Indian Malls-Where are the customers?

What is a Mall? It is am American innovation for attracting customers by providing a comfortable shopping experience where a variety of products, mostly consumer oriented, with different brand names and some services are offered under one roof. Before the advent of Malls in a big way, there have been shopping arcades which also provided essentially the same service but on a smaller scale. Malls are generically huge in size with different individual shops with their own characteristic ambiance, inter connected for easy access and generally have food courts for refreshment and meal service. Being mostly air conditioned they provide protection from severe summer heat or winter cold. It is estimated that business volumes in such Malls for branded products are comparatively high because of high visibility and more foot prints of consumers. The ease of parking vehicles makes them particularly attractive for urban consumers, especially in India where most roads are cluttered, with parking space being at a premium! Still why the Mall concept is not catching on in India as expected though there are many established ones in a few cities like Mumbai, Hyderabad, Bangalore, Chennai, Delhi, Kolkatta etc? Here is an incisive analysis of this phenomenon which explains why Malls are not taking roots in India.

"Revenue from organised bricks-and-mortar retail in India is expected to more than triple to $150 billion by 2020, according to consulting firm Technopak - spurred by a raft of foreign retailers planning their first foray into the market, heating up competition for mall space. In the past six months, Gap Inc (GPS.N) has said it plans 40 stores, The Children's Place (PLCE.O) is looking at 50 while Hennes & Mauritz (H&M) (HMb.ST) has plans for an initial 50 shops. Established brands are also expanding, with Marks & Spencer (MKS.L) aiming to lift its store numbers to 80 from 45 by 2016/17. But India has only 77.6 million square feet of mall space, less than one tenth of U.S. levels, despite having nearly four times the population, with the shortage of attractive malls most acute in New Delhi and Mumbai. One in every six stores is empty, according to property consultants Jones Lang LaSalle, while advisory and management firm Beyond Squarefeet estimates thatup to 25 malls have been shut or converted to other uses in the past two years. That does not include two of Mumbai's oldest suburban malls, Centre One and Nirmal Lifestyle, which have said they are shutting down as shoppers stayed away. Many centres, especially those that went up during the 2006-2007 real estate boom, were built by developers with little mall building experience. Ownership of shops was often sold off piecemeal while many do not have sufficient parking for shoppers or areas for retailers to bring in their supplies. "Many of the malls that grew up did not even think of these things," said Kumar Rajagopalan, CEO of the Retailers' Association of India. Until new and better malls are built, some retailers are looking at alternatives such as leasing standalone shops that can often be less lucrative or investing big in fast-growing but nascent online services. "We...have to look at online spaces in a bigger way much earlier than before, because there is definitely a big shortage (of physical retail space)," said Govind Shrikhande, managing director at Shoppers Stop."

When government of India opened its arms to foreign companies to invest in India in the retail sector lot was expected and it was assumed that international retail chains would flock to India for setting their shop here. Alas this hope seems to have dashed looking at the retail landscape at present. Though many malls and supermarkets were established with lot of enthusiasm, due to poor customer response a significant number of them have already downed their shutters. Though market experts expect that the organized retail sector (a euphoric term for super markets, hyper markets and the Malls) would triple their business volume by 2020, it is a highly optimistic forecast, unlikely to materialize fully. We may recall how pundits were predicting the death knell of our traditional "mom and pop" stores, estimated to be about 8 million in number, once organized retailing comes to India with better resources, organizational skill, management wizardry, decades of experience and financial muscle. What happened? The ground reality is that they are not able to capture even 10% of the retail market business, in spite of struggling for past one and a half decades! Probably unlike in other countries, in India these super business models may not get a supremacy over traditional vendors in the foreseeable future and there has to be a peaceful coexistence between these two competing groups!

V.H.POTTY
http://vhpotty.blogspot.com
http://foodtechupdates.blogspot.com

PRODUCE STANDARDS HARMONIZATION-NEED OF THE HOUR

World trade on fresh produce has been facing some problems as standards and specifications adopted by different countries were in conflict many times creating trade logjams upsetting the business system as a whole. It is always the case that buyer is supreme and the supplier has the responsibility to meet the contractual obligations entered into before striking a deal. Disputes, differences and misinterpretations invariably mar such trade deals and fresh produce being highly perishable cannot afford to be delayed during shipment. The Harmonized standards acceptable to all countries will go a long way to avoid such unnecessary disputes causing trade disruptions. Also of significance is the cost of auditing and the burden it poses to small producers and exporters and it is here that the inspection needs to be simplified, streamlined and made cost effective. Here is a take on this important issue which is the focus of attention in some countries in the forefront of fresh produce marketing. 

"Experience has shown that more and more produce customers are requiring audits of their suppliers, including small and local suppliers, and that customers are realizing the costs of redundant audits are adding to their own costs, regardless of who pays for the actual audit. The broad acceptance of the Harmonized Standards by major produce buyers seems to show a road forward to meeting the industry's objective of reducing the audit burden without sacrificing safe produce growing and handling practices. Even while some buyers have restrictions on who can do the audits, having one checklist for all audits has to reduce the audit burden of differing standards. Further, the expectation is that buyers, seeing the same audit results from different audit organizations, will eventually accept an operation's existing audit results without requiring another, thereby further reducing the audit burden. When they see different audit results for the same operation, using the same standards, from different audit organizations, questions will come back to where they rightfully belong—the audit process—and the marketplace will begin to weed out the poor performers".

