A recent Cushman & Wakefield report says new malls are pivoting from just scale to quality. But along with getting the brand and category mix right, malls need to be at the forefront of experiential retail to get the footfalls, writes Banasree Purkayastha
Malls play the premium card
Around 20 new Grade A or premium malls covering around 12.3 million square feet (MSF) of area are slated to open by the end of 2026, says the ‘Premiumisation of India’s retail sector: Upscaling, upgrading and evolving’ report by commercial real estate services firm Cushman & Wakefield. Of this, 8.6 MSF or around 70% will be superior grade. These top tier malls are defined as properties owned and operated by reputed developers or institutional investors and are characterised by their high occupancy rates (more than 85%), upscale tenant mix, and service-rich environments.
Last week, real estate company DLF had said it will open shopping malls across Delhi and Gurugram, along with its upcoming Goa mall, in FY26. In 2024, Grade A mall stock across eight cities — Delhi-NCR, Mumbai, Bengaluru, Chennai, Kolkata, Ahmedabad, Hyderabad and Pune —stood at 61.5 MSF, with superior grade malls numbering around 60 covering a total area of 38.9 MSF. Delhi-NCR alone accounts for 21.75 MSF. The weighted average rents for superior mall assets is Rs 315 per square feet (PSF) per month, up by more than 29% from Rs 245 PSF per month in 2019.
Experiential consumption, premium brands behind this shift
An expanding affluent and aspirational middle class and transition of digital-first premium brands to offline formats are behind the rush for superior quality malls. A study by Grandview Research indicates that Indian households are already beginning to consume premium/luxury products, i.e., luxury travel, exotic spas, premium clothing, premium beverages, luxury candles etc., at a faster rate than the global average. “Today’s consumers are seeking curated, design-led environments where the brand experience is as important as the product itself,” said Saurabh Shatdal, executive MD, Capital Markets & head, Retail India, Cushman & Wakefield. Around 18-22 new international brands have debuted in India over the last few years, and these are targeting premium / luxury households, thereby helping this category to grow rapidly. Large retail entities such as Aditya Birla Fashion & Retail, Reliance Retail, Shoppers Stop and Tata Trent often dominate physical retail spaces as anchor tenants in major Grade A malls. These four large retailing entities collectively own or have partnered with 900+ brands, thereby having a significantly large presence across both urban and semi-urban cities.
Beauty, wellness, fashion drive footfalls
This premiumisation has impacted the mall leasing landscape as value brands are gradually losing share in superior malls, while lifestyle, premium, and luxury categories are gaining prominence. The share of lifestyle and aspirational category brands has gone up significantly, potentially helping mall developers to achieve a higher revenue realisation. Fashion, beauty, wellness, and experiential dining are emerging as key drivers of footfall and spend. The beauty & wellness segment now commands trading densities of Rs 8,000-12,000 per sqft per month and has doubled its mall footprint from 6-8% pre-Covid to 15-16% in 2024. Food and beverage (QSR, food halls, fine dining, international cuisine, celebrity kitchens, etc) is the new anchor segment and is considered as a fair-weather category. Its share in mall footprint has gone up from 6-8% in the pre-Covid period to 15-18% as of end-2024. The athleisure & sports segment is generating a trading density of Rs 2,500-3,500/sqft/month, with mall footprint share at 11-13% share as of end-2024. The fashion category, though facing a churn within, has managed to keep its share in mall footprint at 19-21%.
Hypermarkets, cinemas lose out
Value brands are losing share in superior malls. Once known to be the key anchors of Grade A malls with a footprint share of 22-28%, departmental stores/ hypermarkets’ footprint share is now 15-20% on average. Along with the changing preferences of the Indian consumer, the fast growth of the quick commerce segment has made consumers more comfortable with shopping for daily essentials online.
Multiplexes are the other segment that is seeing dwindling crowds. Industry observers hint at two possible reasons — the switch to OTT platforms during Covid have made watching content from home more attractive as opposed to watching it in theatres, and the supply of high-quality cinema content exclusively for theatres has dwindled. Occupancy rate in cinemas have dropped from 28-33% pre-COVID on average to merely around 18%-20% on average across leading malls.
How mall owners can ride this wave
Mall owners/ developers need to define the right theme for the mall at the start, i.e. luxury, family-oriented hub or a space for the youth. Having the right product mix based on the socio-economic characteristics of the target micro-market at the pre-launch stage itself is crucial. Partnering with tenants in mall management practices and tracking consumer preferences are essential to decode the right product mix. Malls will have to be treated like a product having a certain business lifecycle, and periodic re-positioning will be essential. Given that customers get weary of seeing the same layout over the years, it is important to consider flexibility in mall design. Developers cannot be just space providers; they need to transform the mall into a social hub so as to drive footfall beyond pure shopping trips. And finally, premium malls should focus on exceptional service offerings, rather than relying solely on their space or brand appeal.