Restaurants in Malls…

I was recently at Forum Vijaya Mall (Chennai), one of the newest in town. It was a Sunday and I was there for lunch, but the upper level of car parking was almost empty around noon, which took me by surprise. However, I was told two days later by someone who works for the Mall that there were over 45,000 footfalls on that day. The Restaurant that I was supposed to visit was located on the second floor of the Mall. As is usually the case, I checked the reviews of the restaurant on the Zomato app on my iPhone. Most of them had written good things about the place and its menu, not to forget their wonderful service. Here is a sample;

After such a good meal, the bill came to around 2500 bucks. "Not bad at all!", we thought, given the amount of food we had eaten. The service too was perfect. The waiters were very watchful, responsive and most importantly, proactive. – Amruth

A great place with tastefully done interiors and food! The options on the menu are limited, but every single item you are served taste good and also look really good on the plate! – Nandhini

If I have to be perfectly honest, there could not be a more unfortunate location to host such a lovely restaurant. A mall in Vadapalani is hardly any place for a classy place like this. Where venue fails, Salt takes North Indian Cuisine and gives it a fantastic twist, to ensure they stand out from the others. I expect much more of this restaurant in the near future. – Vaishnavi

Apart from many reviews, the one above set me thinking. Are Restaurants in Malls a viable option as compared to those on high streets? Are Mall shoppers the right TG for specialty restaurants in Malls? For the cost of operation in Malls, do restaurants make any money at all as a business option? When I spoke to the gentleman who runs the restaurant, he mentioned that the rent is about Rs. 65 per sft per month. Assuming they have an area of 2,000 sft, their rent per month would be about Rs. 1.30 lakhs. Add to that all other expenses which would be around Rs. 2 lakhs pm. On a conservative estimate of Rs. 15 lakhs of sales per month and an operating margin of 50%, the store would recover its expenses and have an EBIDTA of about Rs. 2 –3 lakhs per month. Given the way the outlet has been done, their investment would have been about Rs. 70 lakhs. So, the restaurant makes about Rs. 25 lakhs in profits (before interest and taxes a year)  and would take about 3 years to break even.

On the contrary, business would be double, if not more were it to be on a High Street. There are a number of good quality specialty restaurants that are garnering those numbers already. So, why do Restaurants still prefer Malls? Perhaps, Brand building and familiarity. I don’t see any logical reason why someone would invest so heavily in a Restaurant inside a Mall and wait for 3-4 years to break even, when it could be faster in a High Street. What works best are for established brands such as Rajdhani, Sigree, Mainland China, etc. which have built reputation over the years and have hence chosen to be within Malls to leverage their brand value. For first timers in the Restaurant business, Malls are probably not the place to be in. This is not restricted just to Chennai but to other cities as well. I was at Chandigarh a few weeks back and they have a brand new Mall called Elante. I was almost alone at Chilis on a weekday evening, which is located in the same floor as the cinemas on the fourth floor of the mall. Restaurants in India’s most successful Mall, Select City Walk face the same fate – Restaurants are empty through the week with weekends being their only busy times.

So, what ails Restaurants in Malls?

Mall shoppers are mostly for spending time, probably window shopping. Conversions for Retailers too is lower than on high streets. The sheer number of footfalls make up for lower conversions and therefore helps Retailers and Restaurants. Unless you are a destination such as a Shoppers Stop, Lifestyle, Café Coffee Day, Starbucks, Subway, KFC, Pizza Hut, etc. These are places which plan to visit and hence drop by. Eating out is way to expensive these days, given the cost of ingredients. And Restaurants are trying their best not to upset their clientele by absorbing losses as much as they can. But then, consumers are staying away from eating places on a regular basis, as was the case a couple of years ago. For example, a could of years ago, the neighbourhood area of Koramangala in Bangalore had almost 50 eating joints, a third of whom have closed over the last one year.

