Case Analysis: Align Your Plan

I really feel sorry for Volyoom. Wrong store, wrong location, also maybe the mall’s plans for that floor didn’t work out. But let’s not start there. Let us not even start with whether Gigil should take up the spot vacated by Volyoom. We first need to understand how a mall functions. Over the years, the mall has evolved from a monolith structure to a very dynamic real estate form. Malls make long-term investment in people, in time and finance but it is also a retail distribution hub, which has to change and remain relevant as the market it services alters. It is not as if you can pick it up and move to a location where the market is more suitable to the offer. So, malls look at change in usage pattern. The early malls were led by hypermarkets and apparel-led anchor stores to the current pattesn where services, F&B and entertainment are being allocated greater area allocation than before.

In India, the business of shopping centres has come to be professionally managed with a ‘centre manager’ and a focused leasing team that plans the store locations, re-locations and brand enhancement almost 1-2 years ahead.

Gigil should engage in a dialogue with the mall team and understand their long-terms plans, zoning, and placement with the right set of surrounding stores, before considering any location.

Gigil sees an opportunity within The Quartz as they see it as a premium mall. Mahadev sees the malls as aggregators of needs, fashion, entertainment, cafes, services as well a restaurants. And Quartz seems to be destination which is about to take off, only it didn’t work out for Volyoom.

Mallika should walk the entirety of the mall and select the best possible locations . Ideally that will be situated within the greater ‘ladies fashion precinct’, as apparel, shoes, bags and accessories have some affinity with the offering of Gigil. She should then prepare a business plan, make an appointment with the centre manager and sell him the concept -- product lines and services, hair dressing and care, nails, cosmetics and skin care, the complete package. Staffing, uniforms, marketing plans, turnover projections and anything else that will convince the centre manager he needs you in his mall, should be in the package.

Mahadev is right in thinking that a great store and service with some communication on signages can solve the problem. He saw the Golden Chai shop doing brisk business in spite of being tucked away in a corner.

Quartz’s centre manager would explain the mall zoning plans, adjacencies planned next to the proposed location, marketing plans, profile of customer and trading densities to Mallika. He would also explain or have an estimate of business that Gigil could possibly do based on sales of other stores. The malls marketing calendar has a bunch of events though out the year and he could also add Gigil’s contribution. Mallika could then make estimate of sales versus outgoes towards rent, and revenue sharing clauses. Basically revenue sharing rewards the owner with a serviceable rent. Any amount agreed as a minimum guarantee will generally be below the income expected to service the capital employed. The principles here are no different to opening a new Gigil store, where the menu and price list is set but ‘selling up’ factor carried out by staff greatly adds to the ongoing success of the business.

Services, F&B options, entertainment and spas are something that good malls are focusing on. About a decade ago, having a salon /spa in malls was much debated, but now it is an integral part of the tenant mix. The package at the moment is incomplete without them. Malls are creating happy experiences for the customers, which involve annual event and marketing calendar, right brand mix, right locations for stores... and the landscape keeps changing with time, behaviour of the market and customers.

If Gigil does go ahead with the location, then Gigil’s team and StratNext should be in constant touch with the mall team during the course of term to be aware of these changes, to create a successful business unit. Those with the expertise and courage to complement and take advantage of changing customer needs, will be successful in the long term.