The business of shopping malls falls among the several businesses that have been severely dented by the Covid-19 pandemic. This article delves into the problems that have confronted them and the probability of their regaining financial health post Covid-19.
A shopping mall is a large single building or multiple interconnected buildings housing a great number and variety of shopping units that are all commonly accessible. Large shopping squares, markets, ‘bazaars’ or ‘haats’ have been in existence for several centuries across nations in the world. However, these were generally open-to-sky facilities. The concept of gigantic malls as we know them today are a twentieth century phenomenon, predominantly conceptualised in the west in the second half of the last century. Over a period of time, these gained huge popularity in cities as they combined enormous retail diversity, social experience and a place to get together. The concept caught on and proliferated across the globe. Asia readily accepted the idea and some of the largest malls that got built are now located in Asia. “China’s New South China Mall in Dongguan stands at the top of the heap with 2.9 million square meters of space.”
India’s own shopping mall romance was no different, except that its beginnings were more recent. The year 1999 saw the rise of the first shopping mall in India. By 2017, there were more than six hundred operational malls strewn throughout the country’s metropolitan and mega cities. Thirty more were slated to come up by 2020. In the popular eye, shopping malls announced the arrival of the city into the fold of the vibrant, modern and upbeat city lifestyle.
However, as the digital revolution swept across the world and brought the convenience of on-line shopping, malls did not continue to be looked at as favourably as in the past by customers. On-line shopping allowed the choice of a wider variety of goods and saved the trouble of travel and transport through endless traffic. This also brought in economies of time. The services were offered at the customer’s doorstep and no cash transaction was required. The variety on offer was so large that it could not be matched by a physical store. The penchant of many customers to prefer on-line shopping has been well articulated in the statement that it allowed shopping ‘anytime, anywhere, anything’. As a consequence, consumers were drawn globally and increasingly to buying online.
On-line shopping percentages, prior to Covid-19, were rising every year and the country had the fastest growing on-line market in 2019. Digital buyers were expected to be approximately 330 million in 2020. The sector was catalysed by tailored advertisements, striking discounts and quick, quality delivery. Since this level of growth was achieved with limited penetration restricted to metropolitan cities, it was natural that e-commerce companies would plan to move beyond metros and reach their goods to customers in medium and small towns.
As a consequence, the booming business of shopping malls was seriously hurt. A year back, prior to the attack of Covid-19, of the 1200 malls across United States, a dozen had closed, another sixty were on the verge of closure and many had 30 to 50 percent of their rental space vacant. Covid-19 appears to have hastened the downfall of malls, firstly, due to closures enforced to fight the pandemic and secondly due to the requirements of social distancing post opening. The situation forced the International Council of Shopping Centres (ICSC) to write to the President of the United States seeking “federal support associated with outstanding debt obligations as well as tax and regulatory relief.”
The situation in India broadly replicated that of the United States. E-commerce had already battered brick and mortar retail. Since such retail shops formed a large portion of shopping malls that lost business on account of e-commerce, the percentage of non-rented spaces rose and many malls began to struggle. While they were still strategizing on how to contend with on-line shopping, the arrival of the pandemic threw the shopping malls into complete shutdown. As the country went through the phases of lockdowns and then started emerging out of them, malls remained one of the activities that authorities were highly reluctant to open up. Neither have the customers appeared as enthusiastic as they were before Covid-19. In a survey carried out by Local Circles over 200 districts, 78 percent of consumers backed the expansion of e-commerce platforms to deliver a larger variety of goods beyond essentials and only 4 percent said they would visit malls for purchases post the lockdowns.
The pandemic clearly has given an exponential boost to on-line shopping. Big Basket, a key online grocery business, was overwhelmed by the demand piled up on it and its services broke down on account of its inability to handle the volume. Post the first lockdown, on 25th March 2020, it mounted a message stating, “We'll be back soon!” explaining that the unprecedented demand had forced them to restrict access to the website to existing customers only.” The message urged customers to “Please try again in a few hours.” Amazon, the leading, global e-commerce player, also overwhelmed by unprecedented surge in demand, prioritized its services differently. It concentrated on supplying essentials such as household staples, health care, hygiene, personal safety and other high priority products and put a temporary stop to the supply of lower-priority products.
It is evident that the worries about non-observance of social distancing and problems in adequate air circulation rendered malls suspect during Covid times. These factors are dissuading people from visiting malls as readily as in pre-Covid-19 days. Thus, while the rise in e-commerce dented the popularity of shopping malls, the fears stoked by Covid-19 coupled with governmental weariness to allow shopping malls to function normally have virtually delivered the coup de grace to this business.
The obvious question facing these malls is whether they should entirely fold up or strategise anew in regard to the usage of their space. Globally, shopping mall owners have realised that they cannot compete with on-line shopping advantages of enormous product selection, price comparison and 24-hour operation. Hence malls are attempting to differentiate their offerings by concentrating on areas that on-line shopping cannot offer. Many of them are getting recast as centres of leisure and entertainment (concerts, art centres, spas, theme parks, fitness clubs and farmer’s markets) where on-line shopping cannot be a competitor. Many others are creating spaces that can allow people to come together and spend quality time to relish the social joy of togetherness and sharing. Malls are leveraging technology to practice relationship marketing, finding parking spaces and booking tickets, thereby improving convenience in the use of the malls. Still other malls are transforming themselves into commercial real estate spaces.
In India many malls also began repurposing themselves. Ansal Plaza in Delhi converted into primarily a commercial complex; Jewel Square, Kakade Centre Port and East Court in Pune have reinvented themselves into office spaces. Some others, such as Nirmal Lifestyles in Mumbai, are re-crafting their leasable area into residential buildings. All these innovations clearly establish that the traditional shopping mall, overwhelmed by the dual onslaught of on-line shopping and Covid-19 pandemic, have abandoned the concept of traditional shopping and are moving towards businesses that are less likely to suffer the offensive of digital commerce and the requirements of social distancing. Quite evidently, the malls of old are easing out of shopping and diversifying into centres of experience or places of commerce and residence. We may not have shopping malls post-Covid19 as we understood them.
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Dr. Ramanath Jha is Distinguished Fellow at Observer Research Foundation, Mumbai. He works on urbanisation — urban sustainability, urban governance and urban planning. Dr. Jha belongs ...
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