Mall hoppers prefer food courts instead, which are usually pathetically planned. Mall planners in India somehow do not build large enough food courts, with thousand of chairs and a breathable exhaust system, that are modular and scalable as and when consumers increase. Instead, they try to lease all counters at one shot thereby not having scope for further expansion in future. What would cost around Rs. 600 for a family of three in the food court would probably cost over 50% more in a fine dine restaurant within the Mall.

Restaurateurs would do well to experiment new concepts first on the High Streets. That is where people frequent. There are no SCAM, errrr CAM expenses (Common Area Maintenance) on High Street Locations and no restrictions to close the restaurant at a stipulated time. The biggest benefit of being on High Streets is that the signage builds familiarity among customers over time. No wonder, there are more successful restaurants in India and the world over on High Streets!

Apple–Smart Product or Smarter Retailer?

 

After a lot of careful consideration over the past few months, including reading various literature online and discussion with friends and users of the iPhone, I finally decided to take the plunge. Yes. Now I own an iPhone 4S 32 GB. So, what? Actually. It is just another phone, in my opinion. It is indeed a true case study of how an ordinary product can be made an extraordinary success with simple, yet effective Marketing. One must learn from Apple in this regard. Much has been written about the technical specifications, uniqueness and superiority of the iOS of the iPhone, the Siri and various other features and hence I wouldn’t delve into it. Nor am I a technology expert to rip through comparisons with an Android phone (from Samsung or HTC ) or a BlackBerry or a Windows Phone. Oh yeah, by the way there is Nokia too. Apple iPhone 4S, for me lacks some basic stuff – such as a favourite tune as an alarm; select many / select all in the email box to delete and many such small features. Wonder how the Apple engineers skipped these and a bigger wonder that Apple Marketers kept them low-key, promoting various other features. It is a good smartphone but can be a lot better. Will leave it there.

10 days ago, I ordered my iPhone online – through www.indiaplaza.com where I work. Not just because of a particular loyalty – but also because of the Price. The phone is about Rs. 2,000 (USD 40) cheaper while buying online, compared to the ones sold at an Apple Store or other Electronic Retail chains such as Croma (from the house of Tatas), Ezone (part of the Future Group), Reliance Digital, etc. Two months ago, I bought an iPod Touch (also from www.indiaplaza.com) and the price online was a lot cheaper – I got a 10% discount while the company was celebrating the birthday of Apple founder Steve Jobs. In my view, the iPods, iPhones and iPads should also be sold through Department store chains such as Shoppers Stop and Lifestyle too. After all, it is indeed a lifestyle product as promoted by Apple and not just merely a gadget. The Apple stores are more a novelty than being electronic stores. They are a lot more engaging, inviting and most importantly (well stocked). And I am referring this from an Indian context.

I visited the Apple Store twice in a span of two months to buy accessories for my iPod and iPhone. Every time, the staff have delighted me. They speak little, but with a lot of sense. I have already bought Rs. 10,000 (USD 200) worth accessories from the Apple Store and I believe it is only because of the wonderful staff interaction that I have had each time. On the first instance, I wanted to buy a case and screen guard for my iPod and the staff showed me gladly all the varieties that they had – without indicating any obligation on me to buy. I walked up to two nearby stores that also sold mobile accessories to check out what they have – at one store, the staff was busy canoodling with his girlfriend (I guess) on the phone and had least interest or respect for the customer who came to spend money. At another store, they had stocks for every damn model but an iPod. The staff felt sorry but couldn’t offer anymore. I came back to the Apple store and ended up buying from there. I repeated my visit a month later – this time to buy a screen guard and a case for the iPhone. I visited various other electronic retail stores who didn’t stock them, and were more interested in selling larger items such as LCDs, Washing Machines and Refrigerators. Even Croma, which is known to stock a wide range of accessories wasn’t carrying anything specific for the iPhone.

