19. Hunt, S.D. (1992), 'Marketing is ...', Journal of the Academy of Marketing Science, Vol. 20,
No. 4, pp. 301-311
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Journal of Retailing, Vol. 56, No. 3, pp. 21-40
180 Mall Management
21. Jain, S.C. (1993), Market Planning and Strategy, 4th ed., South-Western Publishing Co.,
Cincinnati, OH
22. Kohli, A.K. and Jaworski, BJ. (1990), 'Market orientation: the construct, research
propositions, and managerial implications', Journo/ of Marketing, Vol. 54, pp. 1-18
23. Kotler, P. (1972), 'A generic concept of marketing', Journal of Marketing, Vol. 36, pp. 46-
54
24. Martin, M. (1985), The /CSC Guide to Operating Shopping Centers the Smart Way: Ideas
From Industry Experts, International Council of Shopping Centers, New York, NY
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profitability', Journal of Marketing, Vol. 54, pp. 20-35
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for urban retail centers: an extension of the Poisson gravity model', Journal of Urban
Economics, Vol. 24, pp. 241-259
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developing segment-specific direct marketing strategies', Journal of Direct Marketing, Vol.
6, No. 3, pp. 44-53
28. Roy, A. (1994), 'Correlates of mall visit frequency', Journal of Retailing, Vol. 70, No. 2, pp.
139-161
29. Schiffman, E.G. and Kanuk, L.L. (2000), Consumer Behavior, 7th ed., Prentice Hall, Upper
Saddle River, NJ
30. Sheth, J.N.; Gardner, F. and Garrell (1988), Marketing Theory: Evolution and Evaluation,
John Wiley 8t Sons, New York, NY
31. Tash, C.B. (1993), 'Price tag is complex for recovery of malls as institutional investments',
Pension World, Vol. 29, No. 3, pp. 14, 16
32. Telsey, D.L. (1996), 'Specialty retailing poised for reinvention', /CSC Research Quarterly,
Vol. 3, Spring, pp. 17-19
33. Yankelovich, D. (1964), 'New criteria for market segmentation', Flarvard Business Review,
March-April, pp. 405-412
34. Zinn, L; Power, C; Siler, J.F.; DeGeorge, G. and Zellner, W. (1990), 'Retailing: who will
survive', Business Week, November 26, pp. 134-144
□ □□
CASE
s- -^Accidental deaths in shopping malls^ ^
Shopping malls are supposed to be the places for fun and frolic. However, some unfortunate
incidents have also occurred in or around malls in the recent past. The latest was the murder
of a boy named Shobit Rastogi on 5 May 2011, who had gone to a Vasant Kunj Mall but was
stabbed while walking on the way to his home. The path connecting the mall to the nearby
residential localities was lonely and unguarded.
In Shobhit's case, the murder did not take place inside the mall. However, there are instances
where the unfortunate incident happened inside the mall and also due to the mall. In January
2011 a 20-year-old BBA student died after falling from the 6th floor of Centre Stage Mall in
Noida. According to the Noida police, the student himself leaped to his death after he had
broken up with his girlfriend. Official sources said the student had come with a girl to watch a
movie. A shoe print at the spot from which Adhiv had jumped suggested that he was talking
to someone while climbing the railing to jump to his death. The shoe print proves that he was
walking backwards onto the railing.
In the past, one falling incident also occurred at Garuda Mall Bangalore where a child slid
through the railings and fell into the atrium. The mall took preventive steps subsequently and
fitted the atrium with a net.
V y
CHAPTER
Regulatory framework
for Shopping Malls
LEARNING OBJECTIVES

• Become familiar with different regulatory requirements for developing and managing a
shopping mall
• Get acquainted with the philosophy behind these regulations
• Understand the nuances of these laws
• Know about the pitfalls while complying with such laws and regulations
MALL KICKS ENVIRONMENTAL ROW
XYZ Developers is a leading real estate and mall-development company based in north
India. It is a professional and successful mall developer with a chain of shopping malls
dotting major cities in north India. The company happened to lay its hands on a property
very close to Yamuna Enclave^ posh locality alongthe banks of river Yamuna.The project
started with huge fanfare but soon became a newspaper headline. Some NGOs and citizen
groups approached the media with complaints that the project is an encroachment on
river bed and is an environmental violation. The company took it lightly, as it had all
the clearances required for construction of the building. The environmental clearance
was, however, missing since the property was situated beyond a major road bordering
the river. Soon the matter reached the administrative authorities and subsequently to
courts. Citizen groups argued that keeping in view the proximity and distance estimates,
the plot comes in the river bed area. The company argued that since the property is
across a major traffic artery (a state highway), it is wrong to classify its location as river
bed. The court granted interim relief to the citizen groups by ordering a stay on the
construction activity till the pronouncement of judgment.
Regulatory frameuuork for Shopping Molls 183
The incomplete skeleton of XYZ Mali overlooking the river and is waiting for the day
when its fate would be decided by the court.
Introduction
Mall development is a very tedious business, as it involves getting approvals from a

multitude of authorities. Every state in India has its own set of regulations that govern
the planning, development and operations of mall business. There are over 20 major
licences and permissions required even before breaking the ground of the proposed mall.
This makes the legal framework governing mall management in India complex.
According to the chronology of mall-development activities, legal and regulatory

compliances for a shopping mall can be classified into the following categories:
• Compliances during the planning stage
• Compliances during the development stage
• Compliances during the launching stage
• Compliances during the operational life
Compliances During the Planning Stage
After commissioning a feasibility study based on market research, the mall developer
gets a clear idea about the need, location, size and tentative tenant-mix of the proposed
shopping mall. Then the developer proceeds to give a formal shape to the concept as
visualized by the feasibility study. In this direction, the two main activities of this stage
are:
(a) Plot acquisition
(b) Developing business plan/proposal
Plot Acquisition
Regarding acquisition of plot, the developer needs to have information about the
following important aspects:
(i) The dimensions of the plot should be correctly stated. These should be checked
in terms of the number of roads/streets/lanes bordering it and their respective
widths.
(ii) The nature of the property should be checked. It should be chekcked whether it is
agricultural, residential, commercial or mixed-use. If it is not a commercial property
additional formalities for change in land usage should be met. It should be seen
whether construction of a commercial entity like shopping mall is permitted at that
location. If it is permitted, then it should be checked who should take this permission.
The seller may take this responsibility, but the developer can also volunteer to take
this permission if significant concessions are offered in land price.
(iii) The title of the land should be clear and unencumbered. The buyer should check for
past sale/registration, litigation and hypothecation.
184 Mall Management
(iv) The buyer should see if there are trees or other environmental assets on the plot
that need to be uprooted or cut for building the mall. Permission from the local
municipal body is required to do so, and a nominal fee is charged for the same.
Check whether the law requires re-plantation of the same or similar tree elsewhere,
as doing this would also require some formalities and documentation.
(v) The plot should be checked for any existing structure on it. If a structure is there,
then it should be checked whether it can be used or is to be demolished.
(vi) It should be checked whether the property is unoccupied or has some tenants. The
presence of tenants/occupants can adversely affect the deal if tenancy laws are
pro-tenant.
(vii) If the property occupants are slum dwellers, the government policy towards
removal/rehabilitation of slum dwellers should be considered. In cities like
Mumbai, local development authorities have stringent rules for this. For instance, in
Maharashtra, MHADA (Maharashtra Flousing and Area Development Authority)
Act mandates compulsory permission from MHADA before constructing a mall
in a slum area. Also people living on the slum site, where the mall would be built,
have to be rehabilitated at a new location within 3 square km of their present place
of residence. If this is not possible, then the most apt location has to chosen to
rehabilitate them.
(viii)The buyer should find out whether existing and proposed land use of adjacent
properties supplement or infringe mall operations.
(ix) The buyer should know about registration formalities and fees payable. It should be
found out how much is the required stamp duty and what is the difference between
the government-declared minimum price for the plot and the actual deal price.
It should be checked if the buyer wishes to pay stamp duty on the government
price, which is generally lower, or the market price. Getting registration done at
the market price proves beneficial if something goes terribly wrong and damages/
refund is to be claimed from the seller. In this case, complications of bridging the
gap between the government price and the market price and accounting for it are
also eliminated.
This stage generally ends with the property registration in the name of the buyer
(developer in this case) and establishing occupation, which is generally reflected in the
form of a boundary wall or fencing.
Developing Business Plan/Proposal
In this stage, the abstract concept of the proposed mall is put on paper along with
relevant numbers and estimates. This stage requires services of specialists like architects
and chartered accountants. The design of the mall should take care of all the rules and
regulations and norms prescribed by the local municipal body (such as BMC in Mumbai
and MCD/NDMC in Delhi) and various other regulatory bodies. A detailed report,
including investment and revenue projections, is also prepared. Financial details given
in the report are in line with the requirements of financial institutions like banks.
Regulatory Frameuuork for Shopping Molls 185
This stage ends with architectural drawings and estimates submitted to the local
municipal authorities along with required pro forma and requisite fee. A more ornate
version of the architectural plan is used for making the marketing brochure that may be
prepared simultaneously or subsequently. The financial plan (business plan) is submitted
to financing institutions along with specified documents for availing of loan.
The mall developer should also check for the floor space index (FSI) permissible
at that location. (The ratio of the built-up area to the total area of the plot is called the
floor space index.) Detailed architectural drawings and estimates would be based on the
permissible FSI.
Compliances During the Development Stage
As mentioned earlier, a number of licences and permissions are required before the
developer starts construction on the basis of the approved construction plan. Some of the
required licences and permissions are as follows:
Environment Impact Assessment Report
If the built-up area of the mall is above the threshold level notified by the State government
or the plot lies in the environmentally-sensitive zone (such as river bed, mountain ridge
and forest area), an environment impact assessment report is to be submitted to the
Ministry of Environment and Forestry stating that all the environmental norms for water,
air and noise pollution will be duly adhered to while constructing the mall.
Permission from the Fire Brigade
Various fire safety rules are required to be followed while constructing the mall. These
relate to aspects such as the number and location of emergency fire exits and availability
and accessibility of safety equipment. The fire brigade after inspecting the fire safety
measures provided in the mall will permit the mall to start operations.
Permission from the State Electricity Board
This permission is required to certify that the state electricity board would be in a position
to provide a valid connection to the mall to fulfil its power requirement as specified in
the project report. This permission is sought by filling an application in the prescribed
format with the electricity board. The application is accompanied by the details of the
building plan, tentative electric consumption and requisite fee.
Permission from the Local Municipal Body
The mall construction activity would require handling large quantities of construction
material (such as iron, sand, cement, bricks and gravel stone). Permission must be taken
from the local municipal body for handling these materials. Permission for water and
sewage connection should also be taken from the municipal authority. A parking licence
for developing a parking area in the mall is also issued by the municipal authority. The
parking area norms vary from place to place. For instance, in Mumbai, the BMC has a
norm of one car parking facility for every 1000 sq ft area of the mall.
L
186 Mall Management
Permission for the Multiplex
If the developer plans to have a multiplex theatre in the mall, a No Objection Certificate
(NOC) must be obtained from the neighbours. A 90-day notice has to be put up on the mall
site to enable the neighbours file objections, if any, regarding setting up of a multiplex.
The neighbours' NOC, along with reports from the police, fire department, electricity
board and public works department, is submitted to the local administration for getting a
licence for movie exhibition. The licence is issued for a specified period (one-three years)
and is subject to cancellation if there is any violation of stipulated guidelines. It must be
renewed when it is due for expiry.
Permission for the Food Court
To construct a food court in the mall, a food licence is to be obtained from the local
authority along with kitchen licence. Food courts are generally constructed on higher
levels. Many state governments provide a higher FSI for food courts and multiplexes.
Hence it must be checked with the local government or municipal body.
Insurance of the Mall and Construction Labour
Insuring people working on mall site is a main concern at this stage. Generally, mall
construction is outsourced to a contractor and all the construction workers are on its
payrolls. Insurance in such cases ought to be the responsibility of contractor. However,
providing this insurance by the mall development company is significant on two counts.
First, it cannot escape its responsibility in case of any construction-related accident, as
it is the principal employer in the eyes of law. Second, in case of any accident, it is the
shopping mall and the mall developer who attract criticism and negative publicity. The
mall developer should also ensure proper training of construction workers and must
adhere to safety norms for construction workers, like wearing of helmet, as specified by
the local authorities. Insurance of the mall structure is also done by mall developer.
Normally, a single insurance company is hired for insurance of the whole project.
Because insuring different things under the mall project with different insurance
companies might create complications while seeking claims in case of any mishap. There
are many loopholes in insurance regulations, so it becomes difficult to judge which
insurance company to approach for which claim if many companies are involved in
insuring the mall project.
It is necessary to apply for all the above-listed permissions at the time of construction,
as getting the regulators' nod takes time, ranging from three months to one year, and
in exceptional cases more than one year. Also, while inspecting the under-construction
mall for granting the sought permissions, the regulators may point out something that
requires suitable adjustments/changes during the construction stage itself. Then it would
be easy to incorporate the desired changes in the incomplete mall construction.
Compliances During the Launching Stage
Though the mall is technically complete after construction and mechanical and electrical
work is over, the mall cannot commence its operations before certain formalities are
completed. Some of these formalities are listed below:
Occupation Certificate (OC)
Before allowing the tenants to set shops in the mall, the mall developer should obtain
the Occupation Certificate (OC) from the local municipal authorities. The Occupation
Certificate states that the mall is ready for occupation or starting business by the
tenants.
Assessment of Property Tax
After completion of the mall construction, municipal officials visit the mall to assess the
property tax applicable to it. This assessment is done in the year of completion of the mall
construction, and the same assessment is applicable to the mall every subsequent year
unless there is change in the law governing the property tax.
Registration of Retailers
Marketing of the mall retail space happens simultaneously with the construction
activity. After signing the lease agreements, the mall developer offers standard, bare
retail space (vanilla shell) to the tenants so that they may carry out fit-outs as per their
requirements. However, every retailer must get itself registered under the Shops and
Commercial Establishments Act of the respective state government before commencing
retail operations. The outlets dealing in food are required to get separate food licence
from the municipal bodies, whereas the ones intending to sell alcoholic beverages must
get relevant licence from the local excise department. Though the task of getting these
licences is to be handled by the respective retailers, in exceptional cases the mall developer
get it done on its own but the licensed stores carry a higher price tag.
Compliances During Operational Life
Once the mall starts operating, a different set of legal and regulatory requirements come into
force. Most of these requirements relate to complying with the rules and norms specified
by different regulatory authorities, maintenance of requisite records and timely reporting
of requisite information in the specified pro forma. Most of these compliances are of
routine nature and follow a certain time-frame. The mall management also needs to ensure
that legal provisions are met regarding outsourced activities and functions, as it owes the
responsibility of being the principal employer. It must be noted that the compliances to be
made by the mall management are different from the ones that each retailer is supposed
to comply with in its individual capacity. Some of the vital laws and norms that require
adherence by the mall management and retailers are discussed below.
Laws Relating to Mall Operations
Operations of retail stores and shops are governed by the shops and commercial
establishments acts of respective state governments. These acts have been enacted
to regulate the working conditions of people employed in different categories of
establishments such as shops, commercial establishments, residential hotels, restaurants.
188 Mall Management
eating houses, theatres and other places of public amusement or entertainment. These acts
mandate compulsory registration, specify norms and benchmarks; impose penalties; and
provide for an administrative set-up to monitor the implementation of these provisions.
Details of a model Shops and Establishments Act are discussed later in the chapter.
Labour Laws
The Government of India and respective state governments enact laws pertaining to
different facets of employment in industrial and commercial establishments and set
minimum standards for essential requirements to be met by employers. These standards
pertain to minimum wage payable to each category of employees, frequency and mode of
payment, age of employment, compensation payable in case of accidents, social welfare
norms and special provisions for ladies. Some important acts governing these areas are
discussed in detail later in the chapter.
Insurance
Insurance is a vital provision for both men and material employed in shopping malls. Core
issues involved in insurance are: selection of the insurance provider, negotiating service
level and terms and conditions of insurance (including premium and claims), schedule
of payment and documentation related to taking insurance and its renewal, launching
claims, claim settlement and related follow-up. Insurance policies and procedures are
governed by stipulations formulated by the Ministry of Finance, the concerned insurance
company and the regulator (IRDA in this case). More details are given later on.
Renewal and Certification
Some essential facilities like lifts and firefighting system are given clearance/certification
by the concerned authority for a specified time, and these require periodic inspection
and renewal/certification. Mall managers are supposed to keep these facilities in
good condition, maintain adequate records about their maintenance, carry out
their scheduled inspections and other necessary follow-ups when due by following
prescribed formalities.
Taxation and Return Filing
The mall developer has to pay a number of taxes from time to time during the operational
life of the mall. Major taxes include service tax and entertainment tax in case of food
courts, multiplexes, disco, family entertainment centre (EEC), etc. and income tax as per
the Income Tax Act. More details are given later on.
Environmental Laws
Several environmental policy statements have been formulated in the last few decades
as part of the Government's approach to integrate environmental concerns with
developmental planning. Provisions of many environmental laws also apply to the mall
when it starts operating. These laws mandate mall developers and managers to comply
with specified restrictions and file periodic reports about the compliance.
Municipal Issues
After getting permission from the municipal authorities to avail of basic services
like water and sewage connections and electricity (from state electricity boards), it is
mandatory for the mall management to follow the specified norms and prevent abuse
of these services. Apart from conformity to the specified norms, mall managers need to
follow the schedule of payment for use and maintenance of these services as directed by
the concerned authorities.
Some of the Acts and compliances mentioned above are discussed in detail in the
following sections.
Shops and Establishments Act
The Shops and Establishments Act is applicable to shops, retail stores and other
commercial establishments like residential hotels, restaurants and theatres. This act is
a social piece of legislation enacted to safeguard the interests of those working in the
unorganized sector by ensuring that their employers provide comfortable working
conditions. Among other things, this law regulates the working hours of employees, the
number of days the establishment should remain closed in a year, weekly off for the
employees and how much overtime work employees are permitted to do. Every state has
its own Shops and Establishments Act, which is amended from time to time to meet the
changing requirements for good working conditions.
The Shops and Establishments Act also defines the jurisdiction of its application
and presents an administrative framework for the supervision of its implementation
through the Commissioner of Labour. Most of the states have a Shops and Establishments
Department, which has a Chief Inspector assisted by deputies and support staff. A model
Shops and Establishments Act has following components:
Registration and Renewal
Registration of shop is mandatory under this Act. Some acts (e.g. the Punjab Shops and
Commercial Establishments Act, 1958) specifically mentions that registration is must
even if the shop does not employ any employee and is managed by owners themselves.
The Act specifies a pro forma that is to be filled and the required fee for registration
of a shop. Generally, the Act specifies different categories of shops/establishments
according to the nature of their work and/or the number of employees. Registration fee
varies for different categories. Failure to get registered under the Act invites penalty.
After completing the registration formalities, a registration certificate is issued within a
specified number of days. Initial registration is for a limited period (say 1-3 years) and
requires renewal after expiry. The renewal application is to be made as per another pro
forma suggested in the Act along with the specified fee. The registration is again granted
for a limited time period. Some states like Haryana have streamlined the registration
process by taking it to the online platform. The Act also specifies pro forma and the
required fee if the retailer wants to incorporate changes in the information provided
during initial registration/renewal.
190 Mall Management
Scope and Coverage
The Shops and Commercial Establishments Act is enacted by the state legislature and
is applicable to the entire state, if not specified otherwise. It is applicable to all shops
and commercial establishments irrespective of the number of people employed and
whether they are employed with or without wages. The only exception is the members
of the employer's family. The state governments can exempt, either permanently or for a
specified period, any category of establishments from all or any provisions of this Act.
Major Provisions
The Shops and Commercial Establishments Act generally has provisions covering the
following issues:
• Compulsory registration of a shop/establishment within a specified number of days
of commencement of work by it
• Communication of closure of the establishment within a specified number of days

from the closing of the establishment
• Hours of work per day and week.
• Guidelines for spread-over, rest interval, opening and closing hours, closed days,
national and religious holidays and overtime work
• Rules for employment of children, young persons and women
• Rules for annual leave, maternity leave, sickness and casual leave
• Rules for employment and termination of service
• Maintenance of registers and records and display of notices
• Obligations of employers
• Obligations of employees
Administration of the Act
The Shops and Commercial Establishments Act provides for the administrative mechanism
to supervise and monitor its implementation. It includes authorities designated to carry
out specific tasks, procedures and documentation for inspection, mechanism for imposing
penalty proceedings and mechanism for addressing grievances. Some important obligations
of employer are: maintaining a muster roll, notifying the list of closed days and holidays
at the beginning of each year to inspector (shops and establishments) and providing
identity card to employees. Major breaches of the provisions of the rule are of the nature
of procedural lapses, for example, not maintaining the prescribed register of employment,
leave register, visit book, lime washing register, not providing leave book to the employees
or not making suitable entries therein, not producing requisite record register and notices
for inspection on demand and not displaying the name board in prescribed script.
Environmental Regulations for Shopping Malls

With a view to integrate environmental concerns with developmental planning, the
Government of India has formulated several policies over the last few decades. The
following are some of these policies:
• National Forest Policy, 1988
• National Conservation Strategy and Policy Statement on Environment and

Development, 1992
• Policy Statement on Abatement of Pollution, 1992
• National Environment Policy (NEP), 2004
This National Environment Policy has been drawn up as a response to the

government's commitment to a clean environment, mandated in the Constitution in
Articles 48 A and 51 A (g), strengthened by judicial interpretation of Article 21. The policy
is still in draft form and addresses environmental concerns relating to all developmental
activities.
The acts, rules and notifications applicable to the environmental aspects of the
construction and operational phases of a shopping mall are summarized in Table 9.1 and
described in the following sections.
Table 9.1 Environmental legislations applicable to malls
Legislation Areas/Activities Covered
The Environment • Overall environment protection

(Protection) Act, 1986 • Compliance with environmental (air, water, noise)
with Rules and EIA standards issued under EPR
Notification, 1994 (as • Preparation of Environment Impact Assessment (EIA)/
amended). Environment Management Plan (EMP) report
• Obtaining environmental clearance from the Ministry of
Environment and Forests (MoEF)
• Taking part in Environmental Public Hearing (EPH)
The Water • Protection of water quality

(Prevention and • Discharge of sewage from the mall
Control of Pollution) • Obtaining Consent to Establish (NOC) for establishing
Act, 1974 with Rules. and Consent to Operate (CTO) for activities causing water
pollution from Delhi Pollution Control Committee (DPCC)
in case of Delhi
The Water Cess Act, • Paying water cess to the local government body for
1977 sourcing of domestic water.
The Centre/State • Conforming to restrictions on drawing of ground water

Ground water • Arranging ground water recharge through rainwater
Regulations harvesting schemes (as applicable)
The Air (Prevention • Protection of air quality

and Control of • No-Objection Certificate (NOC) for establishing and
Pollution) Act, 1981 Consent to Operate (CTO) for activities causing air
with Rules. pollution from DC sets from DPCC
• Compliance with the National Air Quality Standard
192 Mall Management
The Noise Pollution • Compliance with noise standards in accordance with

(Regulation and the land use of the area
Control) Rules, 2000
The Municipal Solid • Management (collection, handling, intermediate storage)

Waste (Management of domestic waste
& Handling) Rules,
2000
In India, projects with the potential to cause significant environmental impact require
Environmental Clearance (EC), which can be received only after an impact assessment
study has been done. The EC process is mandated by the EIA notification dated 27th
January 1994 and is administered by the State-level government regulatory bodies (such
as the State Pollution Control Board and the Environment Department) and the Ministry
of Environment and Forests at the Central Government level.
Environmental Issues
Shopping malls rake up a number of issues about their impact on the environment and
urban living spaces. Some of these issues are discussed below:
Urban Planning and Usage
The planned urban development is encouraged by the Central and State governments.
These governments have promulgated the urban town planning acts with provisions for
proper zoning of land into residential, commercial and industrial areas; control on slums
and urban sprawl; design and development of civic amenities (such as sewerage and
waste disposal) and development of Master Plans for important urban areas in States and
Centre-administered territories.
Water Usage and Water Pollution
The use of water resources and the discharge of polluted water (sewerage) are primarily
regulated by the Water Cess Act, 1977 and the Water (Prevention and Control of Pollution)
Act, 1974. The Water (Prevention and Control of Pollution) Act, 1974, The Water Cess Act,
1977 including Rules 1978 and 1991 provides for levy and collection of cess on water
consumer by authorities and persons running certain industries. The cess thus collected is
used to generate resources for prevention and control of water pollution. It also contains
specifications on affixing of meters, furnishing of tax returns, assessment of cess, interest
payable for delay in payment of cess and penalties for non-payment of cess within the
specified time. The new shopping malls come under the jurisdiction of these acts, as they
source water from the water supply schemes of the local authority.
The Water (Prevention and Control of Pollution), Act, 1974 including Rules, 1975
(as amended up to 1988) provides for the prevention and control of water pollution
and maintaining or restoring good water quality for any establishment. The Act assigns
functions and powers to the CPCB and DPCC for prevention and control of water
pollution and all related matters.
The Environment (Protection) Rules under the EPA also lay down specific standards
for quality of water effluents to be discharged into different types of water bodies (such as
sewers, surface water bodies like lakes and rivers, and marine discharge). Additionally,
the potable water supplied for the mall during the operations phase should also conform
to the National Drinking Water Standard IS: 10500
The Central Ground Water Board (CGWB), a statutory authority set up by the
Central Government, has restricted the drilling of tube wells and bore wells in certain
water-scarce areas in the country. Since the Board does not permit extraction of ground
water resources from the mall project area, all commercial developments in the area
should plan their water usage from sources other than ground water.
Air Quality
The Air (Prevention and Control of Pollution) Act, 1981, including Rules 1982 and 1983,
was enacted to prevent, control and reduce air and noise pollution. According to Section
21 of the Act, no person shall establish or operate any activity that can cause air pollution
without obtaining Consent to Establish (CTE) as per the Air Act.
The Act also lays down national ENT air quality standards for common pollutants
like suspended particulate matter (SPM), sulphur dioxide (S02), oxides of nitrogen
(NOx), carbon monoxide (CO) and lead (Pb) with the intent of managing air quality for
different categories of areas (residential, industrial and sensitive). The Extended Producer
Responsibility (EPR) also specifies source emission standards determined on the basis of
the impact of pollutants on human health, vegetation and property.
It may be noted that normally the CTE with respect to the Air and Water Act is
provided in the form of a No Objection Certificate (NOC) to the project proponent when
the project falls under the 32 categories of activities covered by the EIA notification. The
NOC is generally provided after the submission of the EIA report and holding of the
public hearing.
Noise Pollution
With the objective of regulating the noise level in the environment, the Central
Government notified the Noise Pollution (Regulation and Control) Rules, 1989 and
amended in the year 2000, under the EPA. The EPR also lays down equipment-specific
noise emission standards for DG sets. Specific standards for control of noise from DG
sets and measures to be taken for reduction of noise by using acoustic enclosures,
acoustic treatment of rooms or exhaust muffler have also been specified through the
Environment (Protection) Second Amendment Rules, 2002 notified through notification
GSR 371 (E) on May 17, 2002.
Solid and Other Waste Management

