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The Mall management strategy that I would be talking builds on the basic idea of interdependence between the Mall and the Retailer. It focuses on the business benefits that can accrue out of collaborated business management between the Mall Developers and the Retailers. This is not to say that the association between these two parties does not exist in the current scenario. Mall developers and Retailers do collaborate, but this collaboration has not been formalized and even when it is formalized, it is rather sporadic in nature. Thus the whole focus of this article is on suggesting a structured and formal way of collaboration between the Retailer and the Mall.
This concept is a whole process of enhancing customer traffic, sharing costs and increasing the profit margins.
Sharing the Burden-Collaborative Management
If we look at the customer's perspective, there are two major benefits that every customer seeks out of shopping in a Mall. One is an overall experience and the other is a whole variety of goods under one roof. These two expectations cannot be met satisfactorily either by the Mall developer or the Retailer. But if roles are clearly defined and each one develops a core competence, then a fantastic synergy can arise between the two parties. The Mall and the Retailer should work out a strategy where the Mall focuses on enhancing the overall experience and the Retailer focuses on the delivering a good variety of products. To formalize this association, there would have to be a clear definition of expectations and most importantly sharing of profits.
To summarise, the nature of collaboration would be:
• Redefinition of relationship between malls and retailers. It is no more the tenant landlord relationship that existed traditionally. Both need to consider each other as partners or associates, where one parties growth is greatly dependent on the other.
• Malls and Retailers work together to offer the Customers the complete experience. This complete experience would include products that can offer value for money on the one hand and attractive entertainment on the other hand.
• Through mutual discussions, collaborative strategy is defined and areas of core competence are identified. Each one seeks to improve and perfect the specific area of Competence. For e.g. Mall Developer could take up the responsibility of organizing promotions, while the retailer plans the merchandise according to the promotions requirements.
Pulling in the Customers
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The biggest benefit of this strategy would be in facilitating enhanced customer traffic. Internationally Malls are supposed to be places of entertainment. For e.g. Malls in Germany, U.S.A offer round the clock entertainment services either in terms of carnivals, music shows or events. Mall developers should organize regular events which have the capability of attracting huge masses of audience, which would benefit the occupant retailers hugely. Although while undertaking such events a few things would have to be kept in mind:
1) The events would have to be organized in such a way that Malls do not become merely places of entertainment and buying becomes occasional. In such a case the whole point of organizing these events would be lost. This problem can be tackled by associating a major percentage of the events with direct purchases. Retailers could be intimated about the promotion beforehand so that the retailers organize their merchandise accordingly. Mall developers should come up with a "Mall Events Calendar".
Another thing that the Mall developer needs to be convinced about is the benefit of investing in these promotional events. While on the face of it Mall developers might feel that there are no tangible benefits in undertaking such events, such an assumption is far from reality. Promotion events not only increase the popularity of the Mall, they also increase the value of the space available in the mall. A mall which is more popular would definitely attract better brands at better prices.
In any case to tackle the apprehension of the Mall developers the strategy has incorporated certain financial strategies which create a Win Win situation for both parties. The retailers and the mall developers would have to work out a financial strategy which creates sharing of the costs, the benefits and at the same time does justice to both parties involved. How this can be done will be mentioned in Financial Strategy segments that follow.
Strategic Planning for Merchandise
The Mall management would also have to restructure the way products are sold in their malls. One of the ways could be to create mini malls within malls. For e.g. all stores in related categories could be placed in close proximity, so as to provide a better variety to the customers and at the same time increase impulse within the stores. Thus Apparel stores, Accessories stores and Shoes stores could be placed together and thus create complete segments of related products within the Mall. The malls could now organise specific promotion events for these sections or categories.
Another way of Collaborated Merchandise Planning would be by keeping the Retailers informed about Mall Events Calendar, so that retailers can respond to the promotions by bringing about slight modifications in their product mix for that particular period. This way the retailer benefits as well as the Mall Developer.
Developing the Team
To support these futuristic ideas of mall management, a competent team would need to be developed which is fully devoted to these aspects, whose primary focus is to be in touch with the customers psyche and constantly innovate promotion schemes. The team should ideally have a two three representatives who are reporting to one person. Each of these representatives may hold accounts of occupant retailers. Their primary responsibility would be to coordinate with these retailers and derive business out of them. At the same time it would also be essential for them to be in touch with their requirements. The team would also include traditional roles such as Marketing, Housekeeping etc.
Working out the Financials
Innovative ideas are of no use if they do not make business sense. Without a feasible financial strategy to backup, the strategy would be a failure. While financial strategies would always be specific to the Mall and Retailers, this strategy in its basic form incorporates the following strategies:
1) Sharing of expenses between the Retailer and Mall would be undertaken. Possibilities include a fixed fee to be paid by all the Retailers to the Mall developer. This fee would be over and above the rentals being paid already. As a justification to the costs the strategic team may be held accountable for either footfalls or certain minimum number of events in a year. Since these events would always be held in consultation with the Retailer, retailer would stand to benefit directly from these events.
2) Another strategy for Financial collaboration could be by way of Revenue sharing. The Mall developer gets cut out of the revenues of the Retailers during a specific promotion.
There are many more strategies that will be put forward in the articles to come. The essential thing in the current situation is that both the Mall developers and Retailers take this whole new idea with an open mind and begin the process of contemplation. The perfection of the system is a matter of evolution and will definitely happen in the time to come.
About the Author:
The author is Head of the Department - Retail, Pearl Academy of Fashion
Source: Pearl Academy of Fashion
Website – http://www.fibre2fashion.com/industry-article/14/1320/mall-management-strategies1.asp