A mall not only offers a great shopping experience but is also a mine of business opportunities
It starts right from the point you enter the premises of a mall – catchy outdoor hoardings, and then attendants assisting with parking of vehicles. At the entry points, guards frisk visitors for security assurance, also installed are CCTVs
and surveillance cameras for ensuring a threat-free environment. Then there are kiosks here and there displaying and promoting the latest products. Escalators and lifts for comfort and convenience, with the housekeeping team making sure that the ambience is simply perfect. Of course, there are those with the walkie-talkies who are always around to help out visitors and deal with their grievances.
Ever wondered who is running these shows, behind the scene? More importantly, how big is this business?
Is there an opportunity window?
In India, there are three different categories of malls – Value malls (e.g. Big Bazaar), Value-cum-lifestyle malls (e.g. Pantaloon), and Lifestyle malls (e.g. MGF Metropolitan).
Right from the day a mall is constructed, it becomes a mine of opportunities for a lot of businesses. Besides the shops, restaurants, and entertainment hubs, there are opportunities valued well over Rs 50 crore per mall. These are mall management, facility management, creative firms, and design houses specializing in mall interiors, promotional events, kiosks, and hoardings to advertise products or services, to name a few opportunities. Considering the ever-growing retail sector and the growing prominence of malls in this sector, let us take a quick look at how big a business can some of these services be.
Mall Management
Approximate Market Size: Rs 5-50 crore per mall per annum
A mall management company takes care of the entire operations of a mall, which includes procurement of various equipment and maintenance. This means, broadly all the FMB operations (Facilities Maintenance Operations) such as, leasing out shops and advertising space to interested parties, procuring all necessary equipment, to maintaining the mall. To get all of this done, a mall management company usually outsources many of these functions to facility management companies that deal in specific services.
As Surajit Mitra, Chief of Marketing, Mall Division, Future Group, puts it, “Mall management encompasses operations, facilities management, security, accounts, common area maintenance, marketing, leasing and all the other functions even remotely related to a mall.”
Revenue Generators
“Since a mall management company gets involved right from the inception of a mall, we have a pre-launch as well as a post-launch fees. It is usually around 5-10% of the expected rental in the leasing out phase. Then again 5-10% of the total income from the business generated, which ranges anywhere between Rs 100 crore and Rs 500 crore,” adds Mitra.
So if we take this revenue model into account, then the income from mall management could range anywhere between Rs 5 crore and Rs 50 crore annually, and that is from just one mall! The biggest advantage in this opportunity is the fact that there is no single mall management company that is into catering to malls other than their own (all the malls have their in-house mall management). However, Future Group is contemplating doing mall management for other business houses.
Challenges
“The biggest problem in this industry is finding the right kind of tenants. While leasing out space to tenants, it is important to keep in mind the image that you want to create in the customer’s mind,” says Mitra.
Facility Management
Approximate Market Size: Rs 120-180 lakh per mall per annum
A company providing specialized services to malls is known as a facility management company. Mall management companies outsource usually many operations to these companies like parking, security, housekeeping, and cash management.
Vipul Facility Management currently provides services and manages 22 malls across India. What do they do? “We handle electro mechanical services like fire detection and suppression, power management, access control, water management plumbing, etc. Besides this we also handle business services like guest relations, help desk management, and meeting room management. We also provide soft services like cleaning and pest control, physical and security surveillance, concierge services, and administration services,” says Raghav Iyengar, National Head, Business Development, Vipul Facility Management.
There are a few other functions that facility management companies are also taking up. These include conducting research for malls to find out their requirements before actually starting to service them. Going one step further, facility management companies are also indulging in providing human resources for each of the services.
Revenue Generators
The share of revenue depends on the number of services provided to all the malls in a facility management company’s portfolio. For instance, providing security in itself is a huge business opportunity. Sanjay Katiyar, Regional Head of Topsgrup, a security service provider, says, “We provide security solutions to various companies, institutions, events, etc. We make about Rs 50-55 crore across India, of which 20-25% comes from our mall clientele.” When asked about the scope of security business in malls, he says, “Malls is a booming industry and each mall opening creates a huge opportunity space for service providers. As mentioned, a substantial portion of our clientele is in the malls.”
Challenges
It might sound ironical, but finding human resources is the main problem faced by facility management companies, the core business of which is providing manpower to their clients. One other problem that is faced by service providers is payment delays from their clients. “Delay in payments is one of the main problems that we face as a service provider. This affects our functioning severely,” says Katiyar.
Advertising opportunities
Approximate Market Size: Rs 20-30 lakh per mall per annum
As the number of malls in the country is growing at a rapid pace and with it the number of people visiting these malls burgeoning, advertising and promotional activities in malls have become a hot opportunity.
The BTL (below the line) advertising activities have grabbed a 30% share in the overall advertising market from what used to be a space dominated 100% by ATL (above the line) advertising. With companies realizing the importance of promoting their products in a way in which people can actually touch the product and get a feel of it, more and more companies are opting for putting up kiosks and promoting their products, in addition to going for outdoor advertising and promotion.
A creative agency takes care of all the aspects of advertising, starting from conceptualizing the advertisement to leasing out the space on behalf of their clients, to putting up hoardings or setting up kiosks or conducting events.
Revenue Generators
Both outdoor advertising and BTL activities are revenue generators at the malls. Even though outdoor advertisements fetch good business for malls and ad agencies; the revenue percentage shared with the agency is not as much as in the case of a BTL deal. The reason is that in an outdoor advertising deal, the agency simply has to make arrangements for getting space for their clients and putting up advertisements. While in BTL deals, the involvement of an agency is far more than just that, such as conceptualizing ad/event and executing it.
Challenges
Human resource is a problem in this opportunity area as well. Attrition rates are high as employees keep hopping from one agency to another and there are only a few institutes providing quality education to aspirants.
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written by sundara raja, May 25, 2010
written by Shrinivas M Bakale, December 24, 2009
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