During the construction and operational phases of the mall, collection and handling of
domestic solid waste should be done as per the provisions of the Municipal Solid Waste
Rules, 2000. The goal of the solid waste management at the mall should be to encourage
the four R's—reduce, reuse, recycle, and recover.
i
194 Mall Management
The Rules require the mall to classify wastes into categories, manage them as per
the prescribed guidelines and obtain prior authorization from the state PCC for handling,
treatment, storage and disposal of wastes. The shopping mall has the potential to generate
waste other than solid waste during its construction and operational phases, and such
waste generation should be properly monitored and managed.
The following kinds of waste may be generated during the construction phase of
the mall:
• Spent oil and lubricants from construction equipments
• Spent oil and lubricants from DG sets
• Paint residues during the painting of the building
During the mall's operational phase, management of solid waste should focus on
the segregation/sorting and storage at waste source and collection of waste. Separate
bins should be maintained for various categories of wastes like biodegradable, non-
biodegradable and paper/plastics. This will result in lesser reliance on landfilling. Regular
awareness meetings should be conducted to involve the mall tenants and employees to
ensure proper segregation, storage, collection, treatment and disposal of waste.
Environmental Monitoring
The purpose of environmental monitoring is to evaluate the effectiveness of the

implementation of the Environmental Management Plan (EMP). In this exercise, important
environmental parameters within the shopping mall are periodically monitored so that
adverse affects could be detected and timely action taken.
A suggested environmental monitoring programme for a mall based on the predicted

impacts is given in Table 9.2
Table 9.2: Suggested monitoring programme for a Mall
S. No. Type Location Parameter Period and

Frequency
Stack emission Stack of any S02, NOx, SPM, CO Quarterly during

monitoring one operating
the operational
DG set
phase
Ground water Project site Drinking water Pre-monsoon and
(potability parameters as per IS post-monsoon.
testing) 10500
Treated sewage STP Parameters for As per vendor
water quality horticulture use— BOD, specifications
pH, S.S, Coli forms

Record Keeping and Reporting
Compliance with environment and pollution control laws requires maintaining a record of all
actions and decisions related to pollution control. Apart from it, record keeping and reporting
of performance is important for ensuring that the mall operations remain sustainable. Thus,
the records have regulatory, monitoring and operational significance. Typical record keeping
requirements for a shopping mall site are summarized in Table 9.3.
Table 9.3: Record-keeping requirements for a shopping mall site
Parameter Particulars
Solid waste handling and disposal • Daily quantity of waste generated and sent
for disposal
Sewage treatment • Daily quantity of raw and treated sewage

• Quantity and point of usage of treated
waste water
• Treated waste water quality
Regulatory Licences (Environmental) • Environmental permits / consents from

DPCC / MOEF
• Copy of waste manifests as per
requirement
Monitoring and survey • Records of all monitoring carried out as per

the finalized monitoring protocol.
Other • Log book of compliance

• Employee environmental, health and safety
records
• Equipment inspection and calibration
records, where applicable
• Vehicle maintenance and inspection
records
Environment Audits and Corrective Action Plans

To assess whether the implemented EMP is adequate, the mall management committee
should conduct periodic environmental audits. These audits should be followed by
Corrective Action Plans (CAP) to tackle various issues identified during the audits.
Insurance for Shopping Malls
The IRDA Act has established the Insurance Regulatory and Development Authority
("IRDA" or 'Authority") as a statutory regulator to regulate and promote the insurance
industry in India and to protect the interests of holders of insurance policies. The IRDA
Act also carried out a series of amendments to the Act of 1938 and conferred the powers
of the Controller of Insurance on the IRDA.
The Tariff Advisory Committee ("Advisory Committee") is a body corporate that

controls and regulates the rates, advantages, terms and conditions offered by insurers
196 Mall Management
in the general insurance business. The Advisory Committee has the authority to require
any insurer to supply such information or statements necessary for discharge of its
functions.
Types of Insurance Policies
Different types insurance policies are available to cover losses suffered from the
operations related to the construction of a building. Some particular forms and inclusions
or exclusions are more common to either residential or commercial construction projects.
Important types of insurance policies that shopping malls need to subscribe to are
discussed as follows:
Property Insurance
'Course of Construction' is a specifically designed form of property insurance. It provides

fire insurance, including extended coverage for risks such as wind storm and optional
coverage for events such as floods and earthquakes, for losses that might arise as a result
of the operations related to building construction.
It can also prescribe exclusions that specifically relate to those operations. Most
builders' risk policies are issued based on the 'broad form' coverage. During construction,
this form provides 'all-risk' coverage for fire and vandalism as well as 'in transit' coverage.
If flood or earthquake coverage is desired, these must be added by endorsement for a
specific premium.
Liability Insurance
'General Liability' and 'Comprehensive General Liability' (CGL) are the two most common
forms of liability insurance. Most builders purchase a CGL policy that includes coverage
for any bodily injury or property damage occurring from their products, operations
and completed operations. CGL policies are so broad that they can include coverage for
other related exposures for the insured operations, including coverage for the owners
and contractors, personal injury, medical payments, broad form property damage and
coverage of 'Contingent Employers Liability' (also called 'Stop Gap' insurance).
Environment Impairment Liability (EIL)
It is a form of liability insurance that is becoming more common. It provides coverage

for the 'pollution liability' imposed on the contractor/owner due to any pollution of the
environment that occurs as a result of the construction operations. Examples include
seepage of chemicals produced or used during the construction operations into an
adjacent underground area or body of water such as lake, pond or stream; and, release
of chemicals into the air as a result of a major fire at the construction site. The EIL policy
normally provides coverage for 'sudden and accidental' pollution including onsite third-
party bodily injury and property damage as well as off-site third-party bodily injury,
property damage and cleanup costs arising from pollution conditions on, or emanating
from, the covered construction site.
'Wrap-up Liability'
It is intended for large construction projects to provide general liability coverage for the
general contractor plus all sub-contractors under one policy for a specific project.
Examples of additional risks of losses for which insured may want to consider
coverage are listed below:
• Business interruption—The loss of revenue/income as a result of delay in completing

the project due to a loss caused by a covered peril. This is often added to the property
policy by endorsement.
• Crime—Also referred to as "3-D", it stands for loss of money due to 'disappearance,

destruction and dishonesty'.
• Delay penalty—The penalty levied due to delay in meeting the project deadlines;
coverage for this is called a "Surety" policy.
• Fraud or deceit—The loss due to fraudulent induction of an insured to part with

covered property.
• Contract penalty—The penalty for non-completion of the contract assessed against

the insured. However, an insured's inability to complete the contract according to
its terms must be the direct result of a loss by a covered peril.
• Testing —The loss to a building caused by a covered peril that results from testing
of materials, machinery, or equipment that will become a permanent part of the
building or structure (including start-up, performance, stress, pressure or overload
testing).
• Property in transit—The damage to or loss of materials/machinery used in

construction that during the project might be in transit or in storage off-site.
• Soft costs —Additional expenses incurred by an insured when construction is

delayed by a loss caused by a covered peril, for example, additional attorney's or
accountant's fees, additional interest payments on construction loans, additional
architectural or engineering fees and additional insurance premiums.
Labour Laws Concerning Shopping Malls
Labour regulations for India's retail sector fall under the jurisdiction of state governments
and are contained in the Shops and Establishments Act (SEA). The SEA is a state
legislation and contains various laws relating to working conditions of employees. The
main provisions of the Act include the following:
• Compulsory registration of shop/establishment within thirty days of commencement

of work
• Minimum wages
• Regulation of hours of work per day and week
• Guidelines for spread-over
• Rest interval
I
198 Mall Management
• Opening and closing hours
• Closed days
• National and religious holidays
• Overtime work
• Rules for employment of children, young persons and women
• Rules for annual leave
• Maternity leave
• Sickness and casual leave
• Rules for employment and termination of service
• Obligations of employers
• Obligations of employees
• Communications of closure of the establishment within 15 days from the closing of

the establishment
However, according to a World Bank study, the enforcement of labour law in Indian
retail is very poor. This is mainly because there is no separate regulatory body for the
retail sector. Also, there is a wide difference between the unwritten employment laws in
the organized as well as unorganized retail.
Traditionally, retail in India has been a source of employment for relatively low-
income groups seeking livelihood with minimal education or skill. Retail can absorb this
category of labour since it requires relatively less skills. Hence it absorbs a huge section
of Indian population who cannot seek employment elsewhere in the economy.
However, with the emergence of the organized retailing, the nature of employment
has completely changed in retail. The employee status in corporate retail chains also
matches with that of other corporate sector employees. Hence the skill expectations and
performance levels are also much higher from these retail employees. This sector looks
for skilled labour. The demands from the prospective employees are much higher. With
this comes the need to extend benefits and protection similar to those given to industrial
workers. In fact, the shops and establishments acts clearly mandate that certain acts
applicable to industrial workers should also be applicable to workers in retail stores.
These acts are listed below:
1. The Minimum Wages Act, 1948
2. The Payment of Wages Act. 1936
3. The Workmen's Compensation Act, 1923
4. The Industrial Employment (Standing Orders) Act, 1946
5. The Maternity Benefit Act, 1961
6. The Child Labour (Prohibition and Regulation) Act, 1986
Employers are expected to abide by relevant instructions contained in these acts as

applicable to the employees working in retail stores and shops. For instance, the wage
of an employee working in a shop cannot be less than the minimum wage notified by
the respective State government from time to time. Inability to meet these requirements
tantamounts to violating the respective act and may attract penalty under the said act as
well as the Shops and Commercial Establishments Act.
:
SUMMARY j
Just like any other business, shopping malls operate within the sharp boundaries of the
regulatory environment. It is important for them to abide by the regulations as it impacts
the lives of key stake-holders like investors, employees, shoppers, neighbours and the
community at large. Shopping malls need to follow relevant regulations at each stage of
their life cycle—be it planning, development, launch or operations. Important departments/
offices that regulate different aspects of mall development include district administration,
local municipal authority, electricity board, health and sanitation department and pollution
control board. Important laws influencing the development and working of these malls
include the Shops and Establishment Act, the Payment of Wages Act, the Minimum Wages
Act, the Workmen's Compensation Act, the Child labour (Prohibition & Regulation) Act and
the Environment (Protection) Act etc. These laws are to be followed by the mall as well as by
individual tenants.
J
,
REVIEW QUESTIONS J
1. Comment on the complexity of regulatory environment faced by the shopping malls in India.
2. Development of shopping malls in India requires significant ground-work in terms of

compliance with rules. Explain.
3. List out and discuss vital clearances and licences that shopping malls require from local
municipal authorities.
4. What precautions should be taken while selecting and acquiring a plot for developing a
shopping mall?
5. What are the different threats to security in shopping malls? How do authorities try to
mitigate these through mandatory adherence to rules/certifications/approvals?
6. What are the different types of insurance applicable to shopping malls? Discuss various
issues that deserve attention while insuring malls?
7. Environmental issues and concerns exist well before the mall comes into existence and
continue till its entire life. Explain.
8. Discuss in detail the model Shops and Commercial Establishments Act. How does it control
employee exploitation in retail stores?
9. Build a case for or against mandatory environmental clearance before the development of
shopping malls in India.
10. List out and discuss important renewals and re-certifications that are to be done on a
periodic basis during the operational life of a shopping mall.
200 Mall Management
PRACTICE EXERCISES
1. Examine the Shops and Establishments Act applicable in your city/state. Identify the major
obligations of the employer under the act. Which provision of the said act seems odd and
requires immediate improvement?
2. Visit a shopping mall of your choice. Examine various utilities and safety equipment.
Check their dates of expiry/renewal. Also find out the relevant authority for certification/
renewal.
3. Find outthe Floor Space Index(FSI) applicable toshopping malls in yourcity. Study as many
shopping malls as possible in your city and see whether all of them have same vertical
expansion while utilizing FSI. If not, how did each mall utilize its FSI while maintaining its
distinctiveness?
C )
SUGGESTED READINGS "
1. Association of Certified Fraud Examiners (2010), The 2010 Report to the Nations
on Occupational Fraud and Abuse, available at http://www.acfe.com/rttn/2010-
conclusions.asp
2. Bazerman, M.H.; Curhan, J.R.; Moore, D.A. and Valley, K.L. (2000), 'Negotiation', Annual
Review of Psychology, 51, 279-314
3. Black, B. (2010), 'Murdock on the Financial Reform Act', Securities Low Prof Blog, 29 August
2010, available at http;//lawprofessors.typepad.com/securities /2010/08/ murdock-on-
the-financial-reform-act.html
4. Boyarski, J.B.; Fishman, R.M.; Jopsephberg, K. and Linn, J. (2002), 'World trade organization
welcoming Taiwan as a member', Intellectual Property & Technology Law Journal, 14(2),
pp. 35-37
5. Brooks, LJ. and Dunn, P. (2010), Business & Professional Ethics for Directors, Executives &
Accountants, 5th Ed., Mason, Ohio; South-Western Cengage Learning
6. Covington and Burling LLP (2010), 'Enhanced protection for whistleblowers against
employer retaliation', 29 July 2010, available at http://www.cov.com/files/Publication/
7ed821ae-f749-485a-9554-a06fde78bdc8/Presentation/Publication Attachment/
e7ed9251-9fa6-46ac-b963-aled93390779/Dodd-Frank%20Act%20-%20Enhanced%20Pr
otection%20for%20Whistleblowers%20Against%20 Employer%20Retaliation.pdf
7. Dennis, B. and Cuadra, A. (2010), 'Reinventing financial regulation', The Washington

Post, 21 May 2010, available at http://www.washingtonpost.com/wp-dyn/content/
graphic/2010/05/20/G R2010052004992.html
8. DerivativesStrategy.com (1997), 'The world according to Brooksley Born', Derivatives

Strategy.com, May 1997, available at http://www.derivativesstrategy.com/magazine/
archive/1997/0597qa.asp
9. Dodd-Frank Wall Street Reform and Consumer Protection Act (2010),. Pub. L. 111-203,
111th Congr., 2d Sess., July 21,2010, available at http://docs.house.gov/rules/finserv/lll_
hr4173_finsrvcr.pdf
10. Ellsworth, L.P. and Porapaiboon, K.V. (2009), 'Credit rating agencies in the spotlight: a
new casualty of the mortgage meltdown', Business Law Today, 18:4, March/April 2009,
available at http://www.abanet.org/buslaw/blt/2009-03-04/ellsworth.shtml
11. Flynn, J. (2010), 'Financial reform act creates new bureaucracy, Colorado Springs, The
Gazette, gazette.com, 23 July 2010, available at http://www.gazette.com/articles/act-
101940-reform-financial.html
12. 'Five ways to tame the financial market monster', Spiegel Online, 22 June 2010, available
at http://www.spiegel.de/international/world/0,1518,druck-702200,00.html
13. FICCI Indian Retail Report
14. Garriga, C.; Gavin, W.T. and Schlangenhauf, D. (2006), 'Recent trends in homeownership',
Federal Reserve Bank of St. Louis Review, September/October 2006, pp. 397-411, available
at http://research.stlouisfed.org/publications/review/06/09/Garriga.pdf . International
Journal of Business and Social Science, Vol. 2, No. 13 [Special Issue—July 2011]
15. Goldfarb, Z.A. (2010), 'SEC won't pursue Moody's fraud case', The Washington Post, 1
September 2010
16. Jane C. Ginsburg (2003), 'The concept of authorship in comparative copyright law', 52
DePaulL rev. 1063, 1091-1092
17. Jones, Fl. and Askew, R. (2010), 'Factbox—Comparing EU and U.S. financial reform',
Reuters, 21 May 2010, available at http://blogs.reuters.com/financial-regulatory- forum
2010/05/21/factbox-comparing-eu-and-u-s-financial-reform/
18. Retailer Association of India report
19. Richard A. Epstein (2010), 'The disintegration of intellectual property?, a classical liberal
response to a premature obituary', 62 STAN. L. REV., 455, 456, 520-521
20. Landes, William M. and Posner, Richard A. (2003), The Economic Structure Of Intellectual
Property Low, 4
21. Shopping Center Association India Report.

202 Mall Management
CASE 1
^Dispute over right to inspect the mall ^
Garuda Mall, a landmark in its own right in the heart of Bangalore, witnessed a strange chaos
in January 2011. On a Saturday when the mall was bustling with customers, a team of Brihut
Bangalore Mahanagar PaiikA (BBMP), the local municipal authority, came to inspect the mall.
There were heated arguments between BBMP's Market Standing Committee members and
the mall authorities over the committee's decision to inspect the premises.
Mr. M.G. Uday Garuda, Managing Director, Garuda Group, alleged that the committee
members were demanding a bribe, though his documents were in place. "I have paid
rent to BBMP as per the agreement. There are no violations or deviations in the building
construction," Uday said. The BBMP committee members, however, refuted the allegations
and said they had the right to inspect the premises at any time. The Chairman of the Standing
Committee, S.H. Padmaraj, said that there were a number of complaints against the mall.
"There are allegations that the building bye-laws had been flouted and the mall was built on
a storm water drain. It is BBMP's land and we have not been getting any revenue from it. We
have every right to inspect the mall. Why are they not showing us any documents? There is
no transparency," he said.
The situation became ugly when Mr. Garuda allegedly stopped the committee members from
inspecting the place. The members said they had to cut short their inspection and leave the
place when Uday Garuda brought in his men. "Suddenly, there were rowdies who came towards
us and threatened us to leave. There were three women corporators with us and it was very
intimidating. We had no security. They also used foul language against us," Padmaraj alleged.
Source: 'BBMP officials, Garuda clash over mall inspection', TNN, http://articles.timesofindia.
^ indiatimes.com, accessed on 30 January 2011
CASE 2
-YPemolition of mall built on encroached landy n
The district administration of Bhopal demolished a portion of a shopping mall named Minal
Mall on May 6-7, 2011, which occupied the government land at Minal Residency. The notice
was also sent to 60 house owners for illegal occupation of the government land. The mall
owner constructed a food court, film city, shopping mall, parking area and row-houses on 146
acres of land. This land was acquired by the government from the farmers. The demolition
of a portion of the Minal Mall, the largest-ever anti-encroachment drive in Bhopal to free
government land, began following the High Court's order.
According to a report prepared by the district administration, Minal Mall builder Raj
Homes had encroached upon 108.47 acre of the 141.22 acre land owned by the Industries
Department. Illegally raised columns of the six-storey mall were brought down using dynamite
at about 2.50 pm while a second section of the building was razed to ground on 6 May 2011
at 4.21 pm. The remaining unauthorized part of the building will be done away with using
JCB machines.
The portion that was dynamited and pulled down by the district administration was built
and beautified at a cost of more than Rs 73 crore. The portion of the mall that was razed to
ground comprised 2,250 sq metres of construction across the six floors. According to the
collector's guidelines, the area is worth Rs 32, 500 per sq metre.
Additional District Magistrate (ADM) Rajnish Shrivastava said the city corporation and police
have been asked to calculate the money spent on the demolition. This amount will be realized
from the mall's builder, he added.
However, Raj Homes said that the mall was built after official approval. Raj Homes' director
Sandeep Mehta said, "The mail has been raised after official approval from the Nazul
Department and the city corporation. We have all the papers."
Sources: 'A portion of a Minal mall is demolished in Bhopal, MP", www.metromasti.com,

accessed on 10 May 2011
"Bhopal: Rs 73 crore Minal Mall demolished in Rs 15 lakh", Dainik Bhaskar, http://daily.

^ bhaskar.com, accessed on 10 May 2011 ^
204 Mall Management
ANNEXURE I
Summary of Main provisions under the Delhi Shops and
Establishment Act
SI. No. Provision Section/Rule Remarks
Set up of CIS Section 36/17 This section is headed by DEC (CIS),

Section Chief Inspector of Shops and Labour
Inspector (Shops). The Labour Inspectors
are posted in all Districts, each district is
headed by DLC/ALC/LO
Registration Section 5 Not required because kept in abeyance

of Shops and w.e.f. 23.11.89
Establishments
3 Closed Day Section 16 One day in a week
4 Opening and Section 15 No shop or commercial establishment

Closing hours be opened earlier than such hour or
closed later than as may be prescribed,
i.e. 9.00 am and 7.00 pm in winter, 9.30
am to 7.30 pm in summer, and 8.00 am
to 6.00 pm for establishments.
Appointment Section 34 On appointment/joining of the job

letters
6 Working hours Section 8 48 hours a week or 9 hours a day
7 Compulsory Section 10 Half an hour after 5 hours of work

rest
8 Spread over of Section 11 12 hours in shops and 10-1/2 hours in an

working hours establishment
including rest
Restriction on Section 14 In summer 9.00 pm to 7.00 am and in

working of winter 8.00 pm to 9.00 am
women/young
persons
10 Earned/ Section 22 15 days

privileged
leave
11 Accumulation Section 22 45 days

of earned leave
12 Casual/sick Section 22 12 days

leave
13 Intimation in Rule 10 15 days in advance

writing for
availing of
earned leave
14 Availing of Rule 10 As soon as possible

casual/sick
leave
15 Payment of Section 19 7th of the following month

wages
16 Wages for A piece-rated employee is also entitled

holidays of a to the average of the wages received by
piece-rated him during the previous month.
employee
17 Payment of Section 19(4) The wages are to be paid in cash.

wages
18 Cleanliness Section 25 The premises of every establishment

shall be kept clean.
19 Employment Section 12 No child shall be allowed to work

of children whether as an employee or otherwise in
(12 years and any establishment.
below)
SoMrce;http://www.delhi.gov.in/wps/wcm/connect/doit_labour/Labour/Home/Shops+and+
Establishments+Inspectorate/
ANNEXURE II
Standards for effluent discharge
SI. No. Parameter Inland surface Public sewer Water for

water irrigation
1 Ph 5.5-9.0 5.5-9.0 5.5-9.0
2 Suspended solids 100 600 200
3 Biochemical Oxygen 30 350 100

0
Demand (BOD) at 27 C
4 Hexavalent Chromium 0.1 2.0

(Cr6+)
5 Total Chromium (Cr) 2.0 2.0
6 Oil and grease 10 20 10
7 Temperature Not to exceed

50 deg. C of the
receiving body
206 Mall Management
8 Cyanides (CN) 0.2 2.0 0.2
9 Ammonical Nitrogen (N) 50 50
10 Cadmium (Cd) 2.0 1.0
11 Nickel (Ni) 3 3
12 Zinc (Zn) 5.0 15
13 Copper (Cu) 3.0 3.0
14 Lead (Pb) 0.1 1.0
15 Iron (Fe) 3 3
16 Total Residual Chlorine 1.0
17 Total Nitrogen 100
18 Chemical Oxygen 250

Demand (COD)
19 Arsenic (As) 0.2 0.2 0.2
20 Mercury (Hg) 0.01 0.01
21 Selenium (Se) 0.05 0.05
22 Fluoride (F) 2 15
23 Sulphides (S) 2
24 Phenolic compounds 1
(phenols)
25 Particle size of suspended Pass 850 micron

Sieve
solids
26 Free Ammonia (NH3) 5.0
27 Dissolved Phosphate (P) 5
28 Radioactive materials io-6 IO"6 io-8
Alpha Emitters (UC/ml)

max
-7
Beta Emitters (UC/ml) io-6 io-6 10
max
29 Bio-assay test 90% survival 90% survival 90% survival

of fish after 96 of fish after of fish after
hours in 100% 96 hours in 96 hours in
effluent 100%effluent 100% effluent
30 Vanadium (V) 0.2 0.2

ANNEXURE III
Drinking water quality standards as per BIS 10500, 1991
s . Parameter Desirable Limit (mg/I)

No
1 Colour (Hz units) 5
2 Turbidity (NTU) 5
3 Ph 6.5-8.5
4 Total Hardness (CaCo3) 300
5 Iron 0.3
6 Chloride 250
7 Alkalinity 200
8 Boron 1
9 Dissolved solids 500
10 Calcium 75
11 Sulphate 200
12 Nitrate 45
13 Fluoride 1
14 Phenolic compounds 0.001
15 Pesticides Absent
16 Lead 0.05
17 Zinc 5
18 Chromium (hexavalent) 0.05
ANNEXURE IV
FormforSubmissionoflnformationfor Environmental Assessment
and Environmental Screening of the Development proposal
1. Name and address of the person proposing development.
2. Particulars of the proposed development
a) Brief description.
b) Justification or need for the proposed development.
c) Objective.
d) Size and magnitude.
e) Cost.
f) Present status.
g) Time schedule for completion of development.