Back at my favourite Apple store  at the Forum Mall (Bangalore)m Simran, the sales assistant was not just being polite and interactive but was also non-obtrusive. She allowed me to have a look at things, touch and feel them and never got perturbed by the questions that I enquired regarding the various options. She was happy to answer as many and even offered a few ideas such as a “Matt-finish” scratch guard that would not leave traces of oil from the face and which is easy to wipe off. She suggested a case that not just matched with the phone but was sleek and had a good form factor. Amongst other things, she also showed a few headphones and a couple of JBL speakers. And eventually, I ended up buying a noise-cancellation Apple ear phone worth a 100 dollars (Rs. 4,800) which was completely unplanned! All in a span of a few minutes. Now, that’s what I call “engaging customers” smartly. She knew my preferences for music, realised I had an iPod Touch and an iPhone and that I could, most importantly – appreciate and enjoy the stuff that they make and sell. Hats off to their level of knowledge and customer service. Next on my list: JBL Speakers for the iPod.

I have been using a Samsung Galaxy Tab for the past one year and a BlackBerry for over 3 years. Its been just over two weeks since I have been using the iPhone. Happy with it. But would go back to my BlackBerry any day. I am just that. But all said and done, Apple is not just a product maker but also a smart Retailer. With its unique offering of products, they seemed to have mastered the art of letting customers engage with their products. Single Brand Retailers have a lot to learn from them. Of how not to sell, but to make customers buy the products. And appreciate them all their life. Kudos Apple.

Paribartan! Retail revival in West Bengal?

My initial happiness started worrying me after sometime – after all who wouldn’t want to achieve their Sales targets! When I was told earlier in the day that the store would close by 4pm, I was a bit happy as I could go home early. But that day, I stayed on, for I wanted to see the people’s leader who would be walking down Park Street with her followers. Yet another protest; yet another reason to bunk work, thus grinned Mr. Bannerjee, my senior colleague in his typical Bengali accent- not that he was complaining, but he was more concerned about reaching home which was at suburban north Calcutta since most taxi drivers would take off from work and those plying would demand double charges. Along with Musicworld, where I was the Operations manager 10 years ago, most other retail stores & F&B outlets along the stretch downed their shutters early due to a protest march organized by a relatively lesser known regional party, The Trinamool Congress. “So where is their leader”, I asked my colleague Sandeep Mallick. “There you see, that short lady in hawai slippers, she’s the one” he replied. I was stunned that such a simple looking person could lead a party and a few thousand followers –for her party as well as her protest march that particular day. I was more familiar with an erstwhile woman Chief Minister of Tamil Nadu where I came from, who would adorn more jewelry than that of a model who poses for Jewelry brands would until she vowed never to wear any ornaments after the ruling DMK put her behind the bars citing various scams. After 10 years, she is back in power today and is expected to run the state in a few days, hopefully more efficiently than the decade that passed by.

Just a few months back (in 2001), the Communist Government had assumed power, this time with a new Chief Minister though, Mr. Buddhadeb Bhattacharya, after the octeganerian former CM Jyoti Basu relinquished the seat of power. Buddhadeb, over the next 10 years tried his best to bring reform and change the business landscape but the fundamentals of his party would not allow him to take brave steps too often. And the rest, as they say is History. Singur and Nandigram were bitter memories that the industry would like to forget. Prestigious projects moved out of the state due to government apathy and the worker’s lethargy. The overall mood in the Retail Industry which peaked all over the country in mid-2000s didn’t have much impact in the state, thanks to a workforce that quite didn’t enjoy working in the modern retail formats. Though money was good, many felt that the jobs were lowly and probably they deserved better. A typical middle class Bengali who reads atleast two newspapers every day, one in English and one in the local lingua, is quite updated with the latest within the Organized Retail set-up across the country. Recently, I was a speaker at the “East India Retail Forum”, organized by IMAGES Retail, India’s premier retail publication in Jan’11. There were over 100 retail honchos across the spectrum who attended the event and the mood was upbeat about the impending Retail transformation that’s on the anvil. Miracles are certain, they believed and I too did, given the slow but steady change in mindset that I had seen over the past year – on my first visit to Kolkata after 10 years since I moved in 2001, I wrote on my twitter (@shri611) “so much has changed, yet nothing much has actually changed here!” What I meant was while there were new high rises and a strong immigrant workforce that had moved in, the old-timers remain what they were, reluctant in some cases to change and a few even questioning why they should.

