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Case Study: To Be Or Not To Be In A Mall

“Your premium brand had better be delivering something special, or it’s not going to get the business” — Warren Buffett

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Mahadev Garg heard Angad patiently, even intently, as the latter presented brief bullets about his team’s anxiety over Gigil’s presence in The Quartz Mall.

Angad’s consultant team at StratNext (whose CEO was Mahadev Garg), made up of Mallika and Sanam, had dissected why Volyoom a premium salon brand at Quartz did not succeed. And since Gigil was taking that vacated spot, Gigil was at risk too. Mallika had felt Quartz had let down Volyoom by bringing onto the LG floor, mass brands, which had not been on the cards earlier. When the mall was opened to the public, the Lower Ground (LG) level was mostly empty, save two or three cosmetic stores. The rest were just boards that announced ‘Coming Shortly’ for some premium brands.

The other point Mallika had made was the coexistence of mass brands that were not mass but, in fact, cottage sector products that littered the concourse on the LG. In short, Mallika felt that while Volyoom was being penalised for failure to deliver revenue, the mall was not being questioned for what it had given the salon for the rent it was paying.

Hence their anxiety for Gigil’s future, as it was going to face the same mass brands as well as the same mall attitude. In short, everyone agreed that malls owed it to constituent stores to ensure that their businesses were not disrupted even if not enabled.

By the evening, Angad who had begun bravely, saying he disagreed with the analyses, had begun to wonder if Gigil should have taken StratNext’s advice in deciding on a location. Hearing all their arguments that put Quartz squarely in the dock, Angad needed to have clarity from his CEO on their role as brand advisors.

Volyoom, a premium salon brand, had exited Quartz in Pune, a little over a year after it had set up shop. Hearsay had it that Volyoom had an agreement to return per annum to Quartz, a percentage of its billings. It had been unable to meet its target and either Quartz had asked it to exit or, Volyoom had decided it was not business effective to continue at the Quartz.

Whatever the reason, Mallika felt Volyoom was doing well in other areas in the city and other metros and its failure at Quartz was a function of change of floor mix consequent to change of plans by Quartz as well as delay in the anchor store setting up shop (a good year after the mall was set up) and finally poor footfalls at the Quartz as well as poor marketing effort to render the LG level and its store mix, aspirational.

Now, as long as Angad saw these from the standpoint of Volyoom, there was much debate and debunking on the grounds that Volyoom was at fault. But when Sanam suggested that Gigil could lose for the same reasons, Angad decided he should discuss with Mahadev. For, if Gigil failed, StratNext could look bad.

Mahadev called in Theresa Kurien who headed MR for StratNext, and rolled out growth strategies for various retail clients, even engineering their market presence. Theresa, who had worked with a large corporate branded beauty salon had, in fact, worked on their national roll out. As she entered, Mahadev called out, “Theresa! We need you here! What is the trend you have seen among salons and their choice of locations? Is there a trend at all or is it hinged to the mood of the market? ”

Theresa: I can’t give you much time now Dev, need to prepare for a meeting. But 15 minutes will not hurt. Ok, so let me see. Most salon brands follow a specific distribution strategy, that entails a mix of high street locations plus mall catchments. The wide coverage of its outlets enables a salon to exploit the largely untapped and highly unorganised Indian market, thereby strengthening its visibility.

From a priority perspective, it makes sense to have a mix of both. Location being paramount, holds good, whether it is a mall or a high street. Some malls do better in terms of driving footfalls, like Inorbit in Vashi or Malad, or Ambience Mall in Gurgaon. Whereas Atria Mall in Worli, despite being surrounded by office crowd and high-profile residential catchment, could not attract salons as much as the others, because its tenant mix, design and structure. For, a consumer will like to combine a two-hour salon visit with lunch and shopping. Given traffic jams, people like to make the most of a visit to a mall. So, no clear trend is visible.

Mahadev: Surely there was life before malls! Now here, Angad has a salon client and a mall moment that is causing the team discomfort. What is your take? (And he gave her a quick brief.)

Theresa: It is amazing how salon business has boomed since the advent of the mall. Early entrants like Lakme, Enrich, started with focus on high street locations. And while Lakme staked claim to high footfall catchments, Enrich branched out into mall catchments. Others like Jean Claude Biguine (JCB) that started out with only exclusive, very expensive high street locations – a little like Volyoom – are now ambivalent between being present in malls or specific catchments. Lakme has been very clear about using high street locations, given the large franchise nature of their operations. At best, it has gone into office locations or buildings where other service brands like a restaurant exist, (like the ones in Koramangala, CMH Road, Gurgaon).

Mahadev: Service products are huge in malls, rather striking, I say! How has that come about?

Theresa: Malls for some time, have been trying to function as an entertainment hub and/or aggregator of service providers. Given the shift being experienced, from offline to online for categories, such as electronics, apparel, other categories – like food and beverages, entertainment and services – are seen increasing their presence in malls, thanks to the space and opportunity vacated by these other categories.