208 Mall Management
3. Employment
a) During development stage.
b) During operational stage.
4. Location of the proposed development
a) Revenue Survey No./Hissa No.
b) Name of the village/tehsil/district.
(7x12 extract and the village map showing the location essential)
5. Land Area
a) Existing (in the case of expansion).
b) Proposed.
6. Physical Setting
a) Natural and man-made features (map essential).
b) Topography indicating gradient aspect and altitude (map essential).
c) Soil type and texture (map optional).
d) Flood-prone areas of the site (map essential).
7. Land Uses
a) Existing land use of the site.
(Area statement and map at larger scale essential)
b) Existing land use covering an area of 10 km radius around the site.
(Map at smaller scale essential).
c) Proposed development.
(Area statement and map at larger scale essential).
d) Proposed development showing proposed accesses, land uses of the surrounding

area. (Map at smaller scale essential).
8. Ecologically-sensitive Areas
a) Proximity to a National Park or Wildlife Sanctuary, nature reserves, mangrove

forests and reserved, protected or other forests, biosphere reserve, swamp and
wetlands (indicate distance from the site and identify on the map).
b) Does the development involve any forest land?
c) Proposals for compensatory afforestation plan.
d) Does the proposed development involve reclamation of wetlands?
e) Is the site situated within the catchment area of a water reservoir?
f) Is the site situated within the existing or potential command area of an irrigation
project?
9. Air
a) Ambient area quality data at the site (for S02, N02, SPM).
b) Major air pollution sources within 10 km radius around the site.
c) Nature and concentration of likely emissions from the proposed development.
d) Pollution abatement measures proposed.
10. Water
a) Total daily water requirement.
b) Source of water supply with details of competing users.
c) If the ground water is used at source, details of its quality and quantity available
and present extraction.
d) Quantity of waste water expected.
e) Method of treatment and disposal of waste water proposed.
f) Present quality of water in receiving bodies.
11. Solid Waste
a) Nature and quantity of solid waste expected.
b) Nature and quantity of any toxic and hazardous waste.
c) Method of collection, transport and disposal of solid waste proposed.
12. Noise and Vibrations
a) Ambient noise level.
b) Noise and vibration levels expected during the development phase and
thereafter.
c) Source of noise and vibrations.
d) Noise and vibration abatement measures proposed.
13. Risk and Disaster
a) Does the development involve any hazardous process?
b) Does the development involve any storage or transportation to and from the
site of any toxic or hazardous material?
c) Assessment of risk for (a) and (b) above
d) Details of the Disaster Management Plan.
14. Rehabilitation
a) Does the proposed development involve rehabilitation of local population?
b) Details of the rehabilitation plan, if any.
□ □□
CHAPTER
10
Handling Anchor Tenants
LEARNING OBJECTIVES

• Understand the significance of anchor tenants in shopping malls
• Get an idea of different anchor options available in retail space
• Know about specific features of each tenant in relation with the shopping mall
• Understand the key issues that must be taken care of while dealing the anchors
MALL IN A DILEMMA OVER ANCHOR'S PROBLEM
Everything was not so smooth and easy-going for developers of Magnolia Mall in Jabalpur.
It was the first mall that came up in the city, and it had its positives as well as negatives.
There was no competition, at least for the initial couple of years. But the town being
small with conservative outlook, many brands were not convinced about the ability of
Magnolia to attract footfall, especially when the mall is situated on the city outskirts.
However, the developers knew that the mall would be an instant success provided it
starts with a good occupancy rate. They approached 'Mahabazaar', India's largest chain
of hypermarkets. Mahabazaar agreed to occupy the anchor space on a fixed rental
plus CAM charges. The hypermarket presence induced great enthusiasm among other
brands, and the mall started operations with 80 per cent occupancy. However, problems
started cropping up again. Mahabazaar was given the retail space on the ground, first
and second floors. Customers were supposed to exit the Mahabazaar store with loaded
trolleys and use a set of common lifts to reach their vehicles parked in the basement
parking. It was not considered to be a big issue, as lifts were only 25 metres away from
the store exit and had ample space for a couple of trolleys. But as the footfalls increased
Handling Anchor Tenants 211
with Magnolia's rising popularity, it became difficult for the shoppers to cross those
25 metres and find space in the already loaded lifts coming to and from the basement
parking. Problems were also faced by Mahabazaar in moving replenishments from their
storage space in the upper basement to the store. As a solution, Mahabazaar requested
for installing dedicated customer and service lifts inside their store. Multiple issues came
up while discussing the installation of dedicated lifts. These included capital investment,
maintenance and operating cost of lifts, liability in case of accident and enhancement of
rentals in case the developer bore all these costs.
The Magnolia management is faced with a dilemma, as Mahabazaar has options in
the form of new malls that are coming up nearby. If it leaves the mall, what would be the
response of ancillary tenants? Would Magnolia be able to arrest the decline if it sets in?
Introduction
Shopping malls represent an ecosystem that extends the rational benefit of getting all
solutions under one roof in a controlled and pleasant environment. Therefore selection
of tenants for a shopping mall should be done to achieve this objective. The variety in the
tenant-mix influences the shoppers' preference for a mall and their frequency of shopping
trips. Apart from selling core products from popular platforms, the tenant-mix of a mall
should also satisfy the unmet demand for goods and services within the catchment area.
The aim is to persuade shoppers to stay longer in the mall, increasing the chances that
they will spend. To make it happen, mall developers accommodate a variety of tenants
like specialty stores, vanilla stores, kiosks and carts. However, the appeal of these tenants
is generally constrained due to the size of their store, product range, variety and brand
strength. Hence, it is inappropriate to assume that these small stores would be able to
attract footfalls on their own. In fact, most of these tenants prefer a mall location over
a high street location because they believe that the shopping mall would have decent
footfalls on its own, and they could cash in on a part of those footfalls. Expecting these
tenants to generate footfalls would be like putting the cart before the horse.
For generating footfalls in a mall, developers target anchor tenants. Generally, anchors
are the first ones to be signed as tenants. They occupy large spaces at prominent locations
at preferential rates. It is akin to the treatment given to initial and bulk buyers in any other
trade. Anchors also invest heavily in terms of capital and marketing expenditure that
helps in generating traffic for the mall, justifying their preferential rental rates. Moreover,
whatever is lost (if it is correct to say so!) in terms of reduced rentals is recovered adequately
by charging a higher rental from vanilla tenants who come only due to the presence of a
specific anchor store. In most cases, smaller (vanilla) tenants enquire about the number,
location and status of anchor tenants in a mall before making a decision to opt for retail
space in that mall. The presence of strong anchors improves the realization made from
renting out space to kiosks, carts, stalls, promotional displays and events.
Definition of Anchor Store

Also known as anchor tenants, draw tenants or key tenants, anchor stores are the largest
occupiers of space in shopping malls. In practice, these are the first ones to occupy
212 Mall Management
space. Hence they catalyze subsequent tenancy of the mall and also improve its rate of
occupancy. As they are supposed to draw shoppers, anchor stores are generally placed
at strategic locations. Here 'strategic' does not mean prime as at times anchors are placed
at 'not-so-prime' locations to channelize customer traffic towards that side. Examples
include extreme ends, wing locations and upper floors. However, attempt is made to
allot such spaces to anchor tenants that they are visible to the people passing by. An
anchor's size alone cannot be the magnet to attract shoppers. Rather, it should have some
USP that is valued by the mall's target clientele. In some cases, anchors are so popular
that the mall is known due to their presence.
Since anchor tenants greatly help a mall draw customers as well as other tenants,
they negotiate for special privileges. The first and the foremost is rentals. Anchor tenants
pay rentals that are considerably lower than what vanilla stores pay. In some cases,
malls also adopt a pure revenue sharing model instead of charging rentals from anchors.
Benefits extended to anchors include special infrastructural support in terms of ramps,
escalators, service lifts and dedicated entry/exit points. Anchors like hypermarkets and
supermarkets are generally given direct access to the mall parking so that shoppers may
take loaded trolleys directly to their parked vehicles. If anchors occupy space deep inside
the mall (with no access to peripheral display), they may be given display space on the
fagade, profile or elsewhere on the periphery. Anchor stores sign lease agreements for
considerable large periods of time. Such agreements make sense to the mall as they assure
occupancy of space for a longer period of time. To the anchors also, these agreements
give a guarantee that they can harvest the fruits of business development at the mall for a
longer time period. Moreover, anchors need to invest significantly for making the vanilla
shell worthy of use for their specific format. A large part of this investment is a sunk cost,
hence anchors would like to use it for longer duration.
Some mall researchers define anchor tenants in terms of the absolute size of their
stores. This approach makes sense if the shopping malls and retail formats are of standard
or similar dimensions. However, it is not realistic in a country like India where mall
projects range from 2,00,000 square feet to 20,00,000 square feet. The retail formats tend to
adjust themselves into malls depending upon the size of the mall and business potential
of the catchment. However, while defining an anchor store, the following parameters
should certainly be observed:
(a) Size of the anchor(s) in relation to the ancillary tenant
(b) Proportion of the gross leasable area (GLA) of the mall occupied by the anchor
tenant(s).
It is not uncommon to have more than one anchor in shopping malls these days. It is
partly because mall projects are getting larger and larger and partly because the evolved
Indian customer looks for a larger variety of needs that can be fulfilled by anchor tenants.
Popular Anchor Tenants in the Indian Malls
Generally, shopping malls have the following stores as anchors: department stores,
hypermarkets and supermarkets, multiplexes, food courts, fast-food joints and specialty
stores. The nature of and requirements for these anchors are discussed in the following
sections.
Department Stores
Department stores are the pioneering anchor stores in shopping malls across the globe.
In the world's first modern mall. South Dale Centre (1956), two of the anchor tenants
(Dayton's & Donaldson's) were department stores. The same holds true for India where
department stores like Shopper's Stop, Pantaloons and Westside were the early popular
choices for anchor space. They still hold this position but share it with other anchors like
multiplexes and hypermarkets.
Department stores are large stores that are part of a retail chain and carry a
wide range of products and services. A department store is organized into separate
departments with each department representing one product/service category. Ideally,
the department store should carry a broad range including apparels, furniture, cosmetics,
appliances and home furnishings with no product/service line dominating the store. In
practice, department stores have a dominance of apparels, cosmetics, toiletries, fashion
accessories and home accessories. That is why these are often called Life Style Retail
(LSR). Important home-grown department stores in India include players like Ebony
(DS Group), Shoppers Stop (K Raheja Group), Pantaloons (Future Group), Westside
(Tata Retail Enterprise), Lifestyle (Landmark Group), Globus (R Raheja Group) and
Reliance Trends (Reliance Retail). International players like Marks & Spencer also have
their presence in India.
u P~ S:
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Shoppers Stop in Forum Mall, Kolkata

214 Mall Management
Requirements for Department Stores
Department stores sell merchandise that is medium- to high-priced with a high value-to-
volume ratio. These stores attract customers of a relatively younger and affluent profile.
Being lifestyle formats, location, displays and ambience are quite significant for these
stores. Department stores require large, continuous space without pillars in between.
It is to ensure an unhindered view and feeling of openness inside the store. Preferred
location for a department store is on the ground floor. However, since a disproportionate
share of the ground floor plate cannot be allocated to a single tenant, the space on the
first and second floors exactly above the department store's ground floor space is also
given to it. It goes well for a department store, as some of its departments can be located
on the higher levels. However, this arrangement requires dedicated lifts and escalators
(not ramps) for vertical circulation within the department store. Preferred dimensions
are either square or rectangular with the smaller arm being the depth. It gives the store
a longer store front that can be used for displaying lifestyle products that rely heavily
on visual merchandising and displays. For the same reason department stores should be
situated on the frontal periphery of the mall with extroverted display windows to display
latest arrivals to attract the customers. However, the mall developer might persuade the
department store to occupy space at the back end or only at a higher level if more suitable
anchors are available for the prime location. All the stores housed in a mall have their
entry only from inside. However, some department stores ask for at least one dedicated
entry point on the periphery so that customers who wish to enter the store directly may
do so. In this case, the developer negotiates to ensure that the same point is not used for
exit as it might defeat the purpose of having an anchor. In most cases, department stores
insist on exclusivity, meaning no other department store would be accommodated in the
mall as long as they are there. However, the developer might push for accommodating
another department store at a higher level. An exception to this can be large shopping
malls with a huge plate area where two department stores can be accommodated at the
same location (say, ground floor). In this case, both the stores are located far apart (at
extreme ends) and are serviced by different entry gates of the mall. For example. Great
India Place Mall in Noida has both Shoppers Stop and Pantaloons as anchor tenants. If
there is a single department store, shoppers entering the mall from the distant entry may
not visit the department store situated at the other extreme due to the distance.
Hypermarkets and Supermarkets
Hypermarkets and supermarkets were not popular options for anchor space during the
initial years of mall development in India. Hypermarkets as a concept came to India
only in the year 1998 when the Future group opened India's first hypermarket named
"Big Bazar" in Kolkata. The concept gained acceptance after Future Group came up
with its Big Bazaar chain of hypermarkets across India. However, this is not the case
with supermarkets, as India did have supermarkets even before the advent of malls. The
country's first chain of supermarkets, Nilgiris, came into existence in the year 1905. But
the Indian supermarkets operated primarily from the crowded, in-the-heart-of-the-city
locations though situation has changed over the last 6-7 years regarding the location
of large retail formats. Today, a hypermarket is the first choice for anchor space in any
mall. Hypermarkets are beneficial for malls as they bring high footfalls with a very high
conversion ratio.
BIG BAZAAR
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Hypermarket anchor at EDM, Kaushambi
As compared to hypermarkets, supermarkets represent a smaller and more focused

format that carries merchandise comprising food, grocery and daily need items. These
are low-value, low-margin and high-turnover items. Typical supermarket product
lines include dry items (FMCG and , grocery), wet items (fruits and vegetables) and
appliances. Prominent supermarkets operating at national level are Food Bazaar (Future
group). Spencer's (RPG Group) and Reliance Fresh (Reliance Retail), whereas Nilgiris,
Varkeys and Margin Free Market are regional players in this format. Hypermarkets are
much larger in size and scope as compared to supermarkets. Apart from stocking food,
grocery and daily needs, hypermarkets also sell apparels, electronics, furniture, home
furnishings, music and even jewellery in some cases. Major hypermarkets operating in
India include Big Bazaar (Future Group), Spencer's Hyper (RPG group), Easyday (Bharti-
Walmart), Vishal Mega Mart (Vishal Retail) and Hypercity (K Raheja Group).
216 Mall Management
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Supermarket anchor on top floor at Garuda mall, Bangalore
Requirements for Hypermarkets and Supermarkets
Hypermarkets and supermarkets deal in items having a high volume-to-value ratio. For
easy handling and delivery of such goods, these formats are generally located at the
ground level. Manoeuvring of trolleys is also convenient at the ground level. In many
cases, these formats start from the upper basement and extend to the ground and first
floors. This way the store is easily integrated with unloading facilities for replenishments,
whereas the shoppers can push their loaded trolleys directly to their vehicles. In such
cases, the hyper/supermarket has direct entry/exit options to the parking space in the
upper basement. However, there are exceptions where these formats have been placed at
a higher level. For example, Sahara Mall in Gurgaon has Big Bazaar at a higher level. In
such cases it is mandatory to have dedicated service lifts to handle stock replenishments
and huge customer lifts so that customers can reach the hyper/supermarket comfortably.
Inside the hyper/supermarket store, ramps are needed if the store is spread over
multiple floors. It helps customers in moving trolleys from one floor to the other. If
mechanization is to be adopted, travellators (not escalators) are a better option than lifts.
Though irregularly-shaped retail space may work for these formats, it is better if the
space is regular and does not have visual obstructions like pillars. It should also have the
required width near tentative exit points so that adequate number of check-out counters
and customer help-desk can be placed. The flooring for these formats should be durable
and rugged and the ceiling is generally kept bare and at a higher level. These formats do
not induce customers through display windows and hence may be located deep inside
the mall with no exposure to periphery. However, they do need space on the mall fagade
or profile to carry hoardings displaying store name.
Multiplexes
Though movie exhibition business is more than a century old in India (starting with
Lumiere brothers in 1896), the exhibition landscape was completely dominated by
conventional single-screen cinema halls till a decade back. The first multiplex in India,
PVR Anupam in Saket (New Delhi), opened in the year 1997. Around the same time
pioneering malls Ansal plaza, Delhi and Crossroads, Mumbai came into existence. Since
the concept of multiplex was new and there were few takers for it at that time (the viewer
indifference continued till next 5-6 years), none of the initial malls had a multiplex as
anchor. However, later with soaring income levels, the cine-goers expressed a distinct
desire for ambience, comfort and leisure and they started patronizing multiplexes. The
demand for multiplexes started in metropolitan cities and then percolated to the lower
level urban agglomerates. This is also the case with the concept of shopping malls.
Hence multiplexes and shopping malls are an ideal 'made for each other' combination.
Multiplexes are a useful way of utilizing retail space at levels higher than the second
floor, as conventional retailing and shopping do not go beyond the second floor. Major
multiplexes operating in India are Priya Village Roadshows, i.e., PVR (owned by Ajai
Bijli), Big Cinemas (Reliance ADAG), Fun Cinemas (Essel group), INOX (INOX group)
and Fame multiplex (Shringar Cinemas).
In big cities, local authorities permit a higher FSI, but in most cases it is of no use, as
shoppers do not show enthusiasm in moving to the second or third floor for shopping.
However, developers do construct retail stores at these levels hoping against the hope that
tenants and shoppers would come. When it does not happen, the additional construction
cost pulls down the developer's return on investment (ROI). Now, multiplexes have
emerged as a viable option to put to productive uses the additional space available at
higher levels. Since a typical Hindi movie lasts three hours, the viewers do not mind
travelling up to the second or third floor for an engagement of such a long duration.
218 Mall Management
PVR Cinemas at Forum Mall, Bangalore
Requirements for Multiplexes
Multiplexes do not require typical 'store and corridor' space. They require space for
exhibition halls, ticket booking counter (box-office), canteen space, wash rooms, kids zone
and waiting area. Each area may have a different design configuration. These specific
infrastructure provisions should be accommodated in the mall design at the drawing
board stage itself. For instance, the size of a continuous multiplex hall and spacing
between the columns should be decided as per the hall capacity. The ceiling of the hall is
at a considerably higher level as compared to that of a normal retail store. The flooring
for a multiplex hall is also different, as it is inclined. In most cases, multiplexes request
for additional space for a box office on the ground floor at the external periphery of the
mall so that people may buy tickets (for future shows) without taking the pains to go to
the higher floor. More requirements are posed by the multiplex in the form of additional
parking space. Multiplexes' parking needs are different from those of conventional retail
stores. For conventional stores, vehicles are parked for the duration of a shopping trip that
ranges from half an hour to a couple of hours. Hence the same parking space is utilized
by more people. However, in the case of a multiplex, the parking space is blocked by a
vehicle for nearly four hours. It increases the parking requirement considerably. There
are also issues regarding connectivity of the multiplex with the lower floors and parking
with the help of escalators and lifts.
Food Courts
The food court in a shopping mall means a common facility comprising a collection of
diverse ready-to-serve food counters with shared seating facility. Food courts are meant
to serve fast food really fast. Though food courts may be located anywhere, the common
practice is to place them on a higher level adjacent to multiplexes. By doing so, the mall
ends up utilizing the retail space that is otherwise unsuitable for conventional retailing.
Since eating food is an appealing and time-consuming activity for Indian consumers,
they do not mind travelling up to a higher level, especially when they get a variety of
Hondling Anchor Tenonts 219
offers at a reasonable price as compared to full-meal restaurants. Their combination with

multiplexes makes sense, as watching movies is a family outing, and it is natural for the
family to satisfy its taste-buds after spending nearly three hours in the multiplex. Food
courts also provide a decent place to spend time if the viewers reach the multiplex a
few minutes before the opening of the show. Many people argue that food courts do not
qualify as anchor tenants if one goes by the strict definition of anchor in terms of size
and identity (all counters are owned by different operators). Nonetheless, the food court
is a fit case for designating as anchor if one considers its ability to attract footfalls and
impart an identity and USP to a mall, which is true in case of smaller, not-so-successful
and undifferentiated malls.
Requirements for Food Fourts
A food court comprises a number of counters adjacent to each other. Each counter has
a frontage (serving area) and back space (kitchen). Each unit is provided with water,
electricity and basic infrastructure for a kitchen. Theoretically speaking, the mall
management team might run the food court on its own (that is, manage all the counters
themselves) or rent them out to different tenants. However, running a food court would
prove to be a costly distraction for the mall management team. The common practice
is to award the contract for running the food court to a specialist. The specialist might
operate all the counters or sub-let them to other tenants. Food courts are generally run on
revenue-sharing basis. There are two modes of revenue collection and sharing. The first
mode provides for direct collection of money from customers by individual counters (as
is the case with normal stores). The original lessee (the specialist) has access to the billing
done by individual counters. Revenue sharing is done on a weekly or fortnightly basis.
This system suffers from some drawbacks. Numerous transactions on each counter result
in wastage of time and efforts. There could be instances where some counters try to sell
items without billing. To overcome these drawbacks, there is provision for a centralized
collection of money. Customers are required to buy pre-charged coupons that they
redeem at different counters. Money is thus collected by the original lessee that he shares
with individual tenants on a weekly or fortnightly basis. To fulfil the requirements of a
food court, the developer needs to provide retail counters, kitchen, seating arrangement,
crockery (in some cases), maintenance and upkeep of the facility and software/hardware
support in case of the centralized collection.
Fast-food Joints
Fast-food joints, also known as quick-service restaurants, refer to stores that offer a limited
and pre-decided menu to their customers in really quick time. For serving quickly, food
is generally pre-cooked or semi-cooked, kept hot and assembled or packaged and served
as and when the customer places an order. Some Quick Service Restaurants (QSRs)
offer only the takeaway option, whereas others provide seating space as well. Fast-food
joints operate on the basis of standard cuisine, standard recipes and reasonable prices.
These attract a broad range of customers, from kids to the elderly, in groups as well as
individuals. One of the major fast-food joints operating in India is McDonald's, which is
India's biggest brand in QSR space. In India, McDonald's has two master franchisees—
220 Mall Management
Hard Castle Restaurants Pvt. Ltd., which holds the franchise for southern and western
parts of India and Connaught Plaza Restaurants Pvt. Ltd., which manages operations
in northern and eastern parts of India. Pizza Hut and KFC brands are owned by Yum
Brands Inc of USA, a sister concern of Pepsi. In India, it operates through multiple
franchisees. Subway is among the latest fast-food joints in India. It is the largest single-
brand restaurant chain in the world. In India, it operates through its master franchisee
Lite Bite Foods owned by Mr. Amit Burman of Dabur. Dominos is India's largest chain of
pizza stores with over 300 outlets across India. Its Indian operations are handled by its
master franchisee Jubilant Food Works Ltd.
Fast-food stores are generally not considered anchor stores. However, a player like
McDonald's or Pizza Hut in a tiny mall in a small town has the potential to draw footfalls.
It also happens in cases where the mall developer fails to attract any genuine anchor and
consequently the fast-food joint ends up being the largest and the most prominent brand
in the mall.
Requirements for Fast food Joints
Though the actual size of a fast-food joint depends on the size of the mall and expected
footfalls, these joints generally occupy space in the range of 2000-2500 square feet. They
usually occupy corner positions so that prospective customers can see them from a
distance outside the mall. The corner location (having more than one side open) also
enables customers to have a look outside while seating inside the fast-food joint. But in
some cases, the mall management persuades the tenant to occupy a place deep inside the
mall by offering extra incentives. It happens in cases where a stronger fast-food brand
is already occupying the frontal position, and the other joint is needed to channelize
the customer traffic towards the inner, unvisited parts of the mall. Attempt is made not
to accommodate more than one fast-food joints on a single floor. If it is to be done, it is
ensured that the ones selected are positioned as far apart as possible. In the case of large
malls, fast-food joints are strategically placed at each floor so as to take care of the food
and beverages needs of customers anywhere in the mall.
Specialty Stores
Specialty stores sell a narrow range of complementary products. The assortment carried
by them is fairly deep, and these stores are considered a sort of specialists in the product
category they deal in. Specialty stores generally extend a high level of customer service
though the actual intensity of service depends on the positioning and targeting of the store.
Some of these like Bata operate in the mass segment, whereas others like Louis Vuitton
target the high-end segment. Specialty stores represent a diverse range of products like
footwear (Adidas), Apparels (Koutons), Electronics (Sony World), furniture (Gautier),
Books (Crossword) and watches (Titan).
Just like fast-food joints, specialty stores are not genuine anchors for a mall and
are meant to occupy space as ancillary tenants. But in special cases, they end up being
the anchors. Cases where a specialty store has been deliberately included as an anchor
include Pacific Mall, Sahibabad where 'Ritu wears' has been placed as an anchor. Electronic
retailing stores like 'Croma' and 'Next' are anchors in many shopping malls.
Hondling Anchor Tenonts 221
f )
SUMMARY
X
Anchors or anchor tenants are the largest occupiers of retail space in a shopping mall. They
are significant for a mall because they impart image to it and also generate footfalls. Smaller
tenants take advantage of the spillover effect of the traffic generated by the anchor tenants.
In return, anchors seek favourable terms and conditions in the lease agreement. Some of the
favours include lesser rental, preferential location, dedicated infrastructure and promotional
support. Some of the major anchor tenants for Indian shopping malls include hypermarkets,
supermarkets, multiplexes, department stores, food courts, food joints and specialty stores.
Selection of anchor tenants is a very critical issue because they are the lifeblood of a shopping
mall. It is important to handle anchor tenants carefully to fully exploit their potential in the
interest of the mall and other tenants.
REVIEW QUESTIONS [
1. Who comes first in a new mall: anchor tenants or ancillary tenants? Why is it so?
2. How do mall developers recover the loss in revenue incurred by offering significantly
lower rentals to anchor tenants?
3. Why is it important to take care of the requirements anchor tenants at the design planning
stage of the mall?
4. How do anchor tenants help in utilizing higher floor space index (FSI) provided by the local
development authorities?
5. How do hypermarkets and supermarkets add value to the mall as an anchor? What are the
infrastructure requirements specific to these formats that should be provided in shopping
malls?
6. "It is important for multiplexes to take retail space on a very long term lease, especially
when all the tenant improvement is done by the multiplex itself." Comment.
7. In recent times, shopping malls have been accommodating multiple anchor tenants many
of whom belong to the same retail format. Why is it so? Do you think the trend can sustain
itself?
8. Can a food court in a mall be termed as an anchor tenant? Give arguments for and against
the proposition.
9. Are department stores ideal anchors for all types of catchment areas and shopping malls?
Explain.
10. Under what circumstances do shopping malls accommodate fast food stores and specialty
stores as anchor tenants?
.
222 Mall Management
: _)
PRACTICE EXERCISES
1. Visit two-three shopping malls in a city. Examine their anchor tenants in terms of their size,
location, dedicated facilities and footfalls that they draw? Do you feel there is any anomaly
in any of these parameters? Why is it so? What could be the possible remedy for that?
2. Imagine a neighbourhood mall measuring not more than 3 lakh square feet of gross leasable
area (GLA). Should this mall accommodate more than one anchor? What would be ideal
stores to occupy anchor space? Comment on the size and location of these anchors.
3. Visit a few malls in any city. Prepare a list of anchor stores. Also prepare a list of stores
drawing maximum footfalls? Do the two lists completely overlap? If not, identify the
ancillary stores drawing more footfalls than the anchor stores. Why is it so?
SUGGESTED READINGS
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of population change for retail/wholesale sector employment in the metropolitan great
plains: 1950-1996', Rural Sociology, 64(1), pp. 92-112
3. Anderson, C.H. and Kaminsky, M. (1985), 'The out shopper problem: a group approach for
small retailers', Entrepreneurship: Theory and Practice, 9(3), pp. 34-45
4. Benjamin, J.D.; Boyle, G.W. and Sirmans, C.F. (1992), 'Retail leasing: the determinants of
shopping center rents'. Real Estate Economics, 1990,18(3), pp. 302-312.
5. 'Price discrimination in shopping center leases', Journal of Urban Economics, 1992, 32(3),
pp.299-317
6. Braid, R.M. (1998), 'Spatial price competition when stores are not certain to have what
consumers want', Regional Science and Urban Economics, 28(2), pp. 143-161
7. Bresnahan, T.F. and Reiss, P.C. (1991), 'Entry and competition in concentrated markets',
The Journal of Political Economy, 99(5), pp. 977-1009
8. Brown, M.G. (1999), 'Design and value: spatial form and the economic failure of a mall',
Journal of Real Estate Research, 7(1/2), pp. 189-226
9. Brown, S. (1989); 'Retail location theory: the legacy of harold hotelling',7ot7r/7o/o//?efo/7/A7g,