All that is about to change thanks to the latest verdict in the state elections where the Trinamool Congress has won a 4/5^th majority, ousting the Communist rule after 34 years. It was a shocker to see the outgoing Chief Minister, the Finance minister and many others losing their seats in their respective bastions. Just goes to show that the average Bengali was fed-up – and probably wants a change urgently. He deserves, that’s my belief too. I started my career in Kolkata, way back in June 2001 when I reached the Howrah station all alone, with four bags and loads of dreams, to build a successful professional career. Wasn’t sure if Retail was my cup of tea (or coffee, as I am responsible these days for increasing the café count for India’s largest coffee retailer) but I stayed on. I had just one friend, Hemanth Subramaniam, a former classmate at college who lived in Calcutta those days with his parents who came to pick me from the railway station. The city was over crowded by my Madrasi standards, I thought. And the city roads were congested and there wasn’t even a supermarket to buy toothpaste and shaving cream, I thought. But my first few days at Musicworld changed all my thoughts – that Retail was indeed where I would remain. My circle of friends and well wishes grew over time, so much so that I was hosted four farewell parties when I departed in just a year! 37 Chowringhee, a building that stands proudly, built during the British era was one of my favorite inspirations that housed the Corporate Office of ITC Ltd. at whose factory near Chennai my father toiled for over 30 years to build a family and careers of my sister and myself. I had a lot to give back to the city of joy, where the loner in me was treated every other weekend by someone or the other at Someplace Else or Flury’s, at Tantra or London Pub! During my recent visits and interactions with so many people including those from Government functions as well as those in private establishments, I see an urge, an immediate intention for embracing modern ideas, Organized Retail included.

I am neither a political analyst such as those who feature in “We the People” or “Breaking at 9” nor a mediocre journalist who screams on Tv or writes sensational headlines in newspapers to grab attention – just a Retailer at heart, by profession and choice. Apart from Musicworld & Spencers from the home grown RPG Group, The Ambuja Group and Forum have built several malls in the state while national retailers including Café Coffee Day, The Future Group (Big Bazaar, Food Bazaar, Home Town, Brand Factory), Shoppers Stop, Reliance Retail, PVR Cinemas, Pizza Hut, KFC and many others are all expanding rapidly across the state. A Central Mall is expected to open in Kolkata soon! What I look forward is just a better Retail scenario – one that the Bengali deserves and one which can change their lives and lifestyle quite well. Hoping for a “Paribartan” that would put Kolkata on top in the Indian Retail Map in times to come.

Show-stopper - Shoppers Stop!

There used to be a time during the late 80s and even early 90s when this part of Bangalore was the most preferred area to settle down for the older generation, mainly due to the lush greenery and minimal traffic. After all, why would any one pass through Koramangla – an erstwhile nondescript part of south Bangalore that connects the city towards Hosur, Chennai. Etc. However, all this changed, thanks to the IT revolution and what followed was concrete invasion. Large tracts of empty lands gave way to huge constructions – corporate offices, residential block and of course, Retail stores. In India, one thing is peculiar, if not common. It’s always the unorganized retailers who enter a locality sensing consumption opportunities. The Kirana stores that sell everything from tooth paste to grocery, the Hardware stores that sell all that one would need in their homes, from door handles to curtain rods and the ubiquitous furniture stores – large shell shops that stock cots and mattresses, dining tables and other loose furniture. After a few months, if not a few years of the area settling down with people, the Organized Retailers start swamping the localities. What’s natural is that when a locality is on the verge of getting popular (from a consumption perspective), most of the big players enter together, if not in shorter bursts, thus unsettling the small kiranas.

