NEW DELHI — Select Citywalk mall here has retailers across the country rethinking their strategies. Select Citywalk is consistently seen as India’s leading mall, with sales of more than 10 billion rupees, or $151.2 million, a year and a string of global players making their Indian debuts there.
The list of launches this year itself has been for much-awaited brands including The Gap in May, H&M in October, and Aéropostale in November. Among other brands making their debuts in India, the first Zara was launched at Select Citywalk in 2010, the first Sephora in 2012, the first Bobbi Brown stand-alone store in 2013 and the first Clinique store in 2007. Massimo Dutti will launch in India here in early 2016.
“It’s quite a juggling act,” Yogeshwar Sharma, Select Citywalk’s chief executive officer, said, “but it’s been a priority for us to get the positioning right. We work hard and with the brands to get it right. We know that if they fail, we fail.”
The growth in the $550 billion retail industry in India has been dramatic over the last decade — but it has also been filled with change, which in the last few years has badly impacted some malls. According to a recent study by real estate investment management company Jones Lang LaSalle, more than 40 percent of the malls in India are struggling, or changing to different formats or converting to office space.
Over the last year, as markets have recovered, and both global and Indian brands make a concerted push for growth, this balancing act has been particularly crucial. Sharma talked to WWD about the changing retail scene, and Select Citywalk’s focus as the leader in the fashion and beauty space, with dozens of brands claiming their store in the mall is their best performer in India.
WWD: Select Citywalk has made a major dent in the retail space in India. What has really kept it ahead of the game?
Yogeshwar Sharma: This was the first mall that was fully leased and on a revenue share basis when it started in 2007. That was a big change in the industry. It was a difficult task because brands were keen to buy retail space and it is easier to sell than to wait for leasing money to come in smaller amounts. But we sold our hotel business and office tower but did not sell the shops. A key reason was that the three promoters — Arun Sharma, Neeraj Ghei and Yograj Arora — made it a priority to get the mall mix right. While many of the other malls are a part of a chain, or a small part of another company, this one is clearly a priority for the promoters.
When the mall was launched, it was with the best brands available at that time — Pantaloons [a department store chain] was very sought after. Shoppers Stop didn’t do their department store, but they did four category killers, including Crossword, which was the most popular bookstore; Homestop; the largest Mothercare, and then Arcelia, which was then a new concept for accessories and beauty.
A lot has changed since then. Arcelia closed down, the book category has gotten much smaller, and we have been able to bring in a lot of brands to keep the best mall mix going.
WWD: You’ve had to do a lot of gazing into the future and negotiating in this process. What were some of the key game-changers in subsequent years?
Y.S.: In 2008-09, there was the global financial crisis and every retailer wanted to scale down the business. Even at that time, we wanted short leases because we knew that global brands were coming in — so instead of signing 10 to 15 years, we requested five to six years, nine at the max. That really helped. We knew that by 2012, a lot of shops would come back for leasing. So we did an analysis in 2010 and looked at the brands we wanted for sure, like Mango, and decided to renew them right away instead of waiting till the lease expired so that we didn’t have to handle too many tenants at the same time.
We saw that Arcelia was struggling and we requested them to give it back. Zara was knocking at that time, so we opened the first Zara in the country. Then the first Häagen-Dazs, first Sephora, first Chanel-franchised business boutique, first Clinique, first Bobbi Brown, among others.
We’ve had to move around many stores in this process of accommodation, but all these movements have been done carefully, logically and very respectfully, with the intent of not hurting the other person but helping them, of creating a win-win situation.
When H&M knocked, we requested Pantaloons move and it got an alternate location at a reasonable rate, so we got a spot for H&M. We have relocated Wills Lifestyle on the first floor to make space for Massimo Dutti.
WWD: The mall has also become a big destination for beauty brands.
Y.S.: Yes, we wanted our positioning clear — this is a fashion and beauty neighborhood mall. Beauty can be very difficult — but it happened by default, and now the mall is a big destination for beauty from Color Bar, Inglot, The Body Shop, Clinique, Chanel, Forest Essentials — approximately 40 beauty brands — and all of them are doing well. MAC has continued to be a top performer in terms of volume for the last seven to eight years. Now Christian Dior [beauty] is entering India with a boutique.
With this range of brands, we also have a huge range of prices. For example, a lipstick from Color Bar could range from 300 to 500 rupees ($4.53 to $7.55), while others such as Estée Lauder brands will have 2,000 rupees ($30) plus. So we are able to cater to customers at all levels.
We are also experimenting. We brought in Chambor with a temporary boutique, and it has been doing very well. Sephora struggled a little bit because of a change of partners.
There are many others that haven’t found space yet — Clarins, YSL, Kiehl’s. They are all good brands and we would like to accommodate more. Indian brands have been doing well also, like Forest Essentials, and Shahnaz Husain.
WWD: What kind of averages is the mall doing in terms of sales?
Y.S.: The yearly average is about 10 billion rupees, or $151.17 million, and the per-square-foot average is about 2,750 rupees, or $47.57, a month. But that is the average — in some cases, such as beauty, it is much higher. The stores are much smaller, and often it is more than 14,000 rupees, or $211.64, a square foot.
WWD: Are there specific retailers that are really drawing customers in?
Y.S.: MAC Cosmetics for sure, Bobbi Brown, Chanel in beauty. In fashion, Zara, Tommy Hilfiger, U.S. Polo, Mango. Promod is doing very well. Then Tommy Hilfiger is a very big surprise, it does extremely well, U.S. Polo is doing well. Then Burberry came in — we were evaluating if this is the right time to take it to the next level of price points, but we realized that affordable luxury, bridge-to-luxury is OK — although we get a lot of requests from luxury brands who want the advantage of footfall.
We have given it a lot of careful thought: If a person has 100 rupees in their wallet, how would they spend it? In what proportion? The mall has to reflect the same. For example, a man will usually possess only one wallet, but on the other hand, a woman will carry so many bags of different sizes, clutch, etc. A woman will have a certain amount of ethnicwear, and then Western wear. There is a science behind this and the brands and categories have been chosen accordingly.
WWD: So is the footfall to malls actually dropping as overall retail statistics suggest?
Y.S.: Indian families go out together. We offer them an experience — it is not only about shopping. People are shopping for beautiful clothes, then they need somewhere to wear them. If you look at the customers, they come dressed up for a day out or an evening out. The mall is about shopping, but it is also a destination. Our footfall is about 36,000 during weekdays and approximately 50,000 on weekend days. The mall is shut only for two half days in the year — on the second half of the day on Diwali, and the first half of the day on Holi. During the festive holidays, the footfall is about 100,000 people in a day.
We have a great catchment area, so a lot of the people who come to the mall are travelers who know brands and what they want.
WWD: What has been the biggest change in terms of retail over the last few years?
Y.S.: The frequency of the buyer has gone up, as has the frequency of going to the movies, and of going out. Slowly the habit of spending is becoming more settled. Today, looking good has become the most important thing. People have started earning more — India has started providing the human capital to the world, in terms of technology to the world. We’re seeing the change, and are just watching…and then responding to make ourselves even better to keep up with it. We are open, and receptive. There is a saying that if you agree with someone, think twice, before you jump in with their opinion. We find that even if we disagree, we think twice and make sure we are on the right track.