65(4), pp. 450-470
10. 'Tenant mix, tenant placement, and shopper behavior in a planned shopping centre', The
Services Industries Journal, 1992, 12 (3), pp. 384-403
11. Cassill, N.L; Williamson, N.C.; McEnally, M. and Thomas, J. (1994), 'Department store
cross shoppers', Journal of Applied Business Research, 10(4), pp. 88-96
12. Chowdhury, J.; Reardon, J. and Srivastava, R. (1998), 'Alternative modes of measuring store
image: an empirical assessment of structured versus unstructured measures', Journal of
Marketing Theory and Practice, 6(2), pp. 72-84
13. Christaller, W. (1966), Central Places in Southern Germany, Translated by C.W. Baskin,
Englewood Cliffs, NJ: Prentice Hall, Inc.
14. Claycombe, R.J. (1998), 'Cournot retail chains', Journal of Regional Science, 38(3), pp. 481-494
Hondling Rnchor Tenants 223
15. Colwell, P.F. and Munneke, H. J. (1998), 'Percentage leases and the advantages of regional
malls', 7ot7rno/o//?eo/Esfofe Research, 15(3), pp. 239-252
16. Crask, M. (1979), 'A simulation model of patronage behavior within shopping centers',
Decision Sciences, 10(1), pp. 1-15
17. D'Aspremont, C, Gabszewicz, JJ. and Thisse, J.F. (1979), 'On hotelling's Stability in
Competition', Econometrico, 47(5), pp. 1145-1150
18. Eppli, M J. and Benjamin, J.D. (1994), 'The evolution of shopping center research: a review
and analysis', Journal of Real Estate Research, 9(1), pp. 5-32
19. Ferber, R. (1958), 'Variations in retail sales between cities', Journal of Marketing, 1958, 22,
pp. 295-303
20. Finn, A. and Louviere JJ. (1996), 'Shopping center image, consideration, and choice:
anchor store contribution', Journal of Business Research, 35(3), pp. 241-251
21. Fisher, J.D. and Kinnard, W.N. (1990), 'The business value component of operating properties:
the example of shopping malls', Journal of Property Tax Management, 2(1), pp. 19-27
22. Gabszewicz, JJ. and Garella, P.G. (1987), 'Price search and spatial competition', European
Economic Review, 31, pp. 827-842
23. Ghosh, A. and Craig, C.S. (1983), 'Formulating a retail location strategy in a changing
envkonment', Journal of Marketing, 47(3), pp. 56-68
24. Hardin III, W.G. and Wolverton, M.L. (2000), 'Neighborhood center image and rents',
Working Paper, Mississippi State University
25. Huff, D.L. (1963), 'A probabilistic analysis of shopping center trade areas', Land Economics,
39(1), pp. 81-90
26. Karvel, G.R. and Patchin, PJ. (1992), 'The business value of super-regional shopping
centers and malls'. The Appraisal Journal, 60(4), pp. 453-462
27. Kirkup, M. and Rafiq, M. (1994), 'Managing tenant mix in new shopping centers',
International Journal of Retail and Distribution Management, 22(6), pp. 29-37
28. Mayo, E.J.; Jarvis, L.P. and Xander, J.A. (1988), 'Beyond the gravity model', Academy of
Marketing Science Journal, 16(3/4), pp. 23-29
29. Miller, HJ. (1993), 'Consumer search and retail analysis', Journal of Retailing, 69(2), pp.
160-192
30. Nakanishi, M. and Cooper, E.G. (1958), 'Parameter estimation for a multiplicative
competitive interaction model: least', The Selection of Retail Locations, NY: Dodge
31. Pashigian, B.P. and Gould, E.D. (1998), 'Internalizing externalities: the pricing of space in
shopping malls', Journal of Law and Economics, 41(1), pp. 115-142
32. Ramsland, M.O.. and Kinnard, W.N. (1999), 'Quantifying business enterprise value for
malls', The Appraisal Journal, 67(2), pp. 157-167
33. Simons, R.A. (1992), 'Site attributes in retail leasing: an analysis of a fast-food restaurant
market', The Appraisal Journal, 60(4), 521-531
34. West, D.S. (1992), 'An empirical analysis of retail chains and shopping center similarity',
The Journal of Industrial Economics, 40(6), pp. 201-221
35. Wolinsky, A. (1983), 'Retail trade concentration due to consumers' imperfect information',
The Rand Journal of Economics, 14(1), pp. 275-282
□ □□
224 Mall Management
CASE
^Food courts emerging as anchors ^
Food courts are playing an increasingly important role in the success of shopping malls. It
is observed that as many as 80 per cent visitors to a mall visit a food court as compared to
about 65 per cent who visit a hypermarket and 50-55 per cent who visit a department store.
On a weekend afternoon in Inorbit Mall, Mumbai, you may have to wait for as long as three
hours if you want to eat at any of the restaurants. In the common food court area, customers
may have to stand guard over a table to make sure they get it next.
Keeping this in view, Inorbit Malls (India) Pvt. Ltd plans to nearly double the size of food
courts from the current 6 per cent of mall space in the next few malls it is developing. And
Inorbit is not an exception. Almost all mall developers are giving food courts prime attention,
as they typically get more visitors there than into any single store in the mall. According to
an estimate by real estate consulting company Jones Lang LaSalle, Meghraj food courts are
emerging as one of the anchor tenants. In retail industry parlance, anchor tenants are those
stores that have the largest space, visitors and revenues in the mall.
Kshitij Investment Advisory Co. Ltd, which is developing 11 malls across tier-ll cities, has set
up the first food and beverage division for a mall developer to strengthen its food courts. DLF
Retail Developers Ltd, the retail arm of Delhi property developer DLF Ltd, has an international
food and beverage company on board to consult on creating better quality food courts.
"Food courts are one of the largest syndicated spaces that a mall developer has to manage
and getting it right is important for them," says Ashish Kapur, managing director of Moods
Hospitality Pvt. Ltd, which runs a Chinese restaurant chain called Yo China at several malls.
Mall developers were earlier selling space to stores, but now they lease it out, run food
courts and promote them. All these could drive visitors to stores and increase mall revenues.
"Food courts can increase the time people spend at the mall and drive business to other
stores in the mall," says Girish Pande, chief operating officer of E-City Property Management
Services, which manages seven malls across India.
Source: 'Mall developers give food courts prime attention to step up sales', Saumya Roy,
retrieved from http://www.livemint.com/2007/12/17000734/Mall-developers-give-food-
^cour.html.
CHAPTER
11
Future of shopping molls
LEARNING OBJECTIVES

• Get an overview of the current status of the mall industry in India
• Understand major challenges on the way to shopping malls maturing as a market.
• Know about the life cycle stages of a shopping mall.
• Get an idea of the various options available before mall developers and managers to handle
the complications that shopping malls might face in future
LESSON FOR INDIA FROM THE USA

The United States of America may be called the motherland of shopping mails. According
to the International Council of Shopping Centres (ICSC), the country has over 1,00,000
shopping malls of all sizes (2009 data). However, everything is not hunky-dory in the
US mall business. During recent years, a large number of retail chains posted losses
and closed stores, leading to high vacancy rates in the US malls. This phenomenon
has resulted in what many people call 'dead malls'. The 'dead malls' have no surviving
anchor, have very high vacancy rates and low customer footfall and look outdated and ill-
maintained. Most of these end up getting closed. But even if a mall is closed, its building
still remains. The mall building and the real estate underneath represent a huge cost that
the mall development incurred but could not encash. Clearly, these malls failed to judge
the pulse of the shoppers and bore the brunt. Some of these dead buildings are being
put to alternative uses, whereas others are being demolished for redevelopment, not
necessarily as shopping malls.
Countries like India are far behind the USA, as the number of mails in India is not even half
per cent of what it is in the USA. Though India is at the initial stage of mall development.
226 Mall Management
people are sceptical about the future of the mall business. Whatever happened in the
US may eventually happen in India. Do we need to wait till that stage or look at the US
experience and get prepared beforehand to handle the situation more sensibly?
Introduction
India's journey on the 'Mall Road' has just begun. According to consultancy firm C. B.
Richard Ellis (CBRE), India had 190 shopping malls by the end of year 2010 and the
number is expected to go up to 280 by 2011-12. This is nothing as compared to over
1,00,000 shopping malls in the USA. The comparison becomes more unequal if we
calculate the availability of shopping malls and mall space on a per capita basis, as the US
population base is far smaller than that of India. But the growth exhibited by India cannot
be discounted, as it all happened in a just a decade's time. If the growth is calculated in
terms of three malls in 1998 to 280 malls in 2012, it is a really fast growth story. The
growth has been catalysed by the changes happening at a much rapid pace across the
globe in all segments and sectors of societies and economies.
The malls in India are expected to follow the same routine as the US malls did but
in a more compressed time-frame. The bad thing is that reaction time is significantly
reduced in the face of such rapid changes, but the good thing is that one can have a fair
idea of what is likely to happen. Thus it is important for the Indian mall developers to
follow the global trends in mall development.
Comparison of Mall Developmen.t in the US and India
Though the archetype of modern shopping malls emerged in the 1920s in the USA (Country
Club Plaza), it took over three decades for the first modern shopping mall (Southdale
Shopping Centre) to take shape in 1956. In comparison, India shifted from the archetype
to the modern mall in a much more compressed time-frame. The Indian archetype,
Spencer Plaza, came up in 1990, and the first modern Indian malls (Ansal Plaza, Delhi and
Crossroads, Mumbai) were doing business by the end of the same decade. In the USA,
the shopping mall concept gained immense popularity and saw unparalleled growth
in the four decades after the Southdale opening. By 1990, the shopping mall became an
inseparable part of the American lifestyle and identity. The trend is comparable with India
where shopping malls gained popularity between 1998 and 2008. What happened in the
USA during four decades happened in India in just ten years.
The US market saw the emergence of super regional centres (malls larger than 8,00,000
square feet) in the 1980s when mall development was at its peak. West Edmonton Mall
started operations in the 1981, whereas Mall of America began business in 1992. Since then
there has been a consistent growth in large malls. In the Indian context, initial malls were
confined to five-six lakh square feet of retail space. The million square feet plus mall came
up in India only during 2006-07 and that was the peak of mall development in India.
Between 1989 and 1993, the US economy faced a severe savings and loan crisis
that resulted in a sharp decline in the growth rate of shopping malls. It is comparable
with what India faced during 2008-10 when the economic recession resulted in the
shelving of a number of projects. The availability and cost of funds is a core issue in mall
Future oF shopping molls 227
development, a business that requires huge capital investment. The USA resolved this
issue by making a transition from several privately-held, family-run shopping centre
development companies to publicly-traded real estate investment trusts (REITs). This is
yet to happen in India.
Another lesson that the US market learnt from downturn of the late 1980s was the
need to be innovative and offer value. Consequently, the country saw emergence of 'power
centres' and 'factory outlets'. These formats are among the fastest expanding formats in
mall business. However, India is far behind in utilizing these formats. All Indian malls are
replicas of each other, with limited inclination towards innovation. The new mall formats
that have been used in India are luxury malls and seamless malls. The US mall developers
identified entertainment as a potent tool to attract and hold shoppers, and since 1990s the
US malls have been offering a wide range of entertainment options. The Indian malls too
rely on entertainment as a useful option, but the offer here is restricted to multiplexes,
food courts and an occasional gaming zone. In terms of variety and scale of entertainment
options, the Indian malls stand nowhere near their US counterparts.
The advent of the Internet in the 1990s was another event that could affect retailing
and shopping. The impact was assumed to be so severe that the Time magazine in the
year 1998 carried a cover story "Kiss Your Mall Good-Bye: Online Shopping is Cheaper".
However, US retailers responded smartly by adding online services to their brick-and-
mortar formats. The shopping malls also developed websites to share information about
their location, connectivity, tenants and promotional activities and events. They converted
the Internet threat into an opportunity. However, the Internet never appeared to be a real
threat in India as its penetration in the country is abysmally low and Indian shoppers are
more interaction- oriented. Still many good malls in India have developed their websites.
Challenges before Indian Shopping Malls
The shopping malls have a bright future in India, at least for the next decade or so. It is
because India is still in the growth phase of mall development, whereas the market for
malls in countries like the USA is already declining, as shown in Figure 11.1.
Infancy i Development i Maturity i Decline

I i m ► I
! Southeast
1
Asia
United
t
States
China
MARKET India
! i
GROWTH
Bangladesh
Sri Lanka
Stage I Stage II Stage III Stage IV

TIME >
Figure 11.1: Mall life cycle stages in developing countries and the USA
228 Mall Management
Source: Singh, Harvinder and Bose, S.K. (2008), 'My American cousin: a comparison of Indian and
us malls'. Journal of Asia-Pacific Business, Vol. 9(4)
However, it would be imprudent to think that the Indian shopping malls would
continue to flourish in their natural course. As they climb up along their life-cycle curve,
there will be more competition. There would be other forces in the environment as well,
like customers and regulators. Internally, the mall development companies will have
their strengths and weaknesses. In the coming decades, the Indian shopping malls are
likely to face the following challenges:
• Cloning of shopping malls
• Clustering of malls
• Consolidation of the industry
• Changing financing and revenue models
• Shift in the balance of power
• Role of a regulator
Cloning of Shopping Malls
India being a recently evolved market, both the developers and the customers do not have
many benchmarks before them for development or evaluation. Worse still, a large number
of developers are small builders with little or no exposure to world-class construction
and management. Consequently, they tend to ape the more successful operational malls.
It results in a scenario in which all the malls end up being clones of each other. It would
be a big challenge for the mall developers to come up with innovative concepts and mall
formats that cannot be replicated. To make that happen, it is important to look beyond
the architecture, and focus on the management, promotion and operations part.
Clustering of Malls
In the absence of necessary scientific research, the developers are coming up with
shopping malls in urban centres. Mushrooming of shopping malls in a single catchment
area has resulted in cannibalization among shopping malls and truncated catchment
areas. To remain sustainable and financially viable, the developers need to understand
that a given catchment area can support only a limited square footage of mall space. If
there is a genuine gap in the demand-supply of mall space in the catchment area, only
then it makes sense to develop a shopping mall. The other rational decision is to make
adequate provision of the market share for the unorganized retailers, as the mall store
cannot grab the entire market in the catchment in a country like India.
Consolidation of the Industry
The Indian mall development industry is highly fragmented with a large number of small
players operating in the retail space. Anybody having a plot of land in the city or access
to funds can aspire to be a mall developer. However, there are only a few players like
DLF, Ansals, Unitech, Prestige group, Parsvanath and EWDPL who have the network
and expertise required to run the mall business. Smaller players may find it difficult to
Future of shopping molls 229
manage, promote and operate malls on a long-term basis. Under competitive pressure
many of these would leave the field by selling their assets to bigger players. Eventually,
the industry would be left with a small number of large players. Each of these players
would have the goodwill, expertise and resources to plan, develop, lease, manage and
operate malls on a long-term basis. It is similar to what happened in the US shopping
centre industry in the early 1990s.
Changing Financing and Rrevenue Models
Another change that took place in the USA was the entry of real estate investment trusts
(REITs). These trusts opened up a source of low-cost, long-term debt, ensuring the public
ownership of shopping malls. Hence the management team of a shopping mall could plan
on year-to-year basis instead of typical month-to-month or quarter-to-quarter basis. This
gave them some elbow space to plan for a longer time horizon in the absence of pressure
for immediate recovery. In India, the funding for shopping malls comes primarily from
private sources that carry very high cost. There is pressure to pay returns in the short
run. In many cases, the developers repay the loans raised from private sources by selling
off retail units to individual investors. It results in a situation where the mall is owned
piecemeal by scores or hundreds of investors. It creates a management quagmire. In the
times to come, it is expected that the Indian malls will also have access to public funding.
The Reserve Bank of India (RBI) is contemplating the launch of REITs in India that would
ease considerable pressure from the developers.
Shift in the Balance of Power
During initial stages of mall development, the demand for mall space is higher than its
supply. In such cases, the developers call the shots by charging fixed rentals that are
quite high. However, market corrections take place as supply improves, competition
intensifies and economic instability comes into the picture. It results in a shift in the
balance of power from the developers to the retailers. India has seen this phase during
the economic recession of 2008-10. In the times to come, the tenants are likely to have a
greater say with the revenue model changing from high fixed rental to low/moderate
fixed rental plus revenue sharing to purely revenue sharing. In such cases, the mall
developers need to explore alternative sources of revenue generation.
Role of a Regulator
Real estate is one of the most opaque sectors of the Indian economy. Real estate transactions
suffer from evils like high stamp/registration duty and black money. In an attempt to
weed out black money and bring transparency in real estate deals, the government is
thinking about suitable legislations and a regulatory framework. Once a regulator for
real estate is in place, it is expected to ease the situation as valuations would be realistic
and financing options would be available. However, the regulator would expect parties
to abide by specified rules and regulations. Moreover, appointing a regulator without
having financing support in place may suddenly strangulate the fund supply for mall
projects, at least in the short run.
230 Mall Management
Life Cycle Stages of Shopping Malls
The concept of life-cycle is very pertinent in the field of marketing. It has been successfully
applied on products, brands, categories and stores. However, its application to shopping
malls is unique. It is difficult to visualize the life cycle of shopping malls in the Indian
context, as malls have been existing here only for 15 years or so, which is an insufficient
time period for a large number of malls to complete their life cycle. Whatever mall
failures we see are more due to inappropriate planning and strategizing than due to
reaching the decline stage of the mall life cycle. For understanding this concept, it is
necessary to have a look at the US scenario where shopping malls have been operating
for nearly over 80 years.
The life cycle concept provides a rational explanation for the decline and fall of
shopping malls in a society and economy. According to Jame R. Lowry, there are four
stages in the life cycle of a shopping mall:
(a) Innovation or introduction
(b) Growth or accelerated development.
(c) Maturity
(d) Decline
These stages are identified on the basis of the following parameters:
1. Market conditions: This parameter comprises observations regarding competition

(who and how many), footfalls (number and break-up), growth rate of business and
vacancy rates inside shopping malls.
2. Mall developer strategies; This parameter includes a mix of decisions taken by

the mall developers relating to tenant-mix improvement, revenue model, leasing
practices, facilities and infrastructure, advertising and promotions.
3. Tenant strategies: This parameter covers decisions taken by the tenants during
different stages of the mall's life cycle. These decisions relate to store size, layout,
merchandise, advertising, promotion and discounts.
Introduction/Innovation Stage
During this stage the concept of mall has a novelty value in the market. There are a
small number of similar malls in the market. Customers show enthusiasm towards the
new formats resulting in high footfalls and sales revenue. Many prospective competitors
wait for trends to stabilize. As malls are long-term projects, the competitors who start
constructing new malls do not affect the demand-supply situation during this stage.
Depending upon the maturity level and readiness of the market, the developer
carries out advertising and promotion work. In ready and mature markets like
metropolitan areas, the developer succeeds in eliciting good response from prospective
tenants as well as customers. High, fixed rentals and CAM charges are a reality. In small
towns, the developer needs to indulge in persuasive communication to convince tenants
as well as customers. It is safe to build smaller malls in small towns in the initial phase, as
there may not be many takers for the mall space. Exclusivity and experience is the main
plank for customer communication rather than price promotion. Focus is on carrying
out promotional activities outside the mall. Retailers also use extensive promotion.
Initial merchandise is experimental and is expected to stabilize after getting the customer
response. However in smaller towns, price promotion may be used to induce footfalls.
Accelerated Development/Growth Stage
This stage sees a rapid growth in the number of shopping malls in the city. Consequently,
the trend is firmly entrenched and ignites the market. Footfalls and sales revenue move
skywards. Looking at the customer response, more and more retailers rush to occupy
space in the upcoming malls.
Since the market is enthusiastic about malls, lease rentals escalate and so does the
term of lease. It results in significantly high occupancy rates and a stabilized tenant-
mix. Customers become the best brand ambassadors through positive word-of-mouth
and hence advertising and promotional expenditure is reduced. As a mall gets a little
older, the management is now busy with managing things of routine nature. The focus
of promotion becomes more inward.
A growth stage is generally positive for all. Stores experience greater footfalls, higher
sales, increased ticket size and higher more sales per square feet of retail space. The need
for promotion, especially price promotion, goes down. However, the exact trend depends
on the product category. For instance, if the growth stage results in accommodation of
a high number of stores directly competing with each other, it may necessitate price
promotions and discounts.
Maturity Stage
During this stage, there are a large number of similar malls in the market, may be more
than what the market can digest. Due to intense competition, the shopping malls witness
truncated catchment areas. Footfalls and sales start sliding down. Customers have more
options and some of the new malls could give a serious competition to existing malls
due to their superior infrastructure, modern facilities, relevant tenant-mix and updated
brand profile.
During the maturity stage, many tenants do not renew their lease contract and
shift to the new shopping malls. Stopping this shift is a major task of mall developers
in this stage. If it happens, finding suitable replacement becomes another activity added
to the developer work-list. The tenants coming as replacements generally ask for more
liberal terms and offer lower rentals. Infrastructure and facilities are dilapidated and
need stringent monitoring and upkeep. The mall engages into aggressive promotion and
events to arrest the slide. Many malls opt for renovation or face-lift to make them look
more appealing to the customers.
For the tenants, the business must have stabilized by now in terms of merchandise
and customer service. To face competition, they resort to aggressive price promotion
along with promotion outside the shopping mall.
232 Mall Management
Decline Stage
This stage is characterized by irreversible damage to the mall in terms of major parameters
discussed above. There are a large number of similar shopping malls distorting the
demand-supply situation. Infrastructure and facilities get time-worn, experience becomes
stale, customers manage to find better alternatives resulting in dwindling footfalls, sales
revenue plummets, and tenants start exiting resulting in increased vacancy rates.
The mall developer still tries to squeeze money out of the mall. He/she acts aggressively
in terms of finding new tenants though it is not of much use. To cut cash outflow, the
developer cuts down the promotional expenditure, realizing its futility. Another victim
of cost-cutting is the general maintenance and upkeep of the mall. In some cases, the
developer tries to make the mall fit for some alternative use or try to sell it off.
The tenants of a shopping mall that is in the decline stage try to pass time, as
they wait for the lease agreement to expire. To reduce cash expenses, they cut down
promotional expenditure and confine it only to sale and discounts. No attempt is made
to improve infrastructure and equipment in the store. The store gradually narrows down
its merchandise and may also opt for reduced retail space if the developer agrees.
Strategies for the Decline Stage
Knowing well that a shopping mall has to pass through the stages of innovation,
accelerated growth, maturity and decline, it is prudent for the mall developers to get
ready with possible alternatives to counter any adverse outcome. Some of the options to
cope with the decline are discussed below:
(a) Cosmetic face-lifting: The easiest and the simplest method to apply to a dying mall
is to invest some money in making its exteriors look attractive and contemporary. It
might be accompanied by the overhaul of internal facilities, especially the ones that
are clearly visible. It is not a very popular or potent option, as it does not address
the fundamental deficiency faced by the mall, that is, obsolescence. However, it is
useful when the developer wants to make the mall look attractive so that he/she
may sell it to somebody.
(b) Periodic rejuvenation: During the planning stage itself, the developer must
understand the imminence of decline and opt for staggered leasing. Under the
staggered leasing arrangement, different tenants of the mall are signed leases for
different time durations so that a fixed percentage of vacancies are created each year.
The marketing team may examine the market scenario and consumer preferences
from time to time and find out suitable replacements so that the tenant-mix remains
rejuvenated.
(c) Phases redevelopment: Nobody can predict the pace, quantum and nature of change
in future. It is quite possible that a new feature or facility, desired by consumers,
cannot be accommodated in the physical structure that has been created in the past.
Here a good example is multiplexes that cannot be provided in the malls developed
before the advent of multiplexes. To accommodate such changes, the mall may
adopt modular design (multiple phases). These phases may be developed in one go
or in stages. However, different phases should be leased out in such a manner that
one complete phase (block) may be vacated for redevelopment. That phase may
be redeveloped to create infrastructure that meets contemporary expectations of
consumers.
(d) Complete Redevelopment: The developer may decide to demolish the entire
building and come up with a concept that reflects contemporary needs and tastes.
The new structure need not carry any baggage of the past. But this option is costly,
as it involves huge cost, time and interruption of business. It is not advisable in
cases where the mall has developed an identity of its own.
(e) Repositioning of the mall: This option is suitable for shopping malls that were
positioned for a specific segment of customers and accommodated a specific set of
brands (generally the upper segment of society). As time progresses and the mall
loses its prestige in the eyes of the original targeted segment, it may decide to target
a segment placed at a lower level of the social hierarchy. Accordingly, the tenant-mix,
marketing communication and physical appearance may be modified. Converting a
luxury or upmarket mall to a power mall, value mall or a factory outlet mall is not
a bad idea!
(f) Identifying alternative uses: If it is not possible to manage and run the mall profitably
as a shopping hub, the developer should try to put the mall to alternative use, not
necessarily shopping. For instance, it can be used for storage and warehousing
(maybe for retail stores operating successfully from nearby stores). It may also
be used for conducting classes and exhibitions and hosting social gathering and
ceremonies.
(g) De-malling: The term de-malling originated in the US shopping mall industry. In
de-mailing, the developer provides direct and convenient entrances to all the stores
from outside. It is against the concept of conventional mall that is enclosed and
ensures entry to all the stores strictly from inside.
( )
SUMMARY [
Shopping malls are fast catching up people's imagination and fancy in India. The Indian
journey on the 'Mall Road' has been pretty brisk. India is expected to undergo the same
routine as the US malls did but in a more compressed time-frame. It poses serious challenges
to the mall managers, as it is difficult to aim at future when things are moving so fast. The
rapid journey has its own risks in the form of outcomes like undifferentiated malls, their
clustering in select geographies and regions, and the pressure of consolidation. The cash flow
position of retailers has been quite tough post-recession (2008 onwards) resulting in a thrust
for the revenue-sharing model. Despite being a late entrant in the mall business, India must
realize that like any other product or concept, shopping malls also follow the typical life-cycle
of introduction, growth, maturity and decline. It is time the Indian mall developers realize
this reality and start preparing suitable strategies to cope with the challenges of future.
234 Mall Management
: ^
REVIEW QUESTIONS j
1. India has less than 200 operational malls, whereas the USA has more than 1,00,000. Does
it mean that the Indian shopping malls do not need to worry?
2. What are the major differences in the evolution and development of shopping malls in
India and the USA?
3. How are real estate investment trusts (REITs) expected to affect the mall business in India?
4. What are the various challenges expected by the Indian shopping malls in future?
5. What isthe likelihood of consolidation taking place in the mall development and management
sector in India? How is it likely to affect the performance of the Indian malls?
6. What is meant by the life cycle of shopping malls? What are different stages of the mall
life cycle?
7. How would you differentiate between the innovation stage and the accelerated growth
stage of the mall life cycle?
8. What are the different options available before developers to manage adversities
associated with the declining stage of the mall life cycle?
9. How does intelligent thinking at the time of leasing help developers in handling the decline
stage of the mall life cycle?
10. What is de-malling? How does it differ from cosmetic face-lifting and phased
redevelopment?
s
: D
PRACTICE EXERCISES
1. Prepare a list of malls that are not doing well in your city. How many of these are actually in
the decline stage? What steps can be taken to help these malls regain their customers?
2. Identify 3-4 malls of your choice. Find out the leasing schedule of these malls. What
strategy would be most appropriate for them during the decline stage of their life cycle?
3. Examine Spencer Plaza, Chennai, Crossroads (Sobo Central), Mumbai and Ansal Plaza,
Delhi in the light of the life cycle theory. Which among these are already in the decline
stage? Comment on the actual or proposed strategies that may be adopted to cope with
the decline phase (real or assumed) for each of these malls.
: )
SUGGESTED READINGS ^
1. AnselmssonJ. (2006), 'Sourcesofcustomersatisfaction with shopping malls: a comparative

study of different customer segments'. The Internotional Review of Retail, Distribution and
Consumer Research, 16(1), pp. 115-138
2. Armstrong, J.S. and Overton, T.S. (1977), Estimating non-response bias in mail surveys.
Journal of Marketing Research 14 (3), pp. 396-402
3. Backstrom, K. (2006), 'Understanding recreational shopping', International Review of

