Fall 2011
Passage To India

A booming middle class with plenty of disposable income means India is ripe for retail growth. The emerging shopping center industry is crafting its own style of doing business but could learn from best practices implemented abroad.

Looking for ways to expand their influence, invest in emerging markets, and grow market share, international real estate developers including Ivanhoe Cambridge, Vornado, and JJ Gumberg are exploring India as an opportunity for shopping center development.

The decades-old American shopping center model is a relatively new import to India where it is less than a decade old. With a population of 1.21 billion, and a burgeoning middle class, India offers retailers access to consumers with a lot of disposable income.

Molding the new Indian shopper

As with all other instances of international businesses, cultural and currency differences need to be considered when doing business in India. For example, until recently Indian consumers bought their food from local open-air markets and small shops called kirana (the equivalent of bodegas) found on every street corner throughout India. Clothes and non-perishables were also bought from small mom-and-pop stores.

As malls have sprung up all over the country, consumers (especially the young) have embraced these shopping centers even if it means paying more.

Developers and politicians are betting on the rapid growth of malls in the country. The K Raheja Corporation is one of India’s most highly regarded retail developers—the company looks to position shopping as a multi-faceted experience. Among their most popular retail ventures are the five Inorbit malls. The K Raheja Corporation states that its objective is “to not just create physical structures but also to influence lifestyles.” Incidentally, one of India’s most popular bookstore chains, Crossword, is a K Raheja enterprise.

Despite the modest number of shopping centers in this country, India has a fairly successful and sophisticated retail industry. There are over three million retailers in shopping centers, flea markets, corner stores and bazaars here. Across Asia—and especially in India—global brands are setting up shop. The latest retailing rage here is “fast fashion” which features well-known international retailers including H & M, Zara and Forever 21. Similar to the United States, pop music blares from the storefront of Zara as teens and young adults shop the latest fashion trends.

What’s different about the Indian model

Despite the obvious lucrative benefits of doing business in India, there are many challenges that need to be worked around.

Corruption is a big challenge when it comes to municipal authorities and regulations. It is widely known that India’s way of doing business is fraught with political bribes. Operating standards also vary widely and these extend to mall safety and upkeep standards.

The Indian retail model is also quite different from its North American counterpart in significant ways. To start 
with, mall locations in India are sometimes decided on differently from those in the United States. For example, recent malls in Greater New Delhi had the suburban municipalities deciding on mall locations, building the exterior facade for the property and then, following a bidding process, awarding the interior leasable space to developers to operate, market and manage. Having a city determine the location for a mall is departure from the North American business model.

As a result of the multiple terrorist attacks in November 2008 on high-profile destinations and hotels in Mumbai, India’s largest city, security is much more ramped up in India’s shopping centers and hotels. Cars are searched for bombs prior to entering garages or hotel entrances. At most Delhi shopping centers, airport-level security checkpoints with X-ray scans and metal detectors are vivid reminders of the need for personal safety.

The malls themselves are also different from the North American model. Smaller category-specific stores like groceries or home furnishings, substitute for the large 200,000-sq.-foot department store. Also, Indian developers have figured out how to maximize space by building and successfully merchandising multi-level high-density, mixed-use complexes. Indian malls often house large cinema multiplexes, which extend some shopping center hours until 11 p.m. These multi-cinema complexes along with unique bookstores and family entertainment/amusement centers, drive repeat traffic to Indian shopping centers.

Mall tour

Attached to Select Citywalk, the largest shopping center in New Delhi, is DFL Place Saket, a three-level shopping mecca filled with familiar retail establishments and restaurants such as Hard Rock Café, and T.G.I. Friday’s. This property has a chaotic open-air marketplace in its center court. Well-traveled readers might recognize this marketplace as the equivalent of a “souk” typical in the Middle East although also present all over India. At the center court, shoppers haggle over prices and this is juxtaposed against an organized, fixed-priced retail mall. This concept seems to work here since Indians love a deal and are accustomed to bargaining for deals while becoming accustomed to the presumed quality of fixed-priced goods. This shopping center has small anchors, a food court and a collection of fine restaurants.

Three other shopping centers sharing the same façade and street frontage in the Vasant Kunj area, an upscale neighborhood southwest of New Delhi, offer a more up-market experience. These multi-level malls do not have specialty leasing programs. DLF Emporio was the first luxury mall to open (2008) in India with more than 80 star-studded specialty tenants including Louis Vuitton, Cartier, Burberry and Armani. The adjacent malls include DLF Promenade and Ambience Mall (opened 2007), both offering a wide range of retail stores at moderate price points in multi-level configurations.

Specialty retail in India

Specialty leasing in India is emerging too. The concept of RMUs in the common area is well understood, perhaps because of the vast number of street markets and bazaars. The outdoor cart or thela can certainly be brought indoors.

However at Select Citywalk, the largest shopping center in New Delhi, management has not taken an organized approach to specialty retail program development. The business development team understands merchandising but visual display, inventory management, and RMU design and location are poorly executed. This program, the best in Delhi, has interesting uses including freshly baked cupcakes; handmade fruit-like soaps packaged in baskets, Turkish evil eye gift items and recycled products. While the cupcakes were a creative use, the merchant did not make an appetizing presentation. An antique clock and timepiece kiosk was a fashionable home furnishing concept—but it was misplaced under a second level overhang.

