Shopping Malls are dying in India!
And no, online shopping is not the reason behind their decline
The crazy part? 21% of Indian malls have already turned into ghost malls & another 60% are on the way
THREAD: Rise & fall of malls and the reasons behind it🧵
And no, online shopping is not the reason behind their decline
The crazy part? 21% of Indian malls have already turned into ghost malls & another 60% are on the way
THREAD: Rise & fall of malls and the reasons behind it🧵
First, let’s try and understand malls as a concept.
In the late 20th century US, the first modern malls served as social hubs — a “THIRD SPACE” between home life and work life
— where people could gather, socialize, and spend leisure time.
In the late 20th century US, the first modern malls served as social hubs — a “THIRD SPACE” between home life and work life
— where people could gather, socialize, and spend leisure time.
A space that has been filled with one thing or another ever since humanity has existed, and is now filled by social media :)
Simply put, malls were meant for socializing as much as shopping.
Simply put, malls were meant for socializing as much as shopping.
But as the concept of modern malls evolved and spread globally, its inventor Victor Gruen wanted to disclaim the title of “father of the modern shopping mall”.
Gruen's full vision for the mall was more than just shops.
Gruen's full vision for the mall was more than just shops.
He imagined them as mixed-use facilities, with apartments, offices, medical centers, child care facilities, libraries, and (since it was the 1950s) bomb shelters.
So, he hated what he created because his vision of cultivating a stronger sense of community was lacking in these malls and their focus was on maximizing profits.
We’ll talk more on this later.
We’ll talk more on this later.
Now, the concept of malls was alien to India until 25 years ago.
The first shopping mall in India was launched in 1999 by Ansal's Plaza in Delhi, followed by Crossroads in Mumbai and Spencer Plaza in Chennai.
The first shopping mall in India was launched in 1999 by Ansal's Plaza in Delhi, followed by Crossroads in Mumbai and Spencer Plaza in Chennai.
It was only after 2003 that malls started multiplying and sprung up in every city.
And now, as of 2023, there are a total of 1,20,396 shopping malls in India (Rent Tech Digital).
Of which, majority are ghost malls occupying millions of square feet of space across the country.
And now, as of 2023, there are a total of 1,20,396 shopping malls in India (Rent Tech Digital).
Of which, majority are ghost malls occupying millions of square feet of space across the country.
Now, what is a ghost mall exactly?
It’s a shopping mall with either more than 40% vacancy rate or a low consumer traffic level.
See, the decline of malls can be attributed to several reasons:
It’s a shopping mall with either more than 40% vacancy rate or a low consumer traffic level.
See, the decline of malls can be attributed to several reasons:
👉 The most obvious being that e-commerce in India is booming.
Covid-19 accelerated the digital revolution and transformed consumer behaviour forever.
And more importantly, Indian e-commerce is expected to grow at a CAGR of 27% to reach US$ 163 billion by 2026.
Covid-19 accelerated the digital revolution and transformed consumer behaviour forever.
And more importantly, Indian e-commerce is expected to grow at a CAGR of 27% to reach US$ 163 billion by 2026.
So, while malls stand to benefit from the rise in consumerism, they’re losing out on how consumers consume when it comes to organized retail shopping.
Moreover, malls that fail to differentiate themselves and offer more than just shopping will continue to struggle.
Moreover, malls that fail to differentiate themselves and offer more than just shopping will continue to struggle.
👉 Another reason is that malls are typically located in prime locations and that results in high operational cost for mall owners and retailers with rising real estate costs.
And failing to bear these costs due to underperformance further leads to issues such as poor infrastructure & maintenance, retailers vacating the mall to minimize their losses, and whatnot
— all of which deters the consumers even more.
— all of which deters the consumers even more.
👉 Now let’s the jump to the most important reason — most malls are soulless concrete structures detached with Indianness.
Even their architecture is intentionally optimized to encourage people to buy more things
— things they might not even need.
Even their architecture is intentionally optimized to encourage people to buy more things
— things they might not even need.
A psychological phenomenon that is ironically known as the Gruen Effect.
And you know what’s more ironic? Despite this, Indian malls have a very low conversion rate.
See, cities that have seen maximum malls include Delhi NCR, Mumbai, Chennai, Bengaluru and Pune.
And you know what’s more ironic? Despite this, Indian malls have a very low conversion rate.
See, cities that have seen maximum malls include Delhi NCR, Mumbai, Chennai, Bengaluru and Pune.
And it’s people in these unlivable cities with high population densities that visit malls solely for tourism or escapism.
Not to shop.
Compare that experience to the hustle and bustle of the traditional Indian bazaars we’ve all grown up with.
Not to shop.
Compare that experience to the hustle and bustle of the traditional Indian bazaars we’ve all grown up with.
Now that’s more like what Gruen wanted achieve within enclosed malls — his philosophy being that good design would usher in good profits.
Perhaps it’s not too late to rethink and reinvent Indian shopping malls.
Perhaps it’s not too late to rethink and reinvent Indian shopping malls.
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