Retail Distribution and Consumer Research, 16(2), pp. 143-158
4. Blois, K.; Mandhachitara, R. and Smith, T. (2001), 'Retailing in Bangkok: an intriguing

example of agglomeration', Internationol Journal of Retail and Distribution Management,
29(10), pp. 472-479
5. Carter, C.C. and Vendell, K.D. (2005), 'Store location in shopping centers: theory and
estimates'. Journal of Real Estate Research, 25(3), pp. 237-265
6. Christensen, C; Baumann, H.; Ruggles, R. and Sadtler, T. (2006), 'Disruptive innovation for
social change', Harvard Business Review, 84(12), pp. 94-101
7. Craig, A.M. and Turley, L.W. (2004), 'Malls and consumption motivation: an exploratory
examination of older generation and young consumers', International Journal of Retail
and Distribution Management1, 32(10), pp. 464-475
8. Cruickshank, B. and Baen, J.S. (1998), 'Essay and observations of ecommerce and retail
properties', Unpublished working paper, Demon, TX: University of North Texas
9. d'Astous, A. and Jacob, I. (2002), 'Understanding consumer reactions to premium-based

promotional offers', European Journal of Marketing, 36(11), pp. 1270-1286
10. Demographia (2008), http://www.demographia.com/db-mxcward.htm
11. Evers, D. (2002), 'The rise (and fall) of national retail planning', Tijdschriftvoor Economische
en Sociale Geografie, Vol. 93, No. 1, pp. 107-113
12. Fraser, W.D. (1993), Principles of Property Investment and Pricing, 2nd ed., Macmillan,
London
13. Guy, C. (2002), 'Is retail planning policy effective? The case of very large store development
in the UK', Planning Theory and Practice, Vol. 3, pp. 319-330
14. Menon, S. and Kahn, B. (2002), 'Cross-category effects of induced arousal and pleasure on
the Internet shopping experience', Journal of Retailing, 78(1), pp. 31-40
15. Miranda, M.; Konya, L. and Havira, I. (2005), 'Shopper's satisfaction levels are not only the
key to store loyalty', Marketing Intelligence and Planning, 23(2), pp. 220-232
16. REEF (1999), 'Strategic outlook-on-line retailing and its potential impact on shopping
center sales', Number 23, August 1999
17. Reifenberg (1997), 'Why real estate industry should fear the future'. The Wall Street
Journal, Southwest Edition, September 3, B2
18. Shukla, T. (2007 ), 'Experiential marketing: the new paradigm', Indian Journal of Marketing,
12, pp. 10-12
19. Srivastava , R.K. and Srinivasan, Srini.R. (2008), 'How experiential marketing be used to
builds—a case study of two specialty stores', Innovative Marketing, 4(2), pp. 31-33
20. Srivastava , R.K.(2009), 'Luxury brands: a mirage or reality in Indian retail', Synergy, VII (1),
pp. 21-27
21. Srinivasan, Srini. R. and Srivastava, R.K. (2008), 'RFID application in retail', Synergy, pp.
35-42
22. Wang, Y.S. (2003), The Influence of Western Fast Food Chain Stores Marketing Mix and
Service Quality Satisfaction on Customer Satisfaction, National Chung Cheng University
□ □□
236 Mall Management
CASE
- Has
Ida the
tiic decline
\JCV.IIIIC set
JCL in
HI for
iwi the
tiic Indian
iiivjiaii malls?
iiiaiia.y
Malls came to India a decade back and immediately found an intense following. They drew
a mad rush of shoppers. In cases like Crossroads, the first modern mall in India, the mall
management found it difficult to handle the crowd. So it imposed a condition that only those
carrying either a mobile phone or a credit card (both novelties at that time!) would be allowed
entry. But as mobile phones and credit cards ceased to be novelties for Indians, same is the
case with shopping malls. The year 2008 saw 9.6 million square feet of mall space coming up
in India, an 18 per cent increase over the previous year, but the economic slowdown pulled
wind out of the sails for malls. Across the country, malls that did not cater to consumer needs
are looking deserted as consumers are walking out of them.
Malls that do not stand on sound, fundamental research are fast losing faith of the tenants as
well. It is not only the vanilla stores that are walking out. There are instances where the anchor
stores have terminated their lease agreements prematurely, leaving the mall nothing more
than a skeleton. Such malls are plagued by problems like lack of professional management,
multiple floors, high vacancy rates, unviable location and poor commercialization.
These vices are not confined to only a few malls. Many practitioners believe that out of 200
odd malls operating in India at present, only a handful, may be a dozen, are actually successful.
There may be a difference of opinion on the absolute number of successful malls, but nobody
denies the fact that most of the shopping malls in India are struggling to survive.
During the heydays of mall business, there was a mad race among developers to develop
shopping malls. This blind race exposed them to astronomical costs, unviable locations,
head-on competition and unreceptive geographies. Consequently, many had to shut shop
before they could even take off. Skeletons of unfinished projects are a testimony to this.
Others converted them into commercial spaces.
A multitude of reasons are cited for this state of affairs. Malls are a suitable platform to
sell luxury brands. Luxury brands leave decent margins with the retailers that justify high
investments. But luxury retailing did not take off that fast. On the contrary, Indians have
shown a marked preference for value-for-money offers through modern retail. Globally, such
malls (discount malls) are situated outside the city, but the Indian consumer wants value-
for-money offers at a convenient location and distance. Such locations are available at a
premium, but margins are meagre. In a developing economy like India, the major proportion
of income is spent on food and grocery items for which unorganized retailers are generally
preferred. Preference for local kiranawala is stronger in smaller towns and cities where malls
have been developed by some of the more adventurous mall developers.
Many people believe that the current phase is not the decline phase of the mall life-cycle. It
is simply market correction that would take supply and pricing to realistic levels. It may also
result in consolidation of this fragmented market.
Source: Bhupa, Malini and Vaish, Nandini, 'Mall is not well', India Today, 19 April 2010.
Appendix i J
Letter of intent
This Letter of Intent (hereinafter referred to as the LOI) is made and signed on at -—
Between
^ a company incorporated and validly existing under the provisions of the
Companies Act, 1956 and having its registered office at , (hereinafter referred
to as the 'Lessor/Licensor' which expression shall, unless it be repugnant to the context
or meaning thereof, be deemed to include its executors and successors) acting through its
Managing Director Mr. - Aged ~ years S/o Mr. , R/o
AND
M/s , a company incorporated and validity existing under the provisions of

the Companies Act, 1956 and having its registered office at (hereinafter referred
to as 'Lessee/ Licensee' which expression shall mean and include, unless it be repugnant to
the context or meaning thereof, its administrators, executors and successors) acting through
its authorized signatory Mr. , aged -— years, S/o Mr. , duly authorized vide
attorney/resolution dated .
Now the and agreed to the Terms & Conditions of the LOI as mentioned
hereunder:
Name of the Commercial Mall

Complex
Location (address of the building)
LEASE TERM YEARS { — years +-— years + years)
Nature of Lease RENTAL OR REVENUE SHARING WHICHEVER IS

HIGHER
Shop No. & Floor Shop No.- , FLOOR
Area of Shop - SQFT SBA EQUIVALENT SQFT CARPET
Retail Model of Lessee/ Description of products/services to be sold/offered

Licensee
Monthly Rent/Licensee Rs.— OR --% REVENUE SHARE ON SALE PER MONTH

Fee/Compensation Amount WHICHEVER IS HIGHER
Payable by Lessee/Licensee
Security Deposit Payable by RS. (RS. ONLY) PAYABLE HEREUNDER

Lessee/Licensee b) Rs. AT THE TIME OF LOI
b) Rs. AT THE TIME OF AGREEMENT
238 Mall Management
CAM Charges Payable by Rs — PER SQFT ON ON SBA

Lessee/Licensee
Escalation in Monthly ~% EVERY YEAR

Compensation Amount/
License Fee
CAM Charges Agreement TO BE EXECUTED WITHIN ~ DAYS FROM THE DATE

OF AGREEMENT
Lock-in Period of Lease YEARS
Rent-free (Fit-out) Period — days
Date of Commencement of --TH ,

Mall
Electricity Load AS PER REQUIREMENT
Air Conditioning Charges AS PER MALL STANDARDS
Interiors by Lessor NOT APPLICABLE
Signage ON GLASS FACADE IN FRONT OF SHOP No. -
Licences LESSEE
Taxes LESSEE
Property Taxes LESSOR
Registration Charges of Lease 50:50 BY LESSEE/LICENSEE
Insurance INSIDE SHOP LESSEE
General 1. THE LESSEE/LICENSEE WILL NOT SUBLET, ASSIGN

OR OTHERWISE PART WITH THE POSSESSION OF THE
SHOP IN PART OR FULL
2. THE LESSEE/LICENSEE SHALL USE THE SHOP FOR
THE PURPOSE FOR WHICH HE/SHE AGREED TO TAKE
ON LEASE
Right To Terminate Lease - MONTHS ADVANCE NOTICE AFTER LOCK-IN
Termination of LOI IF THE LESSEE/LICENSEE TERMINATES THE LOI

BEFORE TAKING POSSESSION OF THE SHOP OR
EXECUTION OF LEASE/LEAVE AND LICENCE DEED
THEN MONTHS RENT/LICENCE FEE/MONTHLY
COMPENSATION AMOUNT WOULD BE ADJUSTED
FROM A SECURITY DEPOSIT.
Jurisdiction
Rppendix 239
In witness whereof the parties to the LOI have appended their respective signatures onto
this LOI on the day, month and year first mentioned above in the presence of the following
witnesses:
Lessor/Licensor Lessee/
Licensee
Witnesses:
1.
2.
v y
Appendix 2
TERM SHEET
The parties hereto, after satisfying themselves and with full knowledge of all the laws, bye-
laws, rules, regulations, notifications etc. which are applicable to the said Building and the
Licensed Space, and subsequent negotiations have agreed to enter into a Lease Agreement
on the following terms and conditions:
TERM SHEET
Property Name Mall
City
Leased Space Store

No. ,
First Floor
Level
PROPERTY SPECIFICATIONS
1 Name of the Owner,

Developer and Contractor
(Intended Lessor)
1 Name and Address of the

A Intended Lessee
2 Property Address
3 Plot Size Sq Mtr and Acres/ sq. metres,

Dimensions (length x width)
m x m,
in mtr/
feet
Width of the Road in front
of the Property
4 Lessor's Address
5 Building Configuration Ground + ~ levels and -- Level Basement
6 Due Diligence The Intended Lessee has independently

on its own carried out due diligence to its
entire satisfaction relating to the right, title
and interest in the said Building and/or
the Leased Space of the Intended Lessor,
going through the ownership records,
inspection of the site and other related
matters, to confirm the competence of the
Intended Lessor to lease out the Space.
Appendix 241
It is hereby agreed and understood that upon

signing of this Term Sheet, the Intended Lessee
is deemed to have independently completed
all due diligence and has taken legal opinion
on its own and that it shall be responsible for
any/all consequences thereof.
7 Total BUA sq. feet/metres, including levels of

basement
8 Proposed Format (store name)
9 Total Super Area sq. feet/metres
10 Total Covered Area sq. feet/metres
11 Efficiency —%
COMMERCIAL TERMS
+
CO
>*
1 Agreement period
II
lI
11
2 Stamp duty & registration To be borne by the Intended Lessee

fees
3 Property tax To be borne by the Intended Lessor.
4 Business related taxes/ To be borne by the Intended Lessee

Service Tax/GST/ licences
for signages (as and when
applicable), VSAT Tower
taxes and any other increase
in any other tax known by
whatever name
5 All deposits (present and To be borne by the Intended Lessor

future) for power, electricity,
water and other utilities
6 Insurance (building + To be borne by the Intended Lessor.

equipment provided by the
Intended Lessor only)
7 Possession for fit-out Immediate
8 Store Opening Date
9 Advance notice for days
possession for fit-out
10 Earnest Money Deposit Rs. paid vide cheque no.

(EMD) dated drawn on
Bank, submitted at the time of signing of
this Term Sheet.
242 Mall Management
11 Liability of the Parties If no agreement is executed in terms hereof

by the Parties within -— days from the date
of signing the Term Sheet, or within such
extended period as mutually agreed between
the Parties, the Parties shall have no claim and
liability against each other.
12 Minimum Monthly Rs. -— per sq ft on super area, or —% of net

Guarantee (MMG)or sales, whichever is higher
Revenue Share (RS) %
13 Interest-free Security This Interest-free Security Deposit (IFSD) is

Deposit equivalent to — Month of Lease rental and
it shall remain in such ratio during the term of
the Lease. The Interest-free Security Deposit
shall be refunded by the Lessor on expiry/
termination of the agreement after deduction
of any outstanding arrears.
14 Advance rental — Months MMG
15 Payment Schedule —%- Term Sheet, —%- Licence Agreement,

Balance % - Possession
16 Lock-in Period -— Months
17 Rental Commencement
18 CAM Rs. per sq. feet.
19 Escalation —% after every — years on last paid MMG
20 Power Supply (in kW) Supply from a single point as received from the
Electricity Provider with 100% power back-up
facility. The Intended Lessee to pay demand
charges on pro-rata basis in addition to the
charges charged by the Electricity Provider per
month for consumption of electricity. Power
back-up @ Rs.— per unit consumed.
21 AHU and Ducting The Intended Lessor shall provide chilled

water supply (high side) up to one point in
the Leased Space, for air conditioning, for —
- hours/day, on all days when the mall is open
to public. The Intended Lessee shall install its
Air Handling Unit (AHU)/Fan Coil Unit (FCU)
and also Ducting for the same, of approved
make, within the Leased Space.
22 Agreed Electricity Load Lessee to advise

Requirement ofthe Intended
Lessee
Rppendix 243
23 Renewal of Lease Period It may be renewed upon the mutual consent

of both the Parties on the terms as agreed by
the Parties.
24 Merchandise Contribution Merchandise Contribution for Promotion shall

for Promotion. mean merchandise/voucher contributions
from various lessees of the Mall
for promoting the mall among shoppers/
consumers from time to time. The period/
term for these contributions will be as agreed
between the Lessee and the Lessor.
25 Termination of the Lease On rental default of —- days and failure to

Agreement by the Lessor/ pay within —- days thereafter. If the Intended
Lessee Lessee fails to comply with any of the material
terms and conditions incorporated in the
Lease Agreement and statutory compliance
and further fails to rectify the same.
The Lessee can terminatethe Lease Agreement
after the expiry of the Lock-in Period upon
serving 3 months notice without assigning any
reason.
26 Business Timings As per Mall operation timings, subject to

Statutory Regulations.
27 Leaving/Losing the right On termination/expiry/revocation of the

to enter the Leased Space Lease Agreement, the Lessee will forthwith
after the expiry/revocation/ clear all outstanding dues payable by the
termination of the Lease Lessee and lose its right to enter the Leased
Agreement Space, and shall leave the Leased Space with
all its merchandise, furniture, mannequins
and movable fittings, etc., if any.
28 Delay in refunding the The Lessor shall refund the IFSD after deduction
deposit of dues within davs/months, since
there would be a time lag in receiving the
bills from various authorities, from the date
of vacating the Leased Space by the Lessee.
The Lessor shall also be entitled to adjust
any outstanding arrears, as well as repair/
replacement cost of the damaged fittings and
fixtures at the Leased Space, if any, from such
IFSD. Delay in refunding the deposit by the
Lessor thereafter will entitle the Lessee to an
interest @ -— %.
244 Mall Management
29 Area for signages on the As per the Mall Management's Signage

external facade of the Policy.
building, basement &
compound of the complex,
parking area
OTHER TERMS
1 Insurance of the Premises Insurance of the entire property is the liability

of the Intended Lessor. Insurance of the Leased
Space and the property therein is the liability of
the Intended Lessee.
2 Validity of Term Sheet Subject to the Board Approval
3 Force Majeure The Intended Lessor shall not be held responsible

or liable for not performing any of its obligations
or undertakings provided for in this Term Sheet
if such performance is prevented, delayed or
hindered by an act of God, fire, flood, explosion,
war, strikes, insurrections, riots, terrorist acts,
sabotage, government restrictions (including the
denial or cancellation of any necessary licence),
power failures, or damage or destruction of
any network facilities or servers, inability to
procure or general shortage of energy, labour,
equipments, facilities, material or supplies,
failure of transportation, strike, lock-outs, action
of labour unions, pendency of litigations or any
other cause (whether similar or dissimilar to the
foregoing) not within the reasonable control of
the Intended Lessor.
4 Arbitration All disputes and differences arising between the

Parties hereto relating to the Terms contained
in this Term Sheet shall in the first instance be
resolved amicably between the Parties. If the
same still remain unresolved, it will be referred to
arbitration underthe provisions of the Arbitration
and Conciliation Act, 1996 or any statutory
amendments/modifications thereto for the
time being in force. The arbitration proceedings
shall be held at an appropriate location in -
which shall be mutually decided
by a Sole Arbitrator who shall be appointed

by the Intended Lessor and whose decision
shall be final and binding upon the Parties.
Rppendix 245
The Intended Lessee hereby confirms that it

shall have no objection to this appointment even
if the person so appointed, as the Arbitrator, is
an employee or Advocate of the Intended Lessor
or is otherwise connected to the Intended
Lessor and the Intended Lessee confirms
that notwithstanding any such relationship/
connection, the Intended Lessee shall have no
doubts as to the independence or impartiality of
the said Arbitrator.
5 Jurisdiction Only the Courts at alone shall have

jurisdiction to the exclusion of other courts to
entertain and adjudicate upon the disputes
relating hereto.
6 List of Annexures Floor Plan - Leased Space
It is clarified that this Term Sheet contains only the indicative commercial terms and does not
create any rights or interest of the Intending Lessee over the Leased Space unless the Lease
Agreement contains all the terms and conditions governing the Lease as stipulated above is
signed and executed between the parties.
For (Lessor) For (Lessee)
Date: Date:
Annexure 1
Detailed Floor Plan

Appendix 3 j
f LEASE AGREEMENT
THIS LEASE AGREEMENT is made and executed at on this day of
BETWEEN
M/s , a Company incorporated under the Companies Act, 1956, having its registered
office at , (PAN No. ) through its duly authorized signatory Mr.
duly authorized in this regard vide board resolution dated , hereinafter referred to as
the "Lessor", which expression shall, unless it is repugnant to the context, mean and include
its legal representatives, successors, nominees and assigns) of the ONE PART.
AND
M/s. , a Company incorporated under the Companies Act, 1956, having its registered
office at (PAN No. ) through its duly authorized signatory Mr.
... duly authorized in this regard vide board resolution dated ,
hereinafter referred to as the "Lessee"), which expression shall, unless repugnant to the
context, mean and include its legal representatives, successors and permitted assigns) of the
OTHER PART.
Whereas:
1. The Lessor is the absolute owner and is in peaceful possession of a freehold plot of land
measuring -— sq. metres approximately situated at , herein after referred to
as the "said Land".
2. The Lessor is the Developer ("Developer") and has conceived and constructed a
multistoried commercial retail Mall on the said Land spread over multiple levels/floors.
The said multistoried commercial Mall is known by the name of " -Mall" (hereinafter
referred to as the "said Mall/Building"), and the same has been constructed according to
the approved Bye-Laws/Building Plans by the appropriate authorities.
3. The Lessee, having completely satisfied itself with respect to the right, title, interest,
design, specifications of the said Mall and the premises to be leased, has approached the
Lessor to take on lease a commercial space in the said Mall in bare shell condition to carry
on commercial/retail business.
4. The Parties are executing this Lease Deed to reduce in writing the terms and conditions
agreed in respect of lease of the above premises.
NOW THIS LEASE DEED WITNESSES AS FOLLOWS:
1. DEMISE
1.1 The Lessor DEMISES unto the Lessee the Premises more particularly described in
Schedule 1 (the "Premises") being a part of the Building known as "The Mall".
2. TERM
2.1 TO HOLD the Premises unto the Lessee for the term specified in Schedule 1 (the
"Term") from the date specified in Schedule 1 (the "Rent Commencement Date")
and expiring on the date specified in Schedule 1 (the "Expiry Date").
Appendix 247
3. LOCK-IN PERIOD
3.1 There shall be a lock-in period for the term specified in Schedule 1 (the "Lock-in
Period"). In case of termination of this Lease Deed by the Lessee for whatsoever
reason, before the expiry of the Lock-in Period, the Lessee shall pay the rent and
other payments payable under this Lease Deed for the remaining unexpired period
of the said Lock-in Period.
3.2 That if the Lessee intends to vacate the Premises at any time after the above Lock-
in Period, the Lessee shall give a written notice in advance to the Lessor for a
period as specified in Schedule 1 (the "Notice Period") or pay matching rent in lieu
thereof.
4. RENT
4.1 The Lessee shall pay for the Premises the rent (the "Rent") as provided in Schedule 1.
4.2 The Rent shall be payable on the dates and in the manner prescribed below and in
Schedule 1. The Rent along with Service Tax thereon at applicable rates payable by
the Lessee to the Lessor under this Lease Deed shall be paid by the Lessee by way of
Account Payee cheque in favour of the Lessor and shall be subject to deduction of
tax at source, as required under the Income Tax Act, 1961. The Lessee shall provide
the TDS certificate in accordance with the provision of the Income Tax Act, 1961. In
case of failure of the Lessee in providing TDS certificate/proof of deposit of TDS, the
amount of tax, interest and penalty shall be treated as arrears of rent.
5. RENEWAL AND ESCALATION

5.1 The lease may be renewed for further terms as specified in Schedule 1 (the
"Renewal Terms") on the same terms and conditions but subject to escalation in
rent and other payments payable under this Lease Deed on the rates as specified
in Schedule 1 (the "Escalation") and the security deposit shall also be increased
proportionately at the time of every escalation. The Lessee shall make a request for
renewal in writing to the Lessor not earlier than nine (9) months and not later than
the Notice Period as defined herein below, prior to the expiry of the Term, and the
Lessor shall renew the tenancy for a further term, provided that there shall not at
that time be any existing breach or non-observance of any of the covenants on the
part of the Lessee herein contained. The Lease Deed for the renewed term must be
signed by the Lessee not later than three (3) months prior to the date of expiry of
the Term. This option to renew shall lapse if the Lessee shall fail to sign the Lease
Deed for the renewed term by the date stipulated above and the Lessor shall be
free of all obligations whatsoever to grant to the Lessee any further term. Provided
always that the Lessor may, if it deems fit, impose as a condition of the renewal that
the Lessee shall renovate the Premises prior to the commencement of the renewed
term.
6. PAYMENT
6.1 If any monies payable by the Lessee to the Lessor under this Lease Deed or any
part of such monies shall remain unpaid after becoming payable (whether formally
demanded or not), without prejudice to the Lessor's right of re-entry as stipulated in
this Deed, the Lessee shall be liable to pay interest at the rate of Eighteen per cent
(18%) per annum on such outstanding monies calculated from the date such monies
fall due for payment to the date of actual payment along with an administrative
248 Mall Management
charge, if any, at the rate determined by the Lessor / Developer. The Lessor may
recover such interest and/or administrative charge as if they form part of the Rent
in arrears and shall be paid to the Lessor on demand.
6.2 The Lessee hereby irrevocably authorizes the Lessor to apportion and appropriate
any payment made by the Lessee towards satisfaction of any arrears or sums due
from the Lessee to the Lessor on the date of payment, as the Lessor deems fit
notwithstanding any instructions to the contrary hereafter.
6.3 The Lessee undertakes to pay the bills of Maintenance, Electricity, Air-conditioning
charges etc. of the Premises without any reminders from the Lessor / Developer
within 7 (seven) days of receipt of the bills.
6.4 All payments shall be made by the Lessee through Account Payee cheque/ Demand
Draft drawn in favour of the Lessor / Developer and shall be subject to realization.
6.5 The payment of bill shall not be held up/delayed if there are any differences or
disputes as to its accuracy. Any difference or disputes regarding accuracy of the bill
may be subsequently settled and adjusted.
7. SECURITY DEPOSIT
7.1 To pay to the Lessor the sum specified in Schedule 1 (the "Security Deposit") as
security for the due observance and performance by the Lessee of all its covenants,
conditions, stipulations and agreements on the part of the Lessee herein contained.
The Security Deposit shall be retained by the Lessor throughout the Term free of any
interest to the Lessee with power for the Lessor, without prejudice to any other right
or remedy hereunder, to deduct therefrom the amount of any Rent, CAM Charge
in arrears or interest thereon as provided herein or any other expense, charge or
sum payable to the Lessor remaining unpaid or any loss or damage sustained by
the Lessor and/or the Premises as a result of any breach, non-observance or non-
performance by the Lessee of any such covenants, conditions, stipulations and
agreements, provided always that the Security Deposit shall not be deemed to be
payment of Rent unless the Lessor exercises the Lessor's rights herein.
7.2 In the event of any deduction therefrom being lawfully made by the Lessor as
aforesaid, the Lessee shall on demand by the Lessor forthwith further deposit
a sum equivalent to the amount so deducted and in the further event of the
rent being escalated at the time of renewal, the Lessee shall on demand by the
Lessor forthwith further deposit an amount corresponding to the increase so that
the Security Deposit shall at all times be equal to the number of months' rent as
specified in Schedule 1.
7.3 Subject to adjustments/set off if any, whether arising under this Lease Deed or
otherwise, the Security Deposit shall be refunded to the Lessee by the Lessor
without interest at the expiration of the Term and the simultaneous delivery of
vacant possession of the Premises to the Lessor.
8. OTHER CHARGES
8.1 The Lessee shall pay/ bear any Service Tax or any other tax, levy, cess, etc. of a
similar nature which may be or become chargeable or imposed by the competent
authorities in respect of any payment (whether Rent, CAM charges, LPG charges,
HVAC charges, CAM charges for extended hours of services, signage charges, DG
Appendix 249
charges, parking charges, promotion charges, extraordinary charges or otherwise)

made by the Lessee under or in consequence of this Lease Deed or any payment
made by the Lessor for which the Lessee agrees to reimburse the Lessor under
this Lease Deed. However, the Lessor shall be responsible for the payment of the
presently applicable property tax in respect of the Premises.
8.2 The Lessee shall pay all charges in respect of the supply of electricity from Mains/DG
sets and other utilities or services like Internet, cable etc. supplied to the Premises,
whether by the Lessor or the Mall Management Agency ("Mall Management
Agency"), if any appointed by the Lessor, or directly availed by the Lessee, and any
taxes thereon.
8.3 No free or concessional car and two-wheeler parking shall be allowed to the Lessee
in the basements or any other designated parking areas. The Lessee shall pay
parking charges for its car(s)/two-wheeler(s) as per the rates to be decided by the
Lessor/Developer/Mall Management Agency and as per the normal rates applicable
to the visitors of the Mall.
8.4 WATER CHARGES: The cost of water consumed internally by the restaurants, wet
shops and other premises etc. will be charged at the rates to be decided by the
Lessor/Developer. In case, the water supply has to be augmented by a Tubewell /
Water Tanker etc. the Lessor/Developer shall have the right to charge the Lessee
such extra proportionate charges as the Lessor deemed expedient taking into
consideration the amount spent by it on this account.
8.5 MALL PROMOTION CHARGES: In addition to the CAM charges, the Lessee hereby
agrees and binds itself to pay to the Lessor/Developer a sum @ Rs. (Rupee —
-only) per sq. ft. per month of the Super Built-up Area of the Premises towards the
Advertising and Mail Promotion charges, being the Lessee's contribution towards all
costs, expenses and outgoings incurred or to be incurred by the Lessor/Developer
from time to time for the purpose of promoting and advertising the Mall and the
trades and businesses carried on therein and for carrying out activities which the
Lessor/Developer may implement for and in respect of the Mall and all ancillary
activities connected therewith. The Mall Promotion charges may be adjusted
(increased/decreased) in future at the sole option of the Lessor. Upon being
intimated, the Lessee agrees to pay the adjusted Mall Promotion charges without
any demur.
8.6 The Lessee shall pay all administrative charges, legal fees and other costs and
disbursements incurred by the Lessor/Developer for or in connection with
demanding and enforcing payment of any monies due hereunder; or the observance
and performance of any covenants, terms and conditions herein contained.
9. COMMON AREA MAINTENANCE CHARGES

9.1 In consideration of the Lessor/Developer maintaining the infrastructure and
providing the maintenance services, the Lessee hereby agrees and binds itself to
pay the Lessor CAM charges, in advance by the -— day of each English Calendar
month, which shall be payable to the Lessor/Developer along with the service tax
at applicable rates as prescribed in Schedule 1. The CAM charges shall be payable
by the Lessee from the date of commencement of commercial operation from the
250 Mall Management
Premises. The CAM charges shall be charged per sq. ft. of Super Built-up Area per
month in respect of the said Premises for -- hours of operation from ~ AM to -- PM.
These charges shall be calculated taking into consideration the prevailing prices of
commodities and services. The CAM charges may be adjusted (upward/downward)
by the Lessor/Developer/Mall Management Agency in its sole option and absolute
discretion. Upon being intimated, the Lessee agrees to pay the adjusted CAM charges
without any demur. Extra charges on pro-rata basis at actuals will be charged for
operations for extra hours beyond Mall operating hours. The final reconciliation of
CAM Charges shall be done at year-end based on actual figures and the account
would be settled within seven days thereof. The CAM Charges along with Service Tax
thereon at applicable rates payable by the Lessee to the Lessor/Maintenance Agency
under this Lease Deed shall be paid by the Lessee by way of Account Payee cheque
in favour of the Lessor/Maintenance Agency and shall be subject to deduction of tax
at source, as required under the Income Tax Act, 1961.
9.2 The Lessee agrees to be bound by all the stipulations contained in Annexure 2 hereto
in relation to Common Area Maintenance.
10. COMMON AREA MAINTENANCE SECURITY DEPOSIT