Overall the merchandising was interesting and consistent with the affluent demographics of the center’s consumers, but the inconsistent design of RMUs, lack of proximate electricity, and phone lines showed that specialty retail here still had some catching up to do. However, Select Citywalk did appear to have successful “spot promotions” or sponsorship banners boasting a credit card promotion with Citigroup Bank.

New Delhi malls seem to have a handle on alternative revenue with an abundance of outdoor street-sized billboards, signs and graphics at all shopping centers. However, the country seems ready for a specialty leasing training program to teach the basics and best practices learned from the many years it was tested here.

India is not for the faint of heart. It is plagued by pollution, explosive growth and extreme poverty. To visitors the situation can be overwhelming. The traffic progress can be glacial. Rickshaws, bikes, motorcycles and cars crisscross ignoring the four traffic lanes. With horns beeping and crowds of people and cows walking in the choked streets, it seems everybody is in a rush. However, when you press Delhi at its edges you see its beauty in the kindness of its people and you grow to appreciate this amazing country rich with history and tradition.

Mouseover image to view.

Harnessing India’s Energy

The tipping point for Indian specialty retail could simply be investment in thoughtful, first-rate design, merchandising and marketing from industry leaders outside the country.


Phil McArthur, Senior Vice President–India for Ivanhoe Cambridge is leading this effort. Long known for investments in international shopping centers, Ivanhoe Cambridge is taking its shopping center development abroad with potential plans for teaming with strong Indian developers.

McArthur likes life on the run. From his start as a marketing manager 35 years ago in his hometown near Toronto, he has moved multiple times throughout Canada; experienced the growth of the North American shopping center; participated in the launch of the Middle East’s most famous Dubai malls (Deira City Centre) and now, following a stint in Cairo, Egypt, he has been in India for over three years.

Ivanhoe Cambridge Investment Advisory India Pvt. Ltd. hired him as a talent scout to search for the best Indian real estate investments and/or joint venture partners. Ivanhoe Cambridge is the shopping center investment arm of Caisse de Depot et Placement du Quebec, Canada’s largest pension fund. The firm is active in 14 countries and owns and manages over 80 shopping centers. Their objective in India according to McArthur is “to expand investments and develop shopping centers and mixed-use developments with top caliber Indian development partners.”

McArthur has become Ivanhoe Cambridge’s expert on Indian malls. With the capital city New Delhi as his home base, he is establishing a network in the city and throughout the country—not a simple task. McArthur says he watches Indian television, observes pop culture, listens to India’s music, people watches and reads local magazines. This is how McArthur began his immersion assignment. He and his staff of nine have conducted market research and met with India’s top shopping center developers. “I am getting my Ph.D. in creating shopping centers in emerging Asian markets,” McArthur says indicating he is really getting to know the 
ins-and-outs of the Indian retail scene.

When you walk an Indian mall with McArthur, this drill sergeant sees its flaws. The lack of operating standards aggravates him and the visual merchandising disappoints him. He loves the job he has been assigned. A former trombone player and marching band director, McArthur views the creation of a shopping center as a process that must flow together with great precision—from land acquisition to well-informed design, merchandising and marketing. “If one person is playing off-key [in this process], the entire orchestra sounds poor,” McArthur says. “In India, they don’t see shopping center development as a process; it is 100 percent speculative development.”

Most Indian developers own three to five malls, and, according to McArthur, “these developers are more familiar with residential developments so the malls they build are being developed with a residential mentality.”

McArthur points out that since the shopping center industry in India is still in its nascent stages, it might be easier to implement tried-and-tested basics here instead of experimenting and reinventing the wheel. With his research nearly complete, McArthur must recommend an Indian firm with whom Ivanhoe Cambridge would develop a joint venture. It is a tricky situation especially because he has to maneuver the many challenges and choose the right partner who will not be injurious to the Canadian brand.

International developers like McArthur will have to rally the forces of their companies to make an investment and create a footprint in India. His work here is like creating an orchestra from scratch. He is developing the composition and fine-tuning the play list before he proposes investments in one of the most dynamic new markets in the world.

Traditional Markets

In contrast to the new Gurgaon shopping malls, Old Delhi’s Chandni Chowk, is one of the oldest and grandest outdoor markets in the world. The colors, textures and textiles in this market are intoxicating. Its labyrinth of narrow streets is loaded with retailers selling from stall-like storefronts.

These retailers sell products while seated, from piles of merchandise stacked from the floor to the ceiling. The best way to see this retail market is by cycle rickshaw. The congested commercial streets have lanes dedicated to food, jewelry, clothing, books, wedding dresses and spices—the vibrant colors of India are on vivid display here.

Mouseover image to view.

Duffy C. Weir

Duffy Weir is the former vice president and director of specialty retail and marketing at The Rouse Company of Columbia, MD. Now an independent retail marketing and sponsorship consultant and writer, Weir travels the world searching for what she says "makes marketplaces tick." She can be reached at Duffyllc@comcast.net or 410.252.8885.
Publications of ICSC

1221 Avenue of the Americas, 41st Floor
New York, NY 10020
Phone: 781.709.2420
Fax: 781.829.1042

© 2000-2017 International Council of Shopping Centers

DRIVE business.
Make MONEY.
Find UNIQUE concepts.
DISCOVER hot products.

For only $29.95 you can have the industry's #1 resource.

Subscribe today and save!