An ASSOCHAM report suggests that malls situated in metropolitan cities will witness more than 50% decline in footfalls. While the reasons vary from inflation, high interest rates and economic slowdown, surge of ecommerce sales is said to be the biggest factor for this drop.
Details of the report
The Associated Chambers of Commerce & Industry of India (ASSOCHAM) research team went around in Ahmedabad, Bangalore, Delhi-NCR, Chennai, Chandigarh, Dehradun, Hyderabad, Kolkata, and Mumbai and spoke to nearly 3000 buyers and 720 leasing managers, marketers, representatives of malls’ management, strategist and supervisors for this survey.
Findings of this report are:
- More than 59% of the total mall space remains empty
- Drop in footfalls is highest in Delhi-NCR (68.5%) followed by Mumbai (65%), Ahmedabad (61%) and Chennai (60%)
- Poor mall location, design and parking arrangement has also contributed to this decline
- Only 8-10% of shopping malls are running successfully
- Amazon, Flipkart, Jabong, and Snapdeal are giving tough competition
- Five-fold increase in the revenue earned by ecommerce portals
- Mobile phones, electronics, apparel & fashion accessories, designer furniture, home decorations, jewellery and footwear product categories were the largest contributors to the online sales revenue
Leading retailers aren’t worried though
Two facts are clear: online shopping revenue has grown tremendously this year and footfall in malls has declined. But the gap between online and offline retail sales in India is so huge right from the outset, that big retailers aren’t concerned. For now, at least.
Yesterday IOS reported how offline retailers are doing better than online counterparts in terms of sales due to reduced online discounts. During the festive season, we did see that Flipkart, Amazon, Snapdeal scrapped excessive discounts.
As heavy discounts are no longer the fighting ground, brick-and-mortar retailers are positive that festive season will bring bags of money, in spite of the drop in footfalls.
However, the offline-online sales gap is decreasing, that’s for sure. Mall footfalls are decreasing, that’s clear too. So, traditional retailers can’t be laid back about the growing popularity of online shopping. It’s time to buckle up.