10.1 The Lessee has deposited a sum as specified in Schedule 1 with the Lessor/
Developer as an interest-free security deposit equivalent to such months estimated
CAM charges as specified in Schedule 1 at the time of execution of this Agreement.
The said security deposit shall be refunded by the Lessor/Developer, without any
interest, at the time of the expiry/termination of this Agreement after adjusting
arrears of CAM charges, electricity charges, damages to the said premises or to any
portion of the Mall and any other dues, charges, liabilities or sums due or payable.
In the event of the CAM charges being escalated, the Lessee shall on demand by
the Lessor forthwith further deposit an amount corresponding to the increase so
that the Common Area Maintenance Security Deposit shall at all times be equal to
the number of months' CAM charges as specified in Schedule 1.
11. FIT-OUTS PERIOD

11.1 The Lessor shall permit, subject to the Lessee having fulfilled all its obligations
under this lease deed, the Lessee's entry into the Demised Premises for carrying
out interior work /fit outs (hereinafter referred to as "Fit Out Period") like flooring,
false ceiling, painting and other activities by the Lessee for a rent-free period of
— days from the date of possession of the premises for fit outs, i.e. w.e.f. .
This possession shall be purely on permissive usage basis for the limited purpose
of carrying out fit outs. After — days as the case may be, automatically the rent
for the premises will start. The Lessee further undertakes to take possession of the
Demised Premises within — days of the receipt of intimation from the Lessor that the
Demised Premises is ready for commencing fit outs, failing which the fit out period
shall be deemed to have commenced. Thereafter on the expiry of — days of the fit
outs period the lock-in period shall also be deemed to have commenced. Provided
further in the event the Lessee meanwhile still does not take the possession of the
Demised Premises, the Lessor may in its sole discretion terminate this lease deed
and forfeit all amounts paid by the Lessee till such time. Further in the event of
such termination, the Lessee shall be liable to pay as liquidated damages the entire
Appendix 251
rentals, CAM charges and all other charges for the lock-in period to the Lessor. The
Lessee shall be liable to pay for all the amenities/facilities provided to it during the
fit outs period, including inter alia towards the usage of electricity and water.
11.2 The monthly rent shall become due and payable immediately on the completion of
the aforementioned — days rent-free fit outs period/commencement of commercial
operations by the Lessee at the Premises, whichever is earlier, i.e. the date specified
in Schedule 1 (the "Rent Commencement Date"). The start of commercial operations
of the premises shall not be later than the completion of the rent-free period.
Provided further that in the event the Lessee does not commence its commercial
operations on completion of the tent-free fit outs period, the Lessor may in its sole
discretion terminate this lease deed and forfeit all amounts paid by the Lessee till
such time. Further in the event of such termination, the Lessee shall be liable to pay
as liquidated damages the entire rentals, CAM charges and all other charges for the
lock-in period to the Lessor.
12. LIMIT ON THE RESPONSIBILITY OF LESSOR / DEVELOPER

12.1 The Lessor/Developer makes it clear to the Lessee that the maintenance services
may be outsourced to specialised agencies under separate agreements. The
Lessor's/Developer's responsibility shall be limited only to the extent of supervision
of these agencies and ensuring that the operation and maintenance is in conformity
with the said agreement. The Lessor shall replace an agency if its performance is
not up to the standards. The Lessee confirms that the Lessor/Developer has no
legal liability whatsoever arising from any act of omission, commission, negligence,
and defaults of the aforesaid agencies in providing the services. The Lessor's role
and responsibility for providing electrical energy to the Lessee shall be limited to
receiving the supply of energy from the State Electricity Board/Electricity Supply
Company on behalf of the Mall in bulk and to distribute the same to the occupants.
The Lessor/Developer is merely distributing electricity on behalf of the State
Electricity Board/Electricity Supply Company and has no power or control on the
quality/quantity or any other specifications with respect to the electrical energy
supplied and, therefore, it shall accept no responsibility whatsoever and shall not
be liable for any action, damages whatsoever for any failure on the part of the State
Electricity Board/Electricity Supply Company to supply electrical energy to the user.
The Lessor/Developer, however, shall augment the supply with the help of standby
generators provided in the said Mall.
12.2 The Lessor/Developer shall in no way be responsible or liable (legally, financially

or otherwise) for any fire, electrical, pollution, structural or any kind of hazard
originating from the said premises or any other shop/outlet/restaurant in the said
Mall.
12.3 The Lessor/Developer shall not be liable for any harm, loss, damage or physical injury
which may be caused to the Lessee, its representatives and property on account of
breakdown of power or on account of any failure of the machinery or on account
of any disruption in services and management forming part of the infrastructure or
if the same are beyond the control of the Lessor/Developer and these shall in no
way confer the right upon the Lessee to adopt legal recourse against the Lessor/
Developer for the same.
252 Mall Management
12.4 To the fullest extent permitted by applicable law, neither the Lessor nor their
respective affiliates shall be liable for any special, indirect, consequential or
incidental damages (including but not limited to the damages for loss of business
profits, business interruption, loss of business information and alike) arising out of
this Deed, any documents referred to in this Deed or any addenda or amendment
hereto.
13. RIGHTS OF LESSOR

13.1 The Lessee hereby agrees that the Lessor and/or its representatives shall be entitled
to enter and inspect the Lessee's premises at any time.
13.2 All signages in the said Mall shall be chargeable at the rates to be decided by the
Lessor/Developer. The Lessor/Developer shall have the sole discretion with regard
to the location of Signage/Directory, the size of the Directory and also the pattern
and size of alphabets in which the names of all the occupants of the said Mall will
be displayed by it.
13.3 During the — months immediately preceding the determination of the Term the
Lessor shall bring other prospective lessees or their agents to view the Premises.
13.4 The Lessor reserves the right to use the logo of the Lessee in their publicity material,
advertisements, brochures or any other material without any objection from the
Lessee and without payment of any charges for the Promotional and Corporate
campaigns for Mall only.
14. INSURANCE
14.1 The Lessee shall not do or permit or suffer to be done anything whereby the policy
or policies of insurance on the Building or the Premises against loss or damage by
fire or other risks may be rendered void or voidable or whereby the rate of premium
thereon may be increased and to make good all damage suffered by the Lessor and
to repay to the Lessor on demand all sums paid by the Lessor by way of increased
premiums and all other expenses relating to the renewal of such policy or policies
rendered necessary by a breach or non-observance of this covenant without
prejudice to any other rights of the Lessor.
14.2 The Lessee shall at its expense insure and keep insured the Premises against any
claims, losses, liabilities or other risks arising from public or any third parties under
a Public Liability/Third Party Policy with an insurance company.
14.3 The Lessee shall insure and keep insured against all risks and damages to the
furniture, fixtures and fittings of the Premises and all parts thereof, all equipment
and other property of the Lessee at the Premises against damage by fire and such
other risks at the cost and expenses of the Lessee, and to forward a copy of the
policy to the Lessor upon request of the Lessor.
15. ASSIGNMENT, SUBLETTING, ETC.

15.1 The Lessee shall not assign, sublet, licence or in any way dispose of or part with
the possession of the use of the Premises or any part thereof either by way of sub-
letting, sharing or other means whereby any company or person not a party to
this Lease Deed obtains the use or possession of the Premises or any part thereof
irrespective of whether or not any rental or other consideration is given for such use
or possession, under any circumstances. For the purposes of this clause, a change in
II
Appendix 253
the partners of a firm shall be deemed an assignment and if the Lessee is a company,
any change in the major shareholding, voting rights, control or management of the
company shall be deemed an assignment of this Lease Deed.
16. LESSEE'S EMPLOYEES

16.1 No person engaged, hired or retained by the Lessee in any capacity whatsoever
shall ever be deemed to be an employee of the Lessor or create any legally binding
relationship between such person and the Lessor/Developer. The Lessee shall meet
all employee-related benefits, including wages, salaries, ESI, Provident Fund, etc.
directly, within the time each such payment is due in accordance with their respective
contracts and/or as required by the relevant law in force for the time being, and
through its own resources without any recourse to the Lessor/Developer.
17. COMPLIANCE
17.1 The Lessee shall perform, observe and ensure that its agents, invitees and licensees
perform and observe all rules and regulations made from time to time by the Lessor/
Developer/Mall Management Agency for the maintenance, management, safety,
careand cleanliness of the Building. Provided always that the Lessor/Developer shall
not be liable to the Lessee in any way for the violation of the rules and regulations by
any person including the other occupiers of the Building or the agents, invitees and
licensees thereof. The Lessor/Developer/Mall Management Agency may make any
changes in the rules and regulations pertaining to the Building to which the Lessee
shall not raise any objection and strictly abide by and comply with the same.
17.2 The Lessee shall at all times during the Term comply with promptly and at the
Lessee's expense, with all such requirements as may be imposed on the Lessee/
occupier of the Premises by any statute now or hereafter in force and any bye-laws,
orders, rules, regulations, requirements and noticesthereunder of any Government,
Municipal Authority, any other Authority, Department etc. and to indemnify and
keep the Lessor/Developer/Mall Management Agency fully indemnified against all
costs, claims, liabilities, fines or other expenses whatsoever which may fall upon
the Lessor/Developer/Mall Management Agency by reason of any non-compliance
thereof by the Lessee.
17.3 The Lessee shall bear and pay all duties, levies and/ortaxes, including but not limited
to VAT and Service Taxes, arising out of or payable for the sale or dealing with the
specific products & services from the Premises and ensure that the Lessor/Developer
is not made liable, financially or otherwise, in connection with the same.
17.4 The Lessee agrees to be bound by all the stipulations contained in Annexure 3 hereto
in relation to Leasing Conditions.
18. INDEMNITY
The Lessee shall be responsible for, and to keep the Lessor/Developer/Mall Management
Agency fully indemnified against all damages, losses, costs, expenses, administrative
charges, actions, demands, proceedings, claims and liabilities made against or suffered or
incurred by the Lessor/Developer/Mall Management Agency arising directly or indirectly
out of:
18.1 Any act of omission or negligence of the Lessee, its agents, licensees and invitees at
the Premises or any part of the Building;
254 Mall Management
18.2 Any breach or non-observance by the Lessee of the covenants, conditions or other
provisions of this Lease Deed;
18.3 Any escape from the Premises into other parts of the Building, except via proper
ventilation facilities, of odours, fumes or noise etc.;
18.4 Any use, misuse, waste or abuse of water, gas or electricity or faulty fixtures or
fittings; and/or
18.5 Without prejudice to the generality of the foregoing, any act of the Lessee or
its agents, invitees and licensees causing the interruption or cessation of any of
the maintenance services as may be provided by the Lessor/Developer/Mall
Management Agency.
18.6 Enforcing payment of any monies due under this Lease Deed.
18.7 Any loss, injury, damages, fines, levies, charges or other damages suffered by the Lessor
under any written law and the Fire Safety Regulations arising out of or in connection
with the Lessee's breach, non-observance or non-performance of fire safety norms.
19. CONFIDENTIALITY OF INFORMATION

19.1 The Lessee agrees and undertakes to keep confidential and not to disclose to any
third party any information in respect of, arising from or in connection with the
terms, conditions and provisions of this Lease Deed and all correspondence and
discussions between the Lessor and the Lessee in relation to this Lease Deed unless
the disclosure is required by law or made with the prior written consent of the
Lessor/Developer or its authorised agent.
20. HOLDING OVER

20.1 That in case the Lessee fails to hand over the Demised Premises to the Lessor on
the expiry of the period of lease or the extended period of lease, the Lessor shall
be entitled to recover the possession of the Demised Premises and the Lessee shall
also become liable to pay damages for its illegal occupation calculated at the rate
of 5 times of the last paid rent per month for the succeeding year and this rate of
damages shall keep on doubling on the expiry of every year till the date the Lessee
vacates the Demised Premises, which the parties hereto agree is a genuine estimate
of damages.
21. TRANSFER/ASSIGNMENT BY LESSOR

21.1 The Lessee expressly acknowledges that if the Lessor at any time during the period
of Lease Deed or extension thereof, sells, transfers, assigns or otherwise disposes of
its rights in the Premises as whole or in part then in that event the Lessee shall attorn
to such transfers and transferee on the same terms and conditions as are contained
herein without any objection or condition. However, a letter shall be issued by the
prospective new Lessor in favour of the Lessee confirming that the terms herein
agreed to shall be binding on the new Lessor and that the new Lessor assumes all
rights and liabilities of the Lessor as if this Lease Deed had originally been executed
with such new landlord as the Lessor and he will also acknowledge the security
deposit paid by the Lessee to the Lessor, whose benefit shall be transferred to the
new Lessor and all adjustments shall be in accordance with this Lease Deed.
22. FORCE MAJEURE

22.1 In the event of the Premises or any part thereof or the Building or any part thereof at
Appendix 255
any time during the Term being so damaged or destroyed by fire, act of God or other
cause beyond the control of the Lessor, as to render the Premises unfit for use or
access thereto impossible for a continuous period of more than -—months (except
where such damage or destruction has been caused by the default or negligence
of the Lessee or its agents, invitees or licensees) the rent etc. hereby covenanted
to be paid or a fair proportion thereof according to the nature and extent of the
damage sustained shall be suspended until the Premises shall again be rendered fit
for occupation and use or until access thereto may be obtained as the case may be.
The Lessor shall be under no obligation to provide any alternative premises till the
Premises are restored.
23. TERMINATION
23.1 The Lessor shall on the occurrence of any one or more of the following events be
entitled to terminate this Deed after providing the Lessee an opportunity to rectify
the default by giving a — days notice in writing:
(a) if the Rent, CAM charges and/or other charges hereby reserved or payable or any
part thereof or any sum payable under this Lease Deed shall at any time be unpaid
after becoming payable (whether any formal or legal demand therefore shall have
been made or not); or
(b) ifthe Lessee shall default in the due observance and performance of any undertakings,
terms or covenants on its part to be performed and observed hereunder.
Provided that in the event the Lessor is constrained to terminate the lease during
the lock-in period as aforementioned, the Lessee shall pay to the Lessor the lease
rentals, the maintenance charges and all other charges for the entire unexpired
duration of the lock-in period.
23.2 The Lessor shall on the occurrence of any one or more of the following events be
entitled to terminate this Deed forthwith:
a) ifthe Lessee being an individual shall have a bankruptcy order made against him or
being a company shall go into liquidation whether compulsory or voluntary (except
for the purpose of amalgamation or reconstruction of a solvent company), or shall
be struck off the Register of Companies or if a receiver shall be appointed of its
undertaking(s), property (ies) or assets or any part thereof; or
23.3 The Lessee shall on the completion of the lock-in period be entitled to terminate
this Deed by giving a months notice in writing or rent and all other charges in
lieu thereof to the Lessor.
24. LIEN ON LESSEE'S GOODS
24.1 In the event of non-payment of the rent, CAM charges and all other charges anytime
duringthe lease term or in case of termination ofthis Deed during the lock-in period,
the Lessor shall have an automatic lien and right of sale over all the stocks, goods
and merchandise, equipments, furniture & fixtures, other movable properties etc.
of the Lessee in the Demised Premises, in addition to its right to recover such dues/
payable rent, CAM charges and all other charges.
25. SERVICE OF NOTICE

25.1 All notices required to be served by either of the Parties upon the other shall
be deemed to have been duly sent and served if delivered personally and duly
256 Mall Management
acknowledged and/or sent by Registered AD post at the addresses given herein

above in this Lease Deed.
26. GENERAL
26.1 That it is clearly understood and so agreed by and between the parties hereto that
all the provisions contained herein and the obligations arising thereunder in respect
of the said premises shall equally be applicable to and enforceable against any and
all occupiers, Lessees, employees of the Lessees and/or subsequent purchasers of
the said premises, as the said obligations go along with the said premises for all
intents and purposes.
26.2 The Lessee hereby acknowledges that, prior to the execution of this Lease Deed, the
Lessee has carefully read and understood the terms and conditions contained in this
Lease Deed, has not been influenced into entering into this Lease Deed and that this
Lease Deed contains all the representations or warranties made by or on behalf of
the Lessor/Developer, prior to execution hereof.
26.3 The Lessee shall follow the Fit Out Guidelines, Occupiers Design Guidelines, rules
and regulations and various guidelines issued by the Lessor/Developer/Mall
Management Agency at all times and as modified from time to time.
26.4 Notwithstanding anything herein contained, the Lessor shall not in any way be
responsible or liable to the Lessee or its agents, invitees and licensees who may
be permitted to enter or use the Premises or the Building or any part thereof for
accidents happening or injuries sustained whether resulting in death or not, for
loss of or damage to property, goods or chattels in the Premises or the Building
or any part thereof howsoever caused and the Lessee shall keep the Lessor fully
indemnified against the same.
26.5 That the open areas within the boundary of the plot where the said Mall has been
constructed shall always remain the property of the Developer and may be used for
landscaping, promotional activities etc. and the Lessee shall have no right, title in
the same.
26.6 No delay on the part of either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any waiver on the part of either
party of any right, power or privilege hereunder operate as a waiver of any other
right, power or privilege hereunder, nor shall any single or partial exercise of any
right, power of privilege hereunder preclude any other or further exercise thereof
or the exercise of any right, power or privilege hereunder. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies,
which the parties may otherwise have at law or in equity. No condoning, excusing,
overlooking, indulgence or forbearance by the Lessor/Developer of any breach of
the Lessee's obligations herein shall operate as a waiver of the Lessor's/Developer's
rights or in any way affect the Lessor's/Developer's rights hereunder in respect of
any continuing, or subsequent breach by the Lessee of his obligations herein and no
waiver by the Lessor/Developer shall be inferred from or implied by anything done
or omitted by the Lessor/Developer. Any consent given by the Lessor/Developer
shall operate as a consent only for the particular matter to which it relates and
shall in no way operate as a waiver or release of any of the other provisions hereof,
Appendix 257
nor shall it be construed as dispensing with the necessity of obtaining the specific
written consent of the Lessor in future; unless expressly so extended.
26.7 In giving its consent in respect of any matters hereunder wherein the consent of
the Lessor/Developer is required, the Lessor/Developer shall be at liberty to impose
such conditions as it deems fit.
26.8 In the event any of the provisions of this Lease Deed shall be determined to be
invalid, void, illegal or unenforceable, such provisions shall be deemed to be deleted
from this Lease Deed and the remaining provisions of this Lease Deed shall continue
in full force and effect.
26.9 This Lease Deed is on a principal-to-principal basis and the Parties have entered
into this Lease Deed as independent entities and not as co-venturers, partners,
agents or employees of one another and nothing contained herein shall constitute
a partnership, joint venture, agency or employment between the Parties or be
deemed to grant any authority to either Party to make any contract or agreement
or to give any warranty or undertaking or representation on behalf of the other or
to create any obligation expressed or implicit on behalf of the other.
26.10 The Lessor/Developer shall not be obliged to charge a standard lease rent and the
lease rents may be different for different areas of the Building based on the location,
size of the space and/or other considerations. The Lessee confirms that it shall not
raise any question regarding or objection to the mutually settled rent on the basis
of comparison with the lease rent charged by the Lessor/Developer from other
Lessees.
26.11 The terms of this Lease Deed shall supersede all previous written or verbal
representations, discussions which the parties may have had on the subject matter
contained herein.
26.12 This Deed together with Annexure 1, 2 and 3 constitute the entire arrangement
between the parties.
27. STAMP DUTY

27.1 All costs, expenses, charges, legal or otherwise including stamp duty, registration
charges and other costs and charges, penalties connected with the execution and
registration of this Lease Deed shall be borne by the Lessee.
28. ARBITRATION
28.1 Any dispute or difference arising between the parties shall be resolved amicably
at the first instance. Unresolved disputes, controversies, contests, disputes, if any,
shall be submitted to arbitration. The arbitration shall be conducted in accordance
with the Provisions of the Arbitration and Conciliation Act, 1996 along with the rules
framed thereunder and any amendments thereto by a sole arbitrator appointed
by the Lessor. The arbitration shall be conducted in English. The decision/award
of the arbitrator shall be final/conclusive and binding on the parties. The seat of
arbitration shall be at New Delhi.
29. JURISDICTION
29.1 That the Courts at alone shall have jurisdiction in respect of all matters or
disputes or differences arising hereunder or in connection with or in relation to this
Lease Deed.
Schedule 1
s. PARTICULAR Details
No.
1. Premises Unit No. #: , Floor No. #: Building

Name: THE MALL Address of Building: --
Super Built-up Area: square feet
As shown in the sketch plan attached and edged

in red for the purpose of identification only.
2. Term • years from the Rent Commencement
Date
3. LeaseCommencement •
Date
4. Rent Commencement •
Date
5. Expiry Date I
6. Lock-in Period • Months from the Rent Commencement

Date
7. Renewal Terms ; terms of years ea ch.
8. Escalation • -- % at the time of every renewal/after -- Years

on last paid (Minimum Guarantee) Rent
9. Notice Period I -- days
10. Security Deposit/ CAM Security Deposit of Rs. (Rs.

Security Deposit -Only) equivalent to — Months (Minimum
Guarantee) Rent payable as follows:
On Signing of the MOU — Rs. (Rs.

only) has been paid.
On taking possession for fit outs - Rs.

shall be paid.
AND
CAM Security Deposit of Rs. equivalent to

~ months estimated CAM charges payable at
the time of taking possession for fit outs:
The security deposit and the CAM Deposit

shall be proportionately escalated upon every
escalation in rent/CAM charges.
11. Interest-free security •
deposit for electricity
12. Permitted Use • [ (product category)] trading under the

brand name.
Appendix 259
13. Main Product Line/ ■

Service
14. Lessee Operating ■ - am to ~ pm

Hours
15. Rent Minimum Guarantee Rent:
Rs. -- per square feet per month for — sq. ft.

Super Built-up Area of the Premises amounting
to Rs. (Rs. -—only) per month.
OR
Revenue Sharing Rent:
Revenue Sharing Rent @-—% of Net Sales,

whichever is higher.
"Net Sales" inthiscontextmeansTotal Revenue

generated from the premises [per month] less
VAT and Sales Tax.
The Lessee shall be required to provide to

the Lessor the sales figure of every month
by the —th day of the succeeding month.
Reconciliation between Minimum Guarantee
Rent and Revenue Sharing Rent shall be done
every month and the account settled in five
days thereof. The Lessee shall also be required
to providetothe Lessorthe sales figures forthe
year, duly certified by a Chartered Accountant,
within days from the year end on 31st
March every year. The Lessor has the right
to get the sales figures of the Lessee audited
independently at any time at its own cost and
the Lessee shall not object to the same and
provide all necessary assistance in this regard.
Rent shall be exclusive of Common Area

Maintenance charges which shall be charged
separately.
16. CAM charges To be paid on actuals which are presently

tentatively assessed@ Rs. per sq. ft. on
Super Area basis i.e. Rs. (Rs. Only)
per month.
17. Due Date for CAM Monthly in advance by the —th day of each
Charges, Minimum English calendar month
Guarantee Rent
Payment
260 Mall Management
IN WITNESS WHEREOF the parties hereto have hereunto set their hands respectively.
Signed by
For and on behalf of the Lessor
Signed by
For and on behalf of the Lessee
in the presence of:
Witnesses:
1.
2.
Appendix 261
Annexure 1
FLOOR PLAN IDENTIFYING DEMISED PREMISES
Annexure 2
OPERATIONS & MAINTENANCE—TERMS AND CONDITIONS
1. The "Common Facilities" are integrated and common to all the users of the said Mall. The
Lessee hereby agrees and conveys its consent that the Lessor/Developer shall manage the
said infrastructure for the said Mall and the Lessor/Developer shall provide its services for
managing the same subject to the covenants and consideration as envisaged hereinafter.
2. The Lessor/Developer and the Lessee hereby agree that the internal management of the
premises being occupied by the Lessee will be looked after completely by the Lessee only.
However, the Lessee shall abide by such rules, regulations and guidelines as framed by the
Lessor/Developer/Mall Management Agency from time to time with a view to eliminate
and/or minimize inconvenience and nuisance to the other occupants and/or users of the
premises in the said Mall.
3. The Lessor shall provide the services as per the scope set out herein below:
(a) Housekeeping of all common areas:

Atrium, links, and walkways on all the floors and common passages, all staircases,
terraces including utility services, all open spaces in the complex, basements,
common toilets, plant & equipment rooms.
(b) Maintenance and cleaning of ail vertical areas:

Glass fa?ade all over the building, store fagade, windowpanes on the exterior of
the building and also in common areas. However glass panels and shop front's glass
panels are the Lessee's responsibility.
(c) Maintenance of:

Drain, sewage system, water treatment plant etc., lifts and escalators, common
signage.
(d) Landscaping:
Cleaning and maintaining of gardens and other landscaped areas, manuring and
disinfecting, maintenance and provision of indoor plants in common areas.
(e) Equipment Maintenance and operation:

The Lessor/Developer shall maintain and operate all the systems and services installed
in the complex of the Mali (excluding the systems etc. owned by the Lessee) viz.
generators, water treatment plants, firefighting and alarm systems, sewer treatment
plants, lifts, escalators, etc. If the maintenance services are outsourced, the Lessor/
Developer will be responsible for selecting and coordinating with such agency.
(f) Security services of the areas outside the said premises.
(g) Air-conditioning, mechanical ventilation and power back-up of the common areas
including basements.
(h) Electricity to the common areas including basements.