And the same happened to Koramangla as well. After a lull for many years, organized players started penetrating this area – RPG Foodworld (now Spencer’s), Monday to Sunday (from Jubilant Retail), Viveks – the Electronics store, MegaMart (from the house of Arvind) and most notably, Big Bazaar (BB), a Future Group concept. Interestingly, this was one of the earliest outlets for the now ubiquitous value-retailer in India, a mere 35,000 sft store that was supposed to be a Pantaloon Fashion Store! There was a last minute change in the concept and thus was born BB. The store is located in a building that also houses many corporate offices and hence parking for 2/4 wheelers weren’t too many. Anyway, value-retail stores were expected to bring their shoppers by Bus and thankfully, there was a Bus-stand just outside the store. Rest as they say, is history. This BB store attracts as many people driving their own fancy 4 wheelers as much as those coming by buses and autos and is supposedly the highest in terms of returns per sft, a key metric for Retailers.

The year 2004 saw the opening up of Forum Mall, the most notable Retail landmark in Bangalore till date and rightly so, located adjacent to Prestige Acropolis, a residential dwelling that houses the crème de la crème of Bangalore. The Mall has such a unprecedented opening that the U-turn on this road had to be removed, thankfully! The first outlet for McDonalds in South India opened here and without exaggeration, there were queues waiting outside the store just to get in and have a grub. I was among the last to enjoy the frenzy, when I first entered the store almost three months after they opened. The Mall had many other firsts as well, the largest stores for Fashion Brands such as Benetton and Tommy Hillfiger, the first Apple store through its distributor aptly named “Imagine”, the largest (then) foodcourt in town with over a dozen different cuisines, and the first and among the largest cinemas in Bangalore operated by PVR. The retail chain from the house of Tatas, Westside was the anchor and Landmark Books & Leisure (which was also bought out by Tatas) was another anchor. There wasn’t a multi-brand Department store and thus all the Mono Brands present in the mall perform very well. There wasn’t anything that wasn’t amiss and the Mall ably run by a professional team from the Prestige Group went to win accolades for their achievements, in design, tenant mix, zoning and most importantly managing the multi-level car parking, among the largest & the first in the city.

The area started getting a lot of attention from construction companies as this was the closest locality for those who were working in Bangalore’s own Silicon Valley area – The Electronics City. Real estate prices of land holding soared so high that the area was and still among the most premium residential areas in the city. Almost every Retailer has a presence in this area and the only brand to have multiple locations due to its business model is Cafe Coffee Day – yes, there are five cafes within a three km radius and there are two more in the offing. Recent retail concepts such as E-Zone (also from the Future Group) and Star Bazaar (a hyper-store from Tatas) have found their own spaces and are serving their customers quite well. The one Retail concept that was conspicuously missing was Shoppers Stop (SS), India’s largest multi-brand Department Store chain. And that too was fulfilled recently. While operating three other locations in the city and one at the Bangalore International Airport, the retailer took over the same location earlier occupied by fellow retailer and similar business house “Globus”. There were many reasons why Globus wasn’t doing well; many experts felt it was the location that was the main one at fault apart from the depressing merchandising at the store level. In Retail, there are three main factors to consider before opening a store – Location, Location and Location. And that’s exactly what SS has tried to revisit. They have chosen one of the most complicated locations ever possible for a Retailer but I am sure the decision was conscious and would prove to work to their advantage. After all, who knows this business as well as they do. The store is located in one of the busiest stretches in Bangalore, just ahead of an important traffic signal where the waiting time could range from 10-30 minutes during peak hours to crawl through a 300 meter stretch. Entering and Exiting the store is not just difficult but would need sharp driving skills. The store, which is spread across 40,000 sft is self-sufficient to that catchment since most of the brands have their own stores independently or within the mall close by. The well-maintained and well-merchandised store has almost everything that a harried customer needs, but for a cafe which I guess should soon be there too.

But why one more Retail concept for a locality that already has a substantial penetration of retail formats? Well, one reason is that there is no Shoppers Stop! The unique shopping experience that the Retailer provides is not just consistent across the country but also amongst the most superior in its own form. Secondly, when an area has as many shopping formats, it becomes a natural destination for shoppers. It’s not just the Retailers who benefit due to the presence of a large number of consumers but also the shoppers – they benefit from the wider offering that they are offered and not to mention the innumerous promotions and special offers through the year. So, lets hope this outlet of Shoppers Stop is indeed going to become a show-stopper!