In the wake of an unprecedented surge in e-commerce, shopping malls already under huge pressure due to large vacant spaces are expected to see a sharp decline in the footfalls could be to the extent of 55.58 per cent during the ongoing festive season this year, reveals an ASSOCHAM recent survey.
According to the just concluded survey, Delhi-NCR has recorded the highest decline in footfalls at city malls. As per the study, about 120-150 malls were launched in the past two years but close to 65-70% of the spaces in many of the malls still remain empty. Several malls, unable to attract the shops are even shutting down.
The major factors attributed to this situation are an economic slowdown, online shopping, high-interest rate and inflation of consumer good items, the steep drop in shoppers have hit the malls which are already suffering from large vacant spaces, said ASSOCHAM paper.
In the nine major cities, more than 59 percent of the total mall space remains vacant, with Delhi-NCR top the list with 68.5 percent, followed by Mumbai at 65 percent, Ahmedabad at 61 percent and Chennai at 60 percent. According to the survey, several developers have already started giving rent-free period of up to six months for big brands to lure retailers.
While some malls are operating at 40 percent occupancy, others struggle with less than 20 percent, mainly due to poor location, poor design and poor parking facilities, the survey found.
Both retailers and consultants seem convinced that the mall magic seems to have disappeared in a puff of smoke on the back of the economic slowdown, poor revenue model, low footfalls-to-sales conversion and lack of special purpose malls, adds the survey.
For some malls, even the design and construction quality is poor. The remaining malls lie somewhere in between good performing and bad performing malls– average performers, adds the survey.
A meager 8-10% of these shopping malls are running successfully in India and facing tough competition from online retailers such as Flipkart, Amazon, Jabong, Snapdeal, which hand-delivers goods to the front door for minimal cost.
The festival season this year has triggered a huge rise in online shopping and may cross the Rs. 55,000-crore mark, resulting in the halving of footfalls in malls in places like Delhi, Mumbai, Chennai, Ahmedabad etc. apex industry body ASSOCHAM.
The study reveals that there may be a five-fold increase in the revenue clocked in by the eCommerce websites in categories such as include mobile phones, electronics, designer furniture, home decorations, apparel, accessories, jewellery, footwear etc.
The most popular among the e-commerce websites – Snapdeal, Myntra, Flipkart, Amazon, Jabong etc have been doling out massive price cuts or discounts on purchase of popular brands of apparels, footwear, electronic goods, coinciding with the upcoming festive month.
The growing trend is being attributed to the fact that all reputed Indian and international brands have tied-up with these websites and are being offered to the consumers at a much lower price than their retail prices.