262 Mall Management
(i) Pest control services for the common areas.
(j) Insurance of machineries, equipments, assets etc. for management of the Mall.
4. AIR-CONDITIONING AND POWER BACK UP: The air-conditioning facilities in the said Mall
shall be provided between a.m. and p.m. subject to Government regulations.
There is no provision of central heating system. If the aforesaid facilities of air-conditioning
are required by the Lessee beyond the hours as stated hereinbefore then the same shall
be provided upon a written request as per the prescribed format received in advance
and upon payment of additional charges, as computed by the Lessor/Developer. If found
not feasible, the Lessor/Developer may decline to provide extra air-conditioning service
outside the normal hours.
The Lessee shall pay the charges for power consumption including for the power back-up
through generator sets/electricity consumption charges/water charges/air-conditioning
based on actual meter reading as per the meters installed for the Lessee.
The AHUs/FCUs for air-conditioning shall be installed bythe Lessor/Developer but the cost
and expenses for the same shall be paid and borne by the Lessee. The AHUs/FCUs shall
be connected to the electricity sub-meter of the Lessee, whereas its daily operation and
maintenance shall be controlled by the Lessor/Developer and it would remain operational
during normal operating hours of the Mall.
The chiller water line up to the said premises shall be provided by the Lessor.
The air-conditioning/cooling shall be provided at an average temperature of — degrees

Celsius ( + — degree). The tonnage shall be @ - TR/— sq. ft. average for shops and @ --
TR/— sq. ft. average for restaurants.
If the Lessee requires additional load beyond the load provisioned for, the same shall be
provided to the Lessee upon payment of charges as reflected in the Lessee Input Form and
as revised from time to time.
The Lessor shall provide power back-up to the Mall for lighting, power and air-conditioning
through generator sets.
If the aforesaid facilities of power back-up are required by the Lessee beyond the hours
as stated hereinbefore then the same shall be provided upon a written request as per the
prescribed format received in advance and upon payment of additional charges plus —%,
as computed by the Lessor/Developer.
5. PROVISION OF ELECTRICITY: The Lessor/Developer will ensure provision of electricity

during mall operating hours up to the panels in the Premises. The electricity load provided
for the said premises shall be as per the provisions of the Lessee Input Form. The Lessee
shall be required to deposit a security deposit for the sanctioned load with the Lessor/
Developer as per the rates of the State Electricity Board/Electricity Supply Company. The
Lessee may apply for additional load and the charges for the extra load shall be paid by
the Lessee as per the policies of the Lessor/Developer.
The Lessee shall be provided with dual sub-meter for recording consumption of electricity
supplied to the said Premises by State Electricity Board/ Electricity Supply Company and for
electricity supplied through generator sets. The same meter shall be capable of recording
both the readings separately. The meter shall remain the property of the Lessor. If the
meter ceases to function, the average of the electricity supplied during the preceding -—
Appendix 263
- months or the average of the corresponding months of the preceding year, whichever is
higher, shall be taken as the basis of billing.
Charges for electricity supplied through the State Electricity Board/Electricity Supply Company
shall be calculated and paid by the Lessee as per the State Electricity Board/Electricity Supply
Company rates on actual units consumed along with distribution losses/service charges as
per the reading of the sub-meters (dual meters) on monthly basis along with the electricity
tax/duties as applicable. The Lessee agrees to pay/reimburse the Lessor deposits as may be
demanded by State Electricity Board/Electricity Supply Company from the Lessor under the
Bulk Supply Scheme applicable to the said plot/said complex. The Lessee shall adhere to
the Schedule of Tariff & Charges for supply of electrical energy and shall also pay Minimum
Monthly Charges, if applicable, on the load sanctioned as may be stipulated.
Charges for electricity supplied through generators to the said premises shall be calculated
and paid by the Lessee on cost plus — % on actual units consumed as per the reading of
the sub-meters on monthly basis.
The bill for energy consumed within the premises will be based on the dual meters/sub-
meters installed for the said premises.
The bill for electricity shall be presented by the Lessor by the seventh (-—th) day of the
succeeding month and the same shall be paid by the Lessee within days from the
date of receipt of the same.
The Lessee shall comply with the terms of supply of electricity/DG set supply against pre-
paid coupons as and when the Lessor/Maintenance Agency introduces the same.
Electricity meter shall be installed in the common space under lock and key by the Lessor/
Developer.
Before commencement of supply of electrical energy to the Premises, the Lessee shall be
liable to pay to the Lessor/Maintenance Agency an interest-free security deposit, meter
hire charges and other charges as may be stipulated.
No addition/alteration in the electric installation work, no addition of load other than

contracted upon, shall be carried out by the Lessee without the written permission of the
Lessor. The Lessee shall not connect or sub-let the load, or permit connection from its
sanctioned supply to any other premises/user.
PREJUDICIAL USE OF SUPPLY: The Lessee shall not connect to the Lessor's supply, any
apparatus, which is likely to interfere with or injuriously affect the Lessor's supply to other
users. The Lessee shall balance the load on the three phases of the supply, the maximum
permissible difference in current between any two phases being ten per cent. The Lessee
shall not use the supply given by the Lessor so as to interfere with the safety or efficient
working of the Lessor supply lines or other works, or to prejudicially affect the Lessor in
any manner whatsoever. The Lessee shall not draw load more than the sanctioned load.
DISCONTINUANCE OF SUPPLY: The Lessor/Developer reserves the right to discontinue

supply of electricity to the Lessee by giving days notice in writing if the Lessee
defaults in making payment of the bill on due date or there are reasons to believe that
the Lessee is contravening any of the provisions of the concerned Electricity Act, rules and
regulations of the Lessor, the conditions of supply or is committing a breach of any terms
and conditions.
264 Mall Management
THEFT OF ENERGY: In case any representative of the Lessor/Developer detects any

theft/pilferage of electrical energy on the said premises, its connection is liable to be
disconnected immediately without any notice and the Lessee shall be liable for all costs,
expenses, including damages, if any, and consequences arising out of the said act of theft/
pilferage.
In the event of a breach by the Lessee, whether of these Terms and Conditions or the
Lease Deed, the Lessor also reserves the right and authority to disconnect the electricity
connection to the said premises. During the period of such suspension, the Lessee
shall continue to be liable to pay and bear all charges for the supply of electricity to the
Premises. All costs and expenses incurred in connection with the disconnection and
discontinuation of electricity supply to the Premises and any subsequent re-connection
and re-continuation of electricity supply shall be borne by the Lessee.
6. The security of the common areas of the said Mall will be under the direct control and
supervision of the Lessor/Developer. The security personnel shall remain present at the Mall
24 hours a day including public holidays. However, vehicles and goods left in the vehicles
parked in the Building/Premises shall be at respective owner's risk. The security of men and
property within the Lessee's premises shall be the responsibility and liability of the Lessee.
However, if by any reason or by any act of any person within the Lessee's premises, it is felt
that the security of people and property other than that within the Lessee's premises are at
risk, the security as provided by the Lessor/Developer may take appropriate action against
the person creating possible danger to the overall property/security.
7. DISCONTINUATION OF SERVICES: The Lessee shall be liable to pay the CAM charges and other
dues payable to the Lessor as envisaged herein by the due dates. However, it is agreed that
in the event of the Lessee not paying the bills by the due dates to the Lessor/Developer for
any reason whatsoever, the Lessor/Developer shall be entitled to disconnect, discontinue
and disallow the use and enjoyment of the infrastructure and maintenance services etc. by
giving days notice in writing to the Lessee until the charges and arrears are cleared
by the Lessee. This remedy is however in addition to other remedies as may be available to
the Lessor/Developer under this Lease Deed and as per the law.
8. RIGHT TO TRANSFER MAINTENANCE AGREEMENT TO MALL MANAGEMENT AGENCY: The

Lessee agrees and acknowledges that in case the Lessor/Developer transfers or assigns
the operation and maintenance of the Premises to some other Mall Management Agency,
the Lessee shall have no objection to the same and the Lessee shall attorn to such transfer
or assignment on the same terms and conditions.
Signed by
For and on behalf of the Lessor
Signed by
For and on behalf of the Lessee

Appendix 265
Annexure 3
LEASING HANDBOOK
(a) The Lessee shall not dump any garbage in the corridors, common areas etc. The Lessee
on its own shall arrange to bring its waste and garbage from its respective premises to the
said bins, refuse collection areas etc. and abide by the directions of the Lessor/Developer
with regard to the collection and disposal of garbage and other waste.
(b) The Lessor shall frame rules for observing safety and security within the said Mall and
circulate a copy thereof to the Lessee for compliance. The Lessee shall not store any
material within the said premises or otherwise engage in any activity, which is hazardous,
explosive and/or otherwise dangerous to the building and other owners thereof.
(c) The Lessee shall use the said premises only for purposes of its business and shall not
engage itself in any activity, which may cause pollution and nuisance to the environment
whether by noise, disposal of waste—gaseous, solid or liquid. The Lessee shall arrange to
obtain the requisite licence and permissions in respect of its business activity. The Lessee
shall not use the premises for any unethical, immoral or unlawful purpose.
(d) The Lessee shall not encroach on these areas and shall not use the common passages
and areas for any activities including but not limited to distribution of hand-outs, bills,
pamphlets, putting banners and other such materials for promoting sales of its products
and services or organizing business campaigns.
(e) The Lessee shall not carry heavy loads in the lifts and escalators and only such number
of persons as permissible shall undertake travel in the lifts/on the escalators. If goods/
furniture or equipment is to be carried to any floor, the Lessee shall inform the security/
property manager so that due care is taken and the lifts/escalators are not damaged.
(f) The Lessee hereby agrees that the costs and expenses at the time of its moving into the
premises or vacating the same shall be borne by the Lessee and it shall ensure that it does
not cause any hindrance and obstruction to the enjoyment of the Mall by other occupants
and users in any manner whatsoever. The Lessee shall ensure that the damage and/or
loss, if any, caused to the Mall and other owners and users shall be made good by the
Lessee failing which the Lessor shall take steps to redress the grievances and the Lessee
shall be liable to pay such costs, charges etc. within days from the date of receipt of
the debit note by it from the Lessor/Developer.
(g) The Lessee shall follow the relevant Indian Standard Codes of Safety while executing the
internal electrical/mechanical works within the said premises and the Lessor/Developer
shall not be responsible for the same.
(h) The Lessee shall also notchangethecolourschemeof outer walls or painting of the exterior
side of the doors and windows etc. or carry out any change in the exterior elevation or
design.
(i) To apply for and to pay all charges for and connected with licences required for running its
operations and for the use of any equipment, apparatus etc. on the Premises.
(j) Not to make or permit to be made any change, structural or otherwise, alterations in
or additions to the Premises or any part thereof or the Lessor's fixtures, fittings and
decorations therein, if any provided, and without prejudice to the generality of the
foregoing not to install any equipment save with the prior written approval of the Lessor,
266 Mall Management
and if any consent or approval is sought to be obtained from the relevant authorities, such
consent and approval shall be obtained at the Lessee's own cost.
(k) Not to affix or install any further or additional electrical points in or about the Premises
without the prior written consent of the Lessor and to ensure that the existing circuits are
not overloaded or unbalanced.
(I) All debris and waste materials of whatever nature resulting from any works herein shall be
disposed of by the Lessee in a manner prescribed by the Lessor.
(m) To keep the interior of the Premises, the flooring and interior plaster or other surface
material or rendering on walls and ceilings and the Lessor's fixtures therein including
doors, windows, wires, installations and fittings in good and tenantable repair and
condition (normal wear and tear excepted) and to use the same in a proper and careful
manner and in the event that any part of the Premises shall be damaged due to any act or
omission of the Lessee and/or its agents, invitees and licensees, to replace or repair the
same and further, the Lessee shall be wholly responsible for any injury or loss caused to
the Lessor/Developer or any other persons through the damaged condition of any part of
the Premises and the Lessee shall fully indemnify the Lessor/Developer against all claims,
demands, actions and legal proceedings whatsoever made upon the Lessor/Developer by
any person.
(n) To keep the Premises and every part thereof clean and hygienic and tidy and at a standard
acceptable to the Lessor and to keep all pipes, drains, basins, sinks and water closets if
any in the Premises clean and unblocked. To comply with all statutory provisions and all
rules and regulations made under any statutes, legislation or bye-laws in respect of the
sanitary arrangements, hygiene, health or cleanliness of the Premises.
(o) To collect and/or to remove all refuse or rubbish whatsoever from the Premises and deposit
the same in approved refuse bins, receptacles or containers as the Lessor/Developer may
from time to time direct at such times and places as specified by the Lessor/Developer.
(p) Forthwith to repair, clean, maintain and paint the Premises in a good and workmanlike
manner and as required by the Lessor.
(q) Not to do (or permit or suffer to remain upon the Premises) anything which may be or
become or cause a nuisance, annoyance, disturbance, inconvenience, injury or damage to
or give cause for reasonable complaint from the Lessor/Developer or its Lessees or the
occupiers of adjacent or neighbouring Premises.
(r) Not to use the Premises for a sale by auction or for any dangerous, noxious, noisy or
offensive trade or business, nor for any illegal or immoral act or purpose.
(s) Not to store or bring upon any part of the Premises or the Building arms, ammunition,
or unlawful goods, gunpowder, salt-petre, kerosene, chemicals, gases or any explosive,
combustible or hazardous substance or material etc.
(t) To keep the Premises securely fastened and locked at all times when they remain
unattended and not to sleep or allow any person to sleep on the Premises and not to use
the Premises for residential purposes nor keep any animal or reptile on the Premises.
(u) Not to install any pay telephone or vending machines outside the Premises.
(v) Not to tout or permit its agents, invitees and licensees to tout or to use freelance touts in
the public areas of the Building.
Appendix 267
(w) Except where the permitted use of the Premises is that of an eating outlet, not to serve
any food or drink or allow any consumption of food or drink on the Premises without the
prior written consent of the Lessor.
(x) To participate in any joint marketing programs organized by the Lessor/Developer/Mall

Management Agency for the benefit of regular shoppers in the Building upon terms to be
mutually agreed between the Parties.
(y) In all advertisements in any media or other communications bearing or which may include
the Developer's name or business mark/name of the Building or any picture or likeness
of the Building or the Premises, the Lessee shall use only pre-approved formats for the
Developer's name or business mark or picture to ensure consistency in treatment of brand
name/logo in terms of size, colour and positioning statement.
(z) To provide privileges as may be determined by the Lessor/Developer on goods,

merchandise and/or services for any loyalty program(s) which may be implemented by
the Lessor/Developer and to honour and accept as good payment gift vouchers in all
available denominations issued by the Lessor/Developer.
(aa) In the event that the Premises are not open during the Business Hours for a continuous
period of days, such event shall constitute a fundamental breach and the Lessor/
Developer shall be entitled to re-enter the Premises.
(bb) Not to apply at any time for a licence or licences for the sale of wine, spirits or similar
intoxicating liquors on the Premises or any part thereof or allow the Premises or any part
thereof to be used for carrying on thereon of the trade of sale of wine, spirits or similar
intoxicating liquors, except after obtaining prior written approval from the Lessor and
obtaining the necessary licences from statutory authorities at the costs of the Lessee.
(cc) Not to affix, erect, attach, paint or exhibit or permit or suffer so to be upon any part
of the exterior of the Premises or any part of the Building any placard, poster, notice,
advertisement, name or sign or television or wireless mast or aerial or any other thing
whatsoever save and except such as shall have been previously approved in writing by the
Lessor/Developer at the Lessee's own cost and expense.
(dd) Not to change or in any way vary the shop front without first having obtained the written
consent of the Lessor.
(ee) Not to utilise any unethical business practice or conduct the business of the Lessee in
such a manner as to prejudice the goodwill and reputation of the Building as a shopping
centre/Mall.
(ff) Not to block up, darken, or obstruct or obscure any of the windows or lights belonging to
the Premises or to any part of the Building and not to cover or obstruct any ventilating
shafts or air-inlets or outlets.
(gg) Not to place or leave outside the Premises or in common areas, packages boxes or crates
of any description or parcels of goods or articles or any containers of any description and
to carry out all unpacking of goods within the Premises.
(hh) Not to affix or cause to be affixed any alarm system, door bells, hidden cameras or any
other devices in or around the Premises without obtaining prior written permission of
the Lessor/Developer. In default thereof the Lessor/Developer shall cause the same to be
removed and put right at the expense of the Lessee.
268 Mall Management
(ii) Not at any time to load or permit or suffer to be loaded on any part of the floors or
structures of the Premises any weight greater than 5 kilo-Newton per square meter (or
as the Lessor/Developer may from time to time prescribe) or any weight which will cause
undue strain and not to install any equipment or machinery which shall be unduly noisy
or cause dangerous vibration or cause air pollution or noise pollution or be a nuisance to
the Lessor/Developer or occupiers of the Building.
(jj) The Lessee shall not bring into or use in any part of the Premises or the Building any goods
prohibited for import and domestic sales, goods infringing upon trademarks, copyright,
patent rights or other intellectual property rights of any person or party.
(kk) Immediately prior to the expiration or earlier determination of the Term and if required by
the Lessor to reinstate the Premises to its original state and condition to the satisfaction
of the Lessor
(II) The Lessee shall at ail times observe and comply with Fire Safety Regulations.
(mm) As and where applicable, to subscribe to the point-of-sale system implemented by the
Lessor in the Building (the "Mall POS System") to electronically record gross sales received
or receivable by the Lessee and the Lessee agrees and undertakes to observe and perform
the terms and conditions, as framed by the Lessor, in respect of the Mall POS System.
(nn) Wherever wash rooms have been provided as part of the Premises, to keep such washrooms
and facilities within the Premises clean, hygienic, tidy and at a standard acceptable to the
Lessor/Developer.
(oo) Notwithstanding anything herein contained, the Lessor/Developer shall have the right at
all times to refuse access to the Building or otherwise control such access in respect of any
person whose presence in the Building might in the judgment of the Lessor/Developer
be prejudicial to the safety, character, reputation and interest of the Building and its
occupants.
(pp) That in case the Lessor is having an agreement/arrangement with any Bank/Financial
Institution for availing financial assistance by mortgaging the Demised Premises and/or by
arranging the receivables from the Demised Premises then the Lessee at the request of the
Lessor undertakes and agrees to remit the monthly rentals and other payments directly
to the Bank/Financial Institution. All such payments made by the Lessee to the aforesaid
parties shall be deemed good and full payment of the monthly rentals to Lessor.
(qq) The Lessee agrees and consents that it would have no objection to the Lessor raising
finance by way of mortgage/charge of the Demised Premises and the Lessee shall sign
documents required, if any.
(rr) That if during the term of the Lease Deed, the Demised Premises or any part thereof be
lawfully acquired or requisitioned by the Government or any local body or authority, local
or otherwise, the Lessor alone shall be entitled to any and all compensation payable and
the Lessee shall not raise any claim in respect thereof.
(ss) If the Lessee merges/amalgamates/consolidates or transfers its assets with/to any entity
on account of any merger/amalgamation/consolidation, then a fresh Lease Deed at the
discretion of the Lessor shall be executed between the Lessor and the new entity and
all costs, charges, expenses including penalties, payable on or in respect of execution
and registration of the fresh Lease Deed and on all other instruments and deeds to be
Appendix 4
Possession Letter
Date:-
XYZ Retail Ltd,

ABCD Road,
UVW City
Dear Sir,
We are pleased to hand over the possession of Unit no. XYZ at Mall situated at
The above unit has been taken by you for your brand with effect from day of
(month), (year). You may start the required fit-out work in the said unit. You are
required to pay balance Rs. by (date), (month), (year), else the
possession stands cancelled/
Thanking You
For (Lessor)
Appendix 3 j
Retailer Feedback Form
Dear Retailer,
We at the Mall are trying to knit an even stronger bond with our retailers. That's why
we are seeking your valuable opinion and precious suggestions. We assure you that your
suggestions will be given first priority.
1. How have you found the services provided by the Mall to you?
{ } Excellent { } Very good { }Good { } Average
2. Has the Mall operations been considerate towards the day-to-day operational problems
that you face?
{ } Always { } Usually { } At times { } Not at all
3. Are you facing any problems with regard to the facilities being provided to you by the
Mall?
{ } Yes { } No
If yes, then do let us know. We shall try our best to resolve them.
3. Does the ambience of the Mall meet your expectations?
{ } Yes { } No
If no, then do let us know what we can do to improve it.
5. What can we do at our end to help your sales prosper?

272 Mall Management
6. What role do you expect the Mall to play to help increase the publicity of your brand?
7. Do you receive full support of the Mall management while organising events and different
kinds of publicity for your brand?
{ } Always { } Usually { } At times { } Not at all
What support can we extend in the future to make these events even better for you?
8. Is the behavior of the Mall staff good and cooperative towards you and your team?
{ } Always { } Usually { } At times { } No
9. Do you find the security and housekeeping services being provided to you up to the
mark?
{ } Excellent { } Very good { } Good { } Average
If average, then do let us know why.
10. Do you find the maintenance and engineering services being provided to you up to the
mark?
{ } Excellent { } Very good { } Good { } Average
If average, then do let us know why.
10. Is the behavior of the security officials appropriate towards you and your team?
{ } Yes { } No
11. Do you feel that some loopholes in the mall management hamper your business and other
activities?
{ } Yes { } No
If yes, then do let us know what we must do to plug the loopholes.

Appendix 273
12. Are you comfortable while following the rules and regulations that have been implemented
by the Mall management?
{ } Yes { } No
What changes would you like us to bring in these rules and regulations so as to make
things more comfortable for you?
13. Do the bills (electricity, CAM and rent) reach you on time?
{ } Always { } Usually { } At times { } No
14. The Mall management would like to initiate a few more systems. What according to you
must we add?
If you have any other suggestions or complaints that you feel, you must pass onto us then
please do let us know.
RETAILER DETAILS-
OUTLET
SHOP NO.
INCHARGE NAME_
SIGNATURE DATED
y
I Glossary I
Account
A category used to group financial information and to create financial statements for a
business. Accounts are typically represented by an account number. A well-defined chart of
accounts is essential for good financial records.
Accounting interface
A method of transferring distributions and vouchered receivings from a retail software system
to an accounting software package.
Accounts payable
Amounts owed to others (a liability) for goods or services purchased on credit.
Accounts receivable
Amounts owed to a business (an asset), usually by customers who purchased goods or
services on credit.
Adjustment
An increase or decrease in the quantity indicated in the retail software package. The
adjustment ensures that the records in the retail software match the actual physical quantity
in the inventory.
Additional markdown
An increase of a previous markdown to further lower the selling price.
Ageing
A process that determines the age (number of days old) of customer open items.
Anchor
A business, usually a department store, that is particularly important to a shopping centre
because it attracts a great deal of traffic.
Anchor stores
The largest retail outlets, usually located at the ends or corners of shopping centres, and
generally chosen for their potential to attract customers to the shopping centre. Department
stores usually anchor regional and super-regional malls, and supermarkets are typical anchors
in community centres.
Ancillary tenant
A shopping centre tenant that occupies a smaller space and a location that is secondary in
relation to the anchor tenant.
Atrium
The central area of a building, equipped with a ceiling of translucent material that allows
natural light to fall on the interior.
Audit trail
A method of tracking transactions through the entire sequence of their history so that all
financial information can be traced. Certain reports should be printed or stored electronically
in the retail software as part of the business's permanent records.
Authorization
The act of ensuring the cardholder has adequate funds available against his or her line of
Appendix 275
credit. If authorized, an authorization code will be generated and adequate funds are set
aside. The cardholder's available credit limit will be reduced by the authorized amount.
Available quantity
The quantity of an item that is currently available for sale. Generally, the available quantity is
equal to the on-hand quantity minus any quantities set aside for open orders.
Average cost
An accounting cost method for calculating or recalculating a weighted average of the cost of
all inventory items currently in stock. This cost is recalculated each time items are added to
the inventory, and in certain situations, when items are removed from the inventory.
Base year
The year in a lease term used as a standard in a rent escalation clause. The operating costs in
the next year are compared with the costs in the base year, and the tenant's rent is adjusted
either up or down.
Basic rent
The minimum monthly rent payment as set forth in a retail lease, excluding pass-through,
percentage rents and other additional charges.
B2B (Business-to-Business)
A business model focused on sales to other businesses. Manufacturers, wholesalers, and
suppliers are typical B2B companies.
B2C (Business-to-Consumer)
A business model focused on sales to consumers. Retailers are typical B2C companies.
B2G (Business-to-Government)
A business model focused on sales to national, state or local government agencies.
Backorder
A type of order normally created when there is insufficient quantity available for a sale or
order.
Balance sheet inventory account

An account that tracks the value of on-hand inventory.
Barcode
A unique identifier for an inventory item or for a particular colour/size combination for an
item. A barcode may be printed in the machine readable format using one of a number of
common symbologies, such as UPC-A and Code 39.
Batch processing
A processing model for entering several transactions in a sequence, then finalising (or posting)
all of these transactions at the same time. The batch processing allows multiple employees
to enter and edit the same types of transactions simultaneously in their retail software.
Bin
Represents a physical place to store inventory. Bins are subdivisions of a location and are
used to locate items. Generally, bins refer to physical rows/shelves or to actual bins.
276 Mall Management
Biometric
A measurable characteristic or unique trait, such as a fingerprint, used to recognise the
identity of a person. Biometric devices can be used with retail point-of-sale systems as a
secure log-in mechanism.
Black Friday
The day after Thanksgiving. While Black Friday is often thought of as the busiest retail shopping
day of the year, in fact the busiest retail shopping day of the year is usually the Saturday
before Christmas. The origin of the term Black Friday comes from the shift in profitability
during the holiday season. Black Friday marks the day when many retailers shift from being
unprofitable, or "in the red", to being profitable, or "in the black".
Breakpoint
In retail leases, the point at which the tenant's percentage rent is equal to the base rent
and beyond which the tenant will begin to pay overages. It is also called natural breakpoint.
Sometimes the tenant and the owner negotiate an artificial breakpoint that allows the
tenant to begin paying the percentage rent either before or after the natural breakpoint is
reached.
Buyer
An executive who is responsible for selecting, pricing, and purchasing merchandise. In many
companies, the term "buyer" designates a department manager whose responsibilities
include, but are broader than, the purchasing function.
Build-to-suit
An arrangement between a shopping centre developer and a large tenant (such as
supermarket, department store, fast food franchise and bank whereby the developer agrees
to construct the tenant's building according to the tenant's specific instructions. The tenant
will then lease that building and the site from the developer.
Calendar
A schedule that defines the beginning and end of an accounting year. For retail purposes, the
calendar year may be divided into seasons, months and weeks.
Calendar year
A 365-day period that begins on January 1 and ends on December 31.
Capitalization rate
A rate used to calculate an estimate of a property's value based on that property's income.
Cash discount
The discount on the retail price when a shopper pays cash for an item. Many merchants
encourage shoppers to pay cash in order to avoid processing fees for credit card
transactions.
Cash receipts
The money received from a customer for the purchase of goods or services.
Category
A classification assigned to retail items. Categories are useful for grouping similar items for
pricing and reporting purposes.
I
Appendix 277
Chart of accounts
A list of all of a business's accounts in numerical order, usually grouped by type.
Cheque guarantee
A service that guarantees a customer's payment by cheque for a specified amount. The point-
of-sale merchants must typically follow standard cheque authorization procedures.
Cheque verification
A service used to verify that a cheque writer and/or their checking account information is
valid, and/or the account is in good standing.
Closing
After final negotiations, the signing of a lease.
Closing a drawer
The process of recording the ending amount of cash and other payment types in a drawer
before performing the end-of-day posting. Normally, a drawer is closed at the end of each
day.
Continuous occupancy clause

A lease clause that requires the tenant to occupy the space continuously throughout the
lease term.
Continuous operation clause

A retail lease clause in the area that requires tenants to keep their stores fully stocked at
inventory levels equal to (1) when they first opened for business (2) their stores in other
locations, or (3) stores offering similar merchandise. There may also be requirements
regarding store hours, staffing, and business name.
Construction rider
A part of the lease that lists in detail all work that is to be done for the tenant by the landlord.
It is also called a work letter.
Core space
The central or arterial area in a building that houses the building's function and service
needs. It usually includes elevator banks, washrooms, stairwells, and electrical and janitorial
closets.
Commission
The amount of money due to a sales rep when the sales rep makes a sale. Commissions can
be based on an item's sales price, profit margin, or other parameters.
Commissions due
The amount of money to be paid to a sales rep who is given credit for a particular sale.
Commit
To allocate (commit) inventory to a transaction (e.g. an open order, ticket and adjustment).
Cost
• The amount you pay a vendor for merchandise.
• The derived value of an inventory item, calculated over the lifetime of the item.
278 Mall Management
Cost method
The process that determines the cost of each inventory item. Generally accepted methods of
costing include average cost method, standard cost method, first-in-first-out method (FIFO),
and I a st-in-first-out method (LIFO).
Credit
• The power or ability to obtain goods, services or money in exchange for a promise to pay
later.
• The right side of an account of any G/L account. Credits will normally be increases to
liability accounts and decreases to asset accounts. They may also be increases to income
accounts and decreases to expense accounts.
Customer
An individual or organization that purchases goods and services from your company.
Cyber Monday
Refers to the Monday immediately following Black Friday, which marks the beginning of the
Christmas shopping season for online retailers. In recent years, Cyber Monday has become
one of the busiest days for online retailers.
Declining percentage rent

A negotiated percentage rent structure such that the tenant pays a smaller percentage of
gross sales after a specified sales volume is reached.
Dignified use clause

The provision in a retail lease that the merchant will not use the property in a way that will
damage the image or reputation of the shopping centre as a whole.
Discount
Represents a reduction in the price of an item.
Distributions
G/L accounting transactions created during posting.
Drawer
A physical container that stores money and other tender, including cheques and credit card
drafts, received at the point of sale.
Drawer fund
The amount of money left in a drawer after the drawer has been closed. The drawer fund is
typically used to provide start-up money (change) for the next business day.
DUKPT (Derived Unique Key per Transaction)

A method of PIN pad encryption.
Dun
A demand for payment of a bill or account.
EDC (Electronic Draft Capture)

An automatic method of authorizing, balancing and settling credit card transactions entered
in your retail software package.
I
Appendix 279
EDI (Electronic Data Interchange)