The dilemma of the buyers of fresh produce is understandable in the light of a series of food poisoning episodes involving such simple commodities like spinach, water melon, tomato etc and with the traceability burden becoming too heavy and uncertain buyers must be on alert regarding import of tainted commodities. Harmonized Standards, therefore will go a long way to address this intractable problem and world bodies like FAO and WTO must intervene to make them universally acceptable and practiced. There is a need to set up a trade dispute resolving mechanism that can settle differences quickly with least delay. Auditors need to be accredited after careful evaluation of their credentials and the cost of auditing must be brought down to affordable levels. Will this happen in the foreseeable future? Probably the world seems to be moving in this direction and a cooperative regime involving industry, governments and international bodies can make the world much more safer vis-a-vis the consumers.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

CALORIES IN FOODS-A NEW WAY OF SENSITIZATION

To day's world is on a desperate search for the proverbial magical bullet for meeting the challenges of the epidemic of obesity in many countries, an out come of prosperity and never ending desire of the humans for leisure and relaxation. It is by now known that every creature on this earth has a mechanism to balance its body weight through the satiety signaling system embedded in its brain but due to many factors, mostly man made, this system goes haywire which causes over eating food much beyond what the body requires. It is the basic nutrition principle that if intake of calorie is balanced with outgo or expenditure by the body for the basal metabolic activity and the physical activity indulged, there probably may not be any extra body weight gained by any person. Unfortunately those who develop over weight consume or gorge on foods rich in sugar and fat, major food components that contribute calories for sustenance and day to day activity. Binge eating caused by cheap and highly palatable foods rich in the above food constituents is recognized as the main reason for putting on weight without the consumer being aware of it. Many countries try out different strategies to persuade the consumer to restrict calories and calories yielding foods but with very little success and food industry's aggressive marketing of such products does not help the cause. Latest strategy that is being proposed to curb food consumption depends on the "shock" factor by letting the consumer know the consequences of eating too much by including information on the label or the menu as to how much walking is needed to burn the calories ingested through the food served. Here is a take on this new strategy still under trial.

Victoria Taylor, senior dietician at the British Heart Foundation, said clearly signposting healthy options and nutritional content helped people make informed choices when ordering food. But she added: "While displaying the amount of exercise needed to burn calories is an interesting idea, there's more to a heart-healthy diet than calorie counting. "Restaurants can also take steps to make meals healthier by serving appropriate portion sizes and reducing the amount of salt, saturated fat and sugar in their dishes."Whether eating at home or dining out, a balanced diet with plenty of fruit and veg is the best way to protect your heart." 

Whether this strategy will really work is very difficult to predict. It will definitely sensitize the consumer for some time but in the long run there is the possibility that he may learn to ignore such warnings. History is replete with instances of consumer insensitivity developing to such good intentioned warnings and consumers reverting back to their old habits. Cigarettes and Alcoholic drinks are classical example. It will be interesting to watch the progress of the new approach being tried over a longer period of time before coming to any definitive conclusion. 

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

"ROBOTIC" FOOD SERVICE-A NEW APPROACH

Can a country with large population and high unemployment rate accept a technology that makes humans redundant? Obviously China seems to be taking a conscious decision that in some areas of service Robots are preferable to humans as reflected by the recent opening of a restaurant in that country where food service is managed entirely by these mechanical contraptions. What is amazing is that the customers have accepted this mode of service without any reservation, at least for the time being. According to catering experts Robots enjoy several advantages over their human counterparts like uniformity of service, tirelessness, non-moody approach, no tipping, "personal" hygiene, disease free nature etc. As a Robot hardly costs about $6000 and does not need too much of a recurring expenditure, the profitability margin can go up dramatically.

"The restaurant opened just a month ago, but is already creating a buzz across the globe as it provides droids to deliver food and service to customers without taking a tip. But the biggest advantage, Li Xiaomei, a customer at the restaurant, told the Associated Press' Ken Teh, it's the robots' attitude. "They have a better service attitude than humans," said Li. "Humans can be temperamental or impatient, but they don't feel tired, they just keep working and moving round and round the restaurant all night." The technology is relatively simple: the robots move around the tables on a rotating conveyor belt placed in the middle of the eatery, using motion-sensor technology to identify humans. The robots sit on wheels, giving the appearance of riding a bicycle around the room with a basket in front carrying the food. When a customer reaches out to grab something, the robot stops The droids also double as greeters and entertainers, giving dance routines and welcoming new customers".

What is not sure is whether these Robots can sustain the interest of the consumers, especially when they revisit the place because of the "monotony" factor. Attractive servers with amiable temperament often attract customers and if the attitude and behavior are impeccable no Robot will ever be able to compete with them. In an age when recorded voices are substituting live human voice in many parts of the world, making eating also a mechanical experience may be a little too far-fetched. But with human cost mounting astronomically during the last few years, it may be inevitable that the industry as a whole opt for Robots to cut down on cost. It is a paradox that the unemployment rate in many countries is attaining unbearable levels while development of Robotic technology in many fields will make human intervention infructuous! It is understandable that operations considered dangerous to health are best left to the Robots, but restaurants opting for Robots for food service purely from commercial considerations can have adverse social consequences.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com