Mahadev: You don’t just mean business opportunity vacated by these categories?

Theresa:
More, in fact: to compensate for the loss of revenue from non-service led categories, such as apparel, electronics, consumer goods, that used to dominate the revenues and footfalls. Since now, a lot of consumers are finding it easier to shop online (BigBasket for groceries, Amazon for just about everything from bedsheets to electronics and toilet paper, Myntra for fashion and so on), the onus is on the brands inside the malls and the mall management teams as well, to give people reasons to come to the mall, hang out in the mall, consuming one product/service or the other. It is not exactly tough being a mall, but then it is so insanely dynamic that there is no telling what will be the tune tomorrow.

We also find players in these categories (where the purchase behaviour shift has happened), trying harder. So, Big Bazaar’s Republic Day sales are legendary or cash-back offers at brands such as Reliance digital for white goods and such like. These are all new lessons in promotions and one really wonders at how the consumers are drawn.

Mahadev: I see the advantage; as more consumers come in for direct services, the mall footfall also stands to gain.

Angad: More malls are increasingly allocating space for salon and spa services. But if they do not plan around these, then we have Volyooms happening every year! How are they to plan their business? Being located inside a mall sounds reassuring to brands that want to rationalise their investment in costly real estate rentals, and rely on confirmed traffic that the mall experiences.

Mahadev: I am glad you say that, because you should see why Gigil is in a good place and so was Volyoom. A mall is a readymade market place, consumer and all, for a branded store to just move in with its wares. It is what it is, Angad; you as the branded store have to make the best of that presence. The mall is not merely a space you rent to set up shop. It is now an orchestrator of business! It is also cheaper advertising for the brand as there is a flowing consumer set, and hence growing opportunity to know your brand in that confined space.

Theresa: However – and this is where we examine Gigil, why, even Volyoom – to be successful, it’s not imperative for a salon brand to be present in one or other mall.

Mahadev: Meaning? What do you mean by ‘not imperative to be present in a mall’?

Theresa: I meant that to be in a mall or not be in a mall is not really the moot question. The real reason for being located inside the mall, or outside has to do with its ability to leverage the relevant catchment to drive prospects into its salons. So, a Jean Claude salon inside Ghatkopar’s R City Mall makes as much sense, (as the mall attracts a lot of traffic), as its presence on a high street location in Powai, which doesn’t have a mall to boast of, but provides access to a significant office crowd as well as a captive Hiranandani residential colony.

Mahadev: Jean Claude in Ghatkopar? Are you serious? Gosh, so, brands can travel even where we stereotypically thought they cannot be present!

Theresa: In this day and age of consumers being spoilt for choices, and private salon businesses popping up virtually in every neighbourhood, a good salon/beauty services entity that wants to ensure long term operations, needs to avidly explore all relevant catchments, where ever it might get consumers. Because salons do not depend on malls… that is the truth.

The unique thing about salon services is that people will always need to look good, and well primed. Hence we would be skewed towards consuming them at regular frequency. And this consumer need will elicit some unusual consumer behavioural responses.

Mahadev, also, look at how cities are now developing their little catchments. We are seeing several gated residential colonies, office complexes within a defined walled boundary, (which house food and grocery stores), where we spend a lot of time, hence a beauty services brands within these premises, is natural. It just makes life easier. It is finally about following the shopper and filling her empty time slots and attention span with more services for her to buy. A lot like the Colaba Causeway of yore where no sooner did you buy a wooden elephant than five new vendors urged your attention to a fake Rado, a Jaipur jewel and so on so that you are quickly shoved on to your next purchase engagement, mindlessly even.

I used to think about the alacrity of a Foodhall to open shop in Cyber-hub in Gurgaon, but suddenly it makes such great sense! Because people are waiting for friends, they reach early, that time is available to plug another brand! They walk into Foodhall and gasp!

Mahadev: Breathtaking, indeed! So, Angad, clearly Volyoom failed to assess the trends. Malls cannot mother your brand. In fact, they have an eye on better brands, better returns all the time! Wherever you are, you rework your marketing strategy for the location, for the day, for the moment!

Angad: So, you will go with location or not, Theresa?

Theresa: The guiding principle should be the location, that is, its ability to get people in. A premium salon on Linking Road – a most expensive high-street location in the most expensive city in India – did not do as much business as the one on the outskirts of Bandra on Chapel Road. Hence this salon shut down its Linking Road outlet. Would you believe that? The key insight here is that just because it is high street, doesn’t guarantee that services will do as well as a shoe or apparel brand. And hence, I would examine Volyoom’s experience better: did the presence in a high premium mall not work for it, versus a catchment where it works beautifully. These are learnings unique to salon business. Location within a mall is, hence a new learning experience for them.