The ability to electronically exchange purchasing information between your retail software
and the vendor's system.
Employee discount
A reduction in the selling price on merchandise sold to an employee.
Encryption
The technique of automatically scrambling credit card data in the point-of-sale system before
the data is transmitted. Used for security and anti-fraud purposes.
End caps
The end pieces of display units typically used to display promotional items or featured
items.
Ending inventory
Merchandise on hand at the end of an accounting period.
Escalation clause
In a retail lease, a provision requiring the tenant to pay more rent based on increased
operating costs, changes in a given economic index, or an agreed-upon schedule stated in
the lease.
Etailer
A merchant who sells retail goods or services through the Internet. Related terms: internet
retail, retail ecommerce, online retailing, ecommerce, e-retail, e-tail and e-tailing
Exception reporting
The reporting that only includes information not meeting established criteria. For example, if
you plan to sell between 2% and 5%ofyour inventory per week then the exception reporting
would allow you to report on sales outside your criteria limits (e.g. sales that fell below 2%
or rose above 5%).
Exclusive use clause

A clause preventing the owner from leasing space to other retailers that sell merchandise
similar to that specified in the tenant's lease.
Expenses
Costs of operating a retail business.
Fiscal year
Any accounting period that contains one of the following:
• 52 weeks
• 13 four-week periods
• Calendar year (Jan 1-Dec 1)
• Any 12-month period
Fixed rate option

The tenant's guaranteed right to renew lease at the end of a lease term at a previously
determined rental rate.
280 Mall Management
Floor load capacity

The weight per square foot that a building's floors are able to sustain.
FOB (Freight On Board)

A shipping term indicating that freight charges are included for the specified destination.
Food court
A separate area of a shopping centre containing fast-food outlets and a common seating
area.
Forecasting
Predicting the future, usually in sales or trends.
Form feed
The capability of most printers to automatically feed perforated fixed-size rolls of paper to
the top of the next page.
Frequent Shopper Program (Customer Loyalty Program)

A program designed to reward customers for their continued business, promote loyalty,
increase visitation and encourage future purchases. Rewards may be in the form of discounts,
awards or other perks.
Frontage
The section of a store that faces the street or the pedestrian walkway in a mall. It also refers
to the window display area and entrance.
FSI
Floor Space Index
GAAP (Generally Accepted Accounting Principles)

A set of financial accounting standards and reporting guidelines many retail businesses
follow.
Gateway, Internet Gateway

Manages the electronic connection between consumers and financial institutions, and
transmits data. An Internet gateway that processes credit cards is a gateway connection
between the point-of-sale system and the credit card processors.
General Ledger (G/L)

• The collection of all balance sheet, income, and expense accounts used to keep a business's
financial records.
• A software package that uses accounts to summarize a company's fiscal records.
Gift certificate
A voucher for goods or services that is sold to one customer with the expectation that it will
be redeemed by another.
Gift receipt
A receipt without prices that allows easy exchange of a gift. Gift receipts act as proof of
purchase for the gift recipient and allow the purchaser of the gift to keep the original detailed
receipt for his or her own records.
Appendix 281
Grid
A table or matrix of the available combinations of characteristics for an item such as colour,
size, pattern, width, length, and so forth. Retail apparel grids are typically one-dimensional
(e.g. colour only or size only), two-dimensional (e.g. colour/size) or three-dimensional (e.g.
colour/size/pattern).
Grid cell
The intersection of two dimensions (e.g. colour and size) in an item grid. Also referred to as
a colour/size combination or simply colour/size.
Gross lease
A lease that allows the tenant to pay a fixed rent while the owner pays all operating expenses
for the property
Gross leasable area (GLA)

The total area of floor space (usually cited in square feet) leased for retail shops, consumer
services and entertainment, including restaurants. The total floor area of any shopping centre
or mall is inevitably larger than the gross leasable area. The difference can be accounted
for by mall offices, utility areas, storage, rest rooms, interior plazas and other non-revenue
producing spaces.
GMROI (Gross Margin Return On Investment)

A numerical indicator of the company's return on its investment for an item or a group of
items. GMROI measures the profitability of a company.
GP% (Gross Profit %)

The gross profit divided by the price.
Gross profit (margin)

The difference between an item's price and cost.
Hang tag
The nanufacturer's label describing the merchandise, or a hanging price tag used for apparel
and similar merchandise.
Holdover Clause
A clause in the lease agreement that details exactly what will happen if a tenant stays past
the lease end date. A holdover clause may stipulate that the tenant will pay 200% of their
base rent after the lease end date.
HVAC
A building's heating, ventilating and air conditioning system.
Inventory
• The merchandise on-hand for sale to customers in the ordinary course of business.
• The value of merchandise on hand at cost or retail.
Inventory adjustments
An increase or decrease made to the inventory to match an item's actual on-hand quantity.
Adjustments are typically recorded to account for breakage, theft, loss, incorrect receivings,
over shipments, and so forth.
282 Mall Management
Inventory cost
The actual or average value of on-hand merchandise.
Invoice
A document denoting money owed from one entity to another.
Item
A clearly identifiable product or service that may be sold to your customers.
Journal
The electronic record of transactions, including drawer activity, tickets, inventory adjustments,
transfers, purchase requests and receivings.
Keystone mark-up
A mark-up equal to the cost of the merchandise. Retail price is determined by doubling the
cost of an item.
Kit
A single inventory item that is constructed from other inventory items (components). For
example, you might create a kit called "toolbox set" that includes a toolbox, a hammer, a
wrench and a screwdriver. You could then sell the toolbox set as a single item.
Kiosk
• A small leased area, booth, or cart inside a store or mall. Frequently, it is an extension of
a larger retail business.
• An interactive computer display used for gift registries, online shopping, merchandise
location, or other electronic interactions between a shopper and a retail store.
Landed cost
The final cost per unit of items received into the inventory.
Landed cost = (Purchase cost + freight cost + miscellaneous charges) / Quantity received
Last cost
The cost of an item as of the most recent purchase of the item.
Layaway
A method of deferred payment in which merchandise is held for the customer until it is
completely paid for. The customer makes periodic payments towards the price.
Lease
A contract between the owner and the tenant that transfers to the tenant the right to use a
piece of property for a specified length of time under specific conditions.
Leasing plan
For a given retail site, the statement of rental rates and suitable tenants for specific space,
usually presented to the owner or developer in the early stages of prospecting.
Lessee
The tenant in a lease agreement.
Line item
A single item on a ticket, order or PO.
Rppendix 283
Location
A physical place where the inventory is kept (i.e. a stocking location or warehouse).
Load Factor
It is the percentage of the building space that is common area or is used by all tenants and
customers. This percentage is used to determine how much extra rent per square foot the
tenants should pay to cover their pro rata share of rent for the common areas.
Lot-controlled item
An item whose quantity is tracked by unique lot number within the item. Lot numbers are
commonly used for chemicals, paints, dye-lots and pharmaceuticals.
Loss leader
A pricing strategy where a particular item is sold below cost in an effort to stimulate other,
more profitable sales. For example, during the Thanksgiving season, turkeys are frequently
sold at pennies per pound in the hope that the grocery store will profit from other groceries
purchased at the same time.
Loss prevention
Stopping or reducing shrinkage inventory losses (or shrinkage) due to shoplifting, employee
theft, paperwork errors and breakage.
Loyalty
• Commitment to a particular store or brand.
• A programme designed to reward customers for their continued business.
Mall rat
A young person who frequents a shopping centre primarily for socialising and entertainment
rather than for shopping
Management history
Historical daily summary figures for registers, categories, payments, sales reps and taxes.
Margin (gross profit)

The difference between the cost of an item and its price.
Markdown
A reduction in the original retail price, primarily taken for clearance of broken merchandise,
prior stock or to meet competitor's pricing.
Mark-up
Upward revision of the original retail price, resulting in a price higher than the original
price.
Merchant agreement
A written contract between a merchant and a financial institution that details their respective
rights, responsibilities and warranties.
Minimum order
The smallest sale permitted by a manufacturer or wholesaler (vendor).
Miscellaneous charge
An additional charge that is not normally included in the price of an item, such as a fee for
shipping or handling.
284 Mall Management
Mixed-use centre
An integrated complex that may contain residences, offices, restaurants, theatres, a hotel
and other services in addition to retail stores.
Magnetic Stripe Reader (MSR)

A device that converts the information contained in the magnetic stripe of a credit card into
data that can be understood by the retail software.
Merchandising
Buying and selling of goods.
Metrics
Measurements of data surrounding sales activities, resources and/or deliverables.
MOTO (Mail-order/Telephone-order)
Net terms
Terms calling for the billed amount of the invoice with no discount allowed.
Net lease
A lease specifying that the tenant will pay a share of the owner's operating expenses, real
estate taxes and insurance premiums, usually in return for a lower base rent. The terms net-
net and net-net-net (or triple net) are also used. The use of these terms is being discontinued,
as their meaning is not clear in spelling out who pays, and what are the services offered.
Occupancy level
The relation of the space already rented to the total amount of the leasable space (gross
leasable area) in a shopping centre, expressed as a percentage
On order
Merchandise that has been ordered but not yet received.
Open item
• A type of customer whose account balance is determined by keeping individual document
details and applying payments to specific documents.
• A specific A/R document (e.g. an invoice, finance charge, debit memo and payment)
showing an individual transaction that occurs for an open item customer.
Open-to-buy (OTB)
The amount of merchandise that a retailer can order for a particular period.
The interim open-to-buy is calculated by deducting from the period's planned purchases the
amount of merchandise already received and the retail amount of purchase orders planned
for delivery within the period.
Operating Expenses
The costs the landlord incurs on property tax, building insurance and common area
maintenance (CAM). These costs are passed on to the tenants on a pro rata basis. If a store
leases 25% of a project then it will pay 25% of the project's operating expenses.
Order
A request or instruction to buy, sell or supply goods or services.
Appendix 285
Original markup
The initial markup on an item from cost to retail price.
Overage
• The amount by which a physical inventory exceeds a book inventory.
• The amount by which the actual drawer amount exceeds the reconciled amount at the
time the drawer is closed.
Packing slip
A contents list (or a copy of the invoice) included with a shipment.
PABP (Payment Application Best Practices)

The guidelines established by Visa to protect credit card data from fraud and misuse.
Percentage Rent
Mostly seen in shopping malls, the percentage rent is a rent structure where the landlord
takes a percentage of a tenant's sales—sometimes gross sales and sometimes after a certain
sales milestone is met. This type of rent motivates landlords to promote their properties with
advertising, thus helping tenants' sales that directly increase the landlord's bottom line.
Parking area ration

The relationship between the size of the parking area and the size of the retail building.
Payment
The money received from a customer to pay his or her bill. Payments may be made in the
form of cash, cheques, gift certificates, store credits, debit cards, credit cards, or company-
specific A/R charge accounts.
Percentage rent
This rent paid by a tenant is based on a percentage of gross sales or net income. It is often set
against a guaranteed minimum rent, and therefore considered "supplementary basic rent."
Period
A specified contiguous interval of time, such as a week or a month.
Periodic inventory
A method of determining the value of retail merchandise at periodic intervals by performing
a physical count of the items in stock.
Peripheral devices
Retail point-of-sale (POS) hardware devices used in conjunction with your retail POS
workstation. Retail POS systems support a number of peripheral devices, including printers,
cash drawers, barcode scanners, modems, card readers, cheque readers, customer displays,
weight scales and PIN pads.
Picking ticket
A list of items used for physically gathering items for shipment. Picking tickets typically include
item and customer information, where the item is physically located (the bin), the quantity
ordered, and a place to write the actual quantity of the item being shipped.
PIN (Personal Identification Number)

The individual number or code used by a cardholder to authenticate card ownership for the
point-of-sale debit transactions.
286 Mall Management
Planned sales
Anticipated sales for a given period of time based on retail sales trends and planned increases
over a period of time.
Planogram
Schematic drawings of retail store fixtures that illustrate product placement.
Point of Sale (POS)

The physical location at which goods or services are sold to customers. Also called point of
purchase.
Power mall
A shopping centre containing several category-killer stores such as home-improvement,
discount department, toys and stationary
Preleasing
The leasing of a large retail project before and during mall construction to ensure a high
occupancy level when the construction is completed. I t is often necessary to obtain
financing.
Price
The amount a customer would pay to buy a particular item from you, or what a customer
actually paid for an item.
Pricing unit
The unit of measure by which an item is priced.
Price war
A cycle that begins when one retailer attempts to under-price another, and it results in
retailers continuing to lower prices in turn to undercut their rivals.
Prior stock
The stock that has been in a retailer's inventory for more than six months.
Processing fees
Fees associated with processing credit card transactions.
Processor
A company responsible for processing payment transactions and is either operated by the
acquirer or is acting on the acquirer's behalf.
Profit centre
• A distinct area within your company for which sales, expenses and profits can be calculated
separately from the total sales and expenses of the whole company.
• A segment of the G/L account number used in generating distributions
Profit percentage
The difference between the cost of an item and its price, expressed as a percentage value.
Promotion
A special item price available for a limited period of time.
Purchase order (PO)

A record containing the details of an order for merchandise that has been placed with a
Appendix 287
vendor. Typically, the PO includes the items purchased, costs, discount terms and shipping
information.
Purchase request
It contains all the information that will go into a purchase order after the purchase request
is approved.
Purge
To remove unnecessary records from your retail software.
Quantity discount
A reduction in price based on the volume of sale.
Radius clause
n article in a retail lease that prevents a retailer from opening and operating another business,
whether competitive or not, within a certain radius from the shopping centre.
Receivables
Monies owed to a company by customers who have deferred payments.
Receiving
A document that details the receipt of merchandise ordered from a vendor.
Refund
The money or credit given to the customer back/return.
Rent roll
A record of rents and other income payable from and paid by tenants.
Rentable square footage and usable square footage

The rentable square footage is the amount of square footage on which you pay rent. The
useable square footage is the actual amount of square feet in your unit (although in retail, they
may be the same). The rentable square footage includes a load factor, which is the tenant's
pro rata share of common area. If 10% of a retail project is common area (e.g. elevator,
hallways and restrooms) then the rentable square footage includes a 10% load factor. In this
example, the rentable square footage of 1,650 square feet actually has a "usable" (the actual
size) square footage of 1,500 square feet. The extra 150 square feet for which the tenant is
paying rent is that tenant's pro rata share of the common areas.
Retail POS System (Retail Point-of-Sale System)

A computerized system made up of the retail software and the point-of-sale hardware. Retail
POS systems expedite point-of-sale checkouts, track merchandise performance, reorder
items, identify sales trends, enable buyers to make better merchandising decisions, track
customers and monitor loyalty, and report on historical sales activity.
Retail price
Typically, the highest price at which an item is sold.
Retail method
An accounting method used to estimate the cost of ending inventory based on the cost of the
goods available for sale relative to the retail price of the goods available for sale.
288 Mall Management
Retailer
An individual or company that sells goods and services directly to the consumer.
Relieve
To remove quantity from the inventory due to an adjustment, sale, etc.
Return
A transaction in which a customer gives back a purchased item in exchange for the amount
the customer paid for the item.
Revenue (sales)
The income generated by a company.
Reversal
When an acquirer successfully represents a chargeback to the issuer, the chargeback is
reversed and the funds are returned to the merchant.
Rotating stock
The method of stocking new merchandise behind or in place of old merchandise.
Sale
A transaction in the retail software in which a customer exchanges an agreed amount for an
item.
Sales forecast
An estimate of future sales based on current sales figures and current information from
manufacturers, wholesalers, accountants and bankers.
Sales per square foot

Net sales divided by the square feet of retail selling space.
Sales rep
An employee for whom sales activity and commission information is tracked.
Sales tax
An additional charge levied on the sale of goods and services, usually calculated as a
percentage of the purchase price. Sales taxes vary according to the taxable status of the
merchandise and customer and can differ according to location.
Seasonal merchandise
Merchandise purchased for a specific season that is only in demand for a short period of time
(e.g. summer, Christmas and back to school).
Serial number
A number that identifies a unique unit of an item. Serial numbers are used to track specific
items from acquisition to sale to history.
Serialized item
An item whose individual units are assigned unique serial numbers.
Settlement
The act of completing a credit card transaction.
Shrinkage (Shrink)
The difference between actual stock and book records of stock. Shrinkage represents the
Appendix 289
aggregate of errors in stock record keeping plus actual losses of merchandise through
shoplifting, employee theft, paperwork errors and breakage.
SKU (Stock Keeping Unit)

A number used to identify each unique item. SKUs are used in retail software to identify
items and may be tied to the item's UPC or BAN barcode.
Special order
A type of order typically used for items not generally kept in stock, especially those ordered
by you from your vendor for a particular customer.
SPIFF (Sales Promotion Incentive Fund or Sales Person Incentive Fund)

Cash, reward, or additional commission paid to sales clerks for increasing sales of a particular
item or brand of merchandise.
Split dial
The capability of a point-of-sale card terminal to dial different phone numbers to obtain an
authorization or settlement of different card types.
Statement (customer statement)

A notice sent to a customer describing monies owed. Statements may include details of
invoices, payments, credit memos, debit memos, and/or ageing along with the current
balance of the account.
Station
A retail point-of-sale workstation at which tickets and orders are entered and other cash
register functions are performed.
Stocking unit
The unit of measure by which an item is kept (stocked) in the inventory.
Store
A physical place at which the retail business is conducted.
Store credit
A document that represents money owed to a customer by the merchant. A merchant
normally issues a store credit (also called 'due bill') when a customer returns merchandise
that is not eligible for a refund. Store credits can be redeemed (tendered) by the customer
for future purchases.
Strip
A small open-air neighbourhood shopping centre, typically smaller than 10,000 square feet
GLA, with at least three stores arranged in a connected row facing a parking area
Sub-category
A specific classification within an item category that further defines the characteristics of a
group of items.
Sublease
A lease given by one tenant to another to create a sub-tenancy, usually only for the duration
of the original tenant's lease term. The original tenant remains liable to the owner in case of
default by the subtenant. (Compare with assignment.)
290 Mall Management
Subscription service
A method of delivering periodic retail software updates that may include product updates,
new features and bug fixes. Subscription services typically have an annual fee.
SVC (Stored Value Card)

The most common type of gift card. Each card is uniquely numbered and represents a specific
dollar amount. SVCs typically include a magnetic stripe encoded with a unique ID number
allowing them to be processed with a standard MSR device. The value of each SVC is typically
stored in a central database.
Tag
A physical label attached to merchandise for sale, such as an adhesive price tag, hang tag or
butterfly tag.
Target market
A defined group of consumers whom the retailer attempts to satisfy with its products and
services.
Tax
An amount levied on an item at the time of sale for the support of national, state and/or local
government.
Taxable amount
The per unit amount of an item's price to which a tax can be applied.
TDR
Transfer of Development Rights
Tearsheet
An actual copy of a retail advertisement.
TeleCheck
A cheque verification service for merchants designed to expedite the processing and handling
of chques and reduce fraud.
Temporary tenant
A tenant that rents for a short period of time, often seasonal or month-to-month. These
tenants sometimes occupy kiosks or carts.
Tender
Any form of payment that is offered to purchase goods or services.
Tenant
The individual or entity that pays rent in order to exclusively occupy a retail site for a specific
length of time. (Also see lessee.)
Tenancy
The occupancy or holding of land or other real estate on a rental basis, with or without a
tenant-mix. The tenant-mix refers to the combination of retailers and service vendors leasing
space in a shopping centre.
Tenant profile
A study and listing of the similar and dissimilar characteristics of a property's current tenants.
Appendix 291
Term
The duration of a tenant's lease.
Terms
A set of payment requirements for an invoice. For example, terms of 2/10, net 30 indicate
that an invoice paid within 10 days receives a 2% discount, otherwise the undiscounted
amount must be paid within 30 days.
Ticket
A transaction used for the sale or return of goods or services.
Ticket tax
The total tax amount for one ticket or order.
Ticket history
Detailed historical records of the tickets issued in the retail software.
Track 1/Track 2
The information stored on the magnetic stripe on the back of a card. Track 1 stores the
cardholder's name, account number and expiration date. Track 2 stores the account number
and expiration date only.
Transaction
A completed record in the retail software that involves the exchange of goods, products or
services.
Transfer
A transaction that facilitates the movement of some quantity of items from one location to
another.
Trunk show
The occasion when vendors present their merchandise directly to retail store owners, buyers
and/or customers.
Turn rate (stock turnover rate)

A measure of how quickly your inventory sells. For example, a turn rate of 6 would indicate
that you sell your merchandise quickly enough to replace it six times per year.
Unallocated
A purchase request or PO in cases where the goods ordered are intended for delivery to a
single location.
Uniform Resource Locator (URL)

A unique address that locates a specific resource on the Internet.
Unit
• A quantity of one
• A fixed quantity used as a standard for entering quantities in the retail software. For
example, the stocking unit for an item might be 'each,' but you might receive an item from
your vendor by the alternate unit 'case.'
UPC (Universal Product Code)

The standard for encoding a set of lines and spaces (or barcodes) that can be scanned and
interpreted by the retail software to identify a product.
292 Mall Management
Vendor
An individual or organization from which a retailer purchases merchandise for resale.
Vanilla Shell
The Vanilla Shell is an industry term that describes how most landlords will deliver a space
to a new tenant. It may include textured and painted walls, drop ceiling and lighting fixtures.
Vanilla Shell descriptions may differ from one landlord to the other, so it is important for
tenants to ask for a detailed description of the Vanilla Shell.
Vouchering
The process of creating an accounts payable voucher, or record of what is owed to a vendor,
for items received from and invoiced by the vendor.
Warranty
A written guarantee of a manufacturer's or retailer's responsibility. A limited warranty
provides specific conditions under which a manufacturer or retailer will repair or replace an
item.
Workstation
The computer used to run a retail software package.
X-Z
Year
An accounting period most often defined by the company's fiscal year or as a calendar year
(January 1 through December 31).
Zoning
The Floor Area Ratio (FAR) or Floor Space Index (FSI) is the ratio of the total floor area of
buildings on a certain location to the size of the land of that location, or the limit imposed on
such a ratio. The Floor Area Ratio is the total building square footage (building area) divided
by the site size square footage (site area). As a formula: Floor Area Ratio = (Total covered
area on all floors of all buildings on a certain plot)/(Area of the plot).Thus, an FSI of 2.0 would
indicate that the total floor area of a building is two times the gross area of the plot on which
it is constructed. This ratio could apply to a multi-storey building.
Index
Ansal Plaza 7,8, 177 EIL 196
Activation strategies 75 Emerging trends 32
Ambience 163,177 Entertainment retailing 29
Anchor store 211,212,213,220 Environmental monitoring 194
Anchor tenants 50,54 Environmental regulations 191
Atmospherics 98 Event marketing 74,79
Baskin & Bobbins 151 Exclusivity Clause 121,122
Brokers 142,143,144 Fair price shops 2,3
CAM 120,129,131,132 Fast-Food joints 212,219,220
Catchment areas 42 Fit-out Letter 128
Cloning 228 Floor space index 185
Clustering of malls 228 Food fourts 219
Cold Canvassing 126 Foot-fall index 150
Comparison Goods 95 Forum Mall 93
Cosmetic face-lifting 232 Four R's 194
CPI 124,131 Graduated Rental 123
Cross-shopping 101,109 Great India Place 53
De-Mailing 233 Gross lease 118
Department stores 212,213,214 Health and hygiene 164,167
Design phase 41,47 HNWIs 15
Discount malls 31,32 HVAC 54
Dog bone 93 Hypermarket 215,216

294 Mall Management
Inaugural Decor 149 Project Brochure 140,141
Index-based Rental 124 Public funds 66,71
Internal accruals 66,67 Regional malls 30
IPOs 74 Regulator 228,229
Kiosk leasing 74,77 REITs 227,229
Labour laws 188,197 Re-leasing 147,153,154
Landscaping 50,51 Rent Reviews 131,133
Leasing Brochure 145 RMUs 76,77
Liability insurance 196 Rowdy shoppers 169,170
Life style retail 213 Safety features 55
Luxury retailers 41 Sahara Mall 100
Mahagun Mall 110 Select City Walk 112
Mall design 39,40,47,49,55 Sewage treatment 195
Mall Expansion 27 Shopping centre 22,23,25,28,31,33
Mall Exteriors 146 Social perspective 24
Mall financing 66,70,75,83 South Dale Centre 213
Mall life cycle 227,230 Special Displays 108
Mall Life-Cycle Curve 27 Specialty malls 31
Mall management 10,11,16,17 Specialty stores 211,220
Marketing perspective 23,24 Spencer 6,7,20
Modern retail 3,4,5,13 Stampede 169
MSUs 96,101 Strip malls 31
MTBF 166 Structural Perspective 22
MTTR 166 Super Regional Centre's 226
Multiplexes 212,213,217,218,219 Supermarkets 42,45,50,54, 212,214,215,216
Net lease 118,119 Temporary Tenants 151
Note and mortgage 67,69 Tenant strategies 230
Occupation certificate 187 Tl Mall 118
Organized retail 1,2,4,9,15,16 Trust deed 67,70
Out-hopping 96 UB city mall 54
Parking standards 173 Unorganized retail 4,15,
Periodic rejuvenation 232 Vending machines 74,78,87
Planning phase 41,47 Wrap-up liability 197
Positioning 10 Zoning 7,10,11,18, 92,93,98,101,103,108
Private funds 66

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The McGraw Hill Companies

About the Authors

Dr. Harvinder Singh is an Associate Professor in the area of

Dr. Harvinder Singh has over 14 years of teaching experience. He

Dr. Srini R. Srinivasan is a professor of Marketing and heading the

Chairperson, Vivekanand Education Society's

Tata McGraw Hill Education Private Limited

Published by the Tata McGraw Hill Education Private Limited,

This edition can be exported from India only by the publishers,

ISBN (13 digit): 978-1-25-900499-5

Vice President and Managing Director: Ajay Shukla

Cover Printer: Sai Printo Pack

The McGraw-Hill Companies

My wife, Sumeet, and my son, Ramneek.

—Dr. Harvinder Singh

My wife, Srividhya, son, Adithya, and daughter, Anusha.

—Dr. Srini R. Srinivasan

It is definitely going to be a invaluable tool for the students of retail management. I am

Dr. Harvinder Singh

Dr. Srini R. Srinivasan

To begin with, I would like to express my gratitude to my employer. Institute of Management

Dr. Harvinder Singh

I express my sincere gratitude to Shri Kanchi Mahaswmigal and my greatest appreciation

I express my infinite thanks to my beloved mother, who is also a teacher by profession,

Dr. Srini R. Srinivasan

2. Concept of Shopping Mall 21-38

Case: The mall and the community 38

3. Mall Development Process 39-63

Site for the Shopping Mall 45

Case 2: Square peg in a round hole 62

4. Financing and Revenue Model for Shopping Malls 64-90

Case: Multiple owner can't manage malls 90

5. Tenant Mix 91-115

Suggested Readings 114

Case: Retailer developer partnership: A way forward 115

6. Leasing Administration 116-137

Types of Lease 118

Case: Retailer's down shutters 137

7. Marketing and Promotion Activities for Shopping Malls 138-161

Suggested Readings 159

Case: Summer carnival at Oberoi mall, Mumbai 161

8. Facilities Management in Mall Operations 162-181

9. Regulatory Framework for Shopping Malls 182-209

Labour Laws Concerning Shopping Malls 197

Suggested Readings 200

Case 1: Disputes over right to inspect the mall 202

10. Handling Anchor Tenants 210-224

11. Future of Shopping Malls 225-236

Suggested Readings 234

and Shopping Molls

This chapter will enable the readers to

SHOULD THERE BE FDI IN INDIAN RETAIL?

Emergence of Organized Retail in India

Fair Price Shops

Introduction to Retoiling ond Shopping Molls 3

Private Initiatives in Pre-liberalization India

High-street Markets in India

Forces Shaping Demand for Improved Retail Formats

Organized vs Unorganized Retail