Look at JCB. Given the paucity of malls in a prized suburb location like Bandra, drove JCB to further consolidate its Bandra presence in a whole new location, in the middle of Pali Hill (in the heart of the residential area). It is present in malls in other areas like Ghatkopar west and in Parel’s, Palladium Mall. Down south, in Bangalore, a chain like YLG started with high street locations giving preference to real estate in prime residential areas, and supplemented that with very select presence in a mall or two. Yet Affinity is more mall led but rare to find in high street locations. Sometimes it is the brand, sometimes it is the catchment. I am still figuring out these behaviours. So, it works in some kinds of malls, and not in other kinds of malls. I would agree with Mallika. There is a huge role for us to play in examining location and even doing a trend analysis looking at other locations where a service is present. I don’t just mean salons, this can apply to restaurants too.

Mahadev: Let’s talk about this another day again. I know you need to go, Theresa! (As Theresa left, Mahadev addressed Angad.) But business is business, Angad. A salon or service cannot depend on a mall to survive, or as in this case, cannot ascribe its failure to a mall and its floor mix strategies. Hence Gigil now needs to work closely with us to renew its strategies regularly. As for Volyoom, I say Volyoom was errant in not working with its marketing.

Mallika: Not sure I agree. Footfalls is a collective result. The footfalls in a mall are a function of store mix, service mix, fun mix, need mix, adventure mix… all that; however much I work with my strategies, the mall is also playing a role!

Mahadev: Maybe, maybe not. OK, OK, let us talk business, brass tacks. Volyoom knew what it was being set against, just as Gigil knows now.

Volyoom knew it was setting up shop in a mall that had not yet developed the buzz and Gigil too needs to stay aware that its environment is not a given. And face it, this is mostly the case. An investment in a mall like Quartz or any other is dynamic.

It is finally about good business. Mall and stores both need to keep their individual business perspectives clear. If this was a music concert and the singer has mounted the dais but the audience is sparse, trickling in gradually… will the musician wait? Or sing not very popular songs, thinking he will save his better performance for after the audience has come in? Will he not risk a) his reputation b) his current audience c) his own energy?

Mallika: I don’t know your musician, but for a store anywhere, performing includes winning. He cannot win without performing and he cannot perform if he does not think of winning.

Mahadev: You said it! A store has to think winning. Yes, the mall has duties, yes the mall has to create the power factor… But at any given moment, the performer is the store. The mall is only the orchestrator. In a mall, the environment is defined, with small scope for variation. In a public market place, say, like the GK I market, the walls are lower, electricity and conveniences (washrooms) absent, the environment is more undefined and hence, more susceptible to other factors such as rain, parking space… reasons abound.

So, a given store has to make do with what it has and holding that, it has to perform.

So, a Volyoom or Gigil on a mainstreet say, GK I market, or Brigade Road – who defines its audience? There is nothing to define it. The store performs for itself.

Mallika: My point is, malls are new business. They have barely been around five years. You say malls orchestrate, but are there real consumer behaviours behind why they chose to place salons on the LG level? Yet in four other malls, Hibiscus, the hair salon, is on the first floor, so too are all the Thai spas – either on the first or second level. Is there some manual or book that prescribes respective roles, duties, responsibilities?

Mahadev: What does a ‘premium mall’ really mean to you? Are there non-premium malls? These labels have absolutely no meaning. A mall is a mall. And Quartz asking Volyoom to leave, could well be because maybe, they are getting a better deal from Gigil. Higher rent, whatever…

Mallika: That is unethical. Rent is not something that is variable randomly. There is always a clause that your rent is fixed for three years or something like that.

Mahadev: There is a reason why malls do this. Mall dynamics are themselves changing and a tenant store cannot point fingers. People break rules for better returns. And there are no cast-in-stone rules! It can be supremely expensive for Volyoom to fight this in court, when this can cost it more losses. Face it, what legal teams do salons have?

Mallika: This is what I was coming to. In a new growing industry, who decides business ethics, rules of the game and conduct? O.K., so there was no precedent but that should not deter them from laying down rules. I am speaking for Volyoom, but I speak out of concern for Gigil. What if tomorrow Quartz were to change the LG to a food court? Seriously, is that what I want for my client? Is that suitable for the salon category? Will you mix the two? Or are you now willing to allow this mindless fusion in the name of mall supremacy?

Neither am I taking away from malls what is theirs. But with so many malls now beginning to be aggregators of businesses, there is need to discuss broad business conduct, especially! After all, I need to protect and help my client.

Mahadev: I had once read what Warren Buffett had to say about brands, “Your premium brand had better be delivering something special, or it’s not going to get the business.” Let this be your advice to Gigil. As for Volyoom, clearly they did not deliver.

Mallika: I am sorry, I am unable to agree, Mahadev. A brand exists in an environment, brands thrive on their environment. Life has to be played by rules. If not, we will have a free for all. If I can turn back the pages, then I will say to Gigil, define the terms on which you will be in a mall. Document it and get them to sign. If not... there is life outside malls too!

To be continued...

Also read case analysis by: Sadashiv Nayak | Srinidhi Rao


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