Opening a Retail shop in a mall, is it always a good deal?

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In recent years, shopping centers have flourished in large cities around the world, redefining the consumer’s shopping experience.

The bottom line is that setting up a retail shop in a shopping mall is not always a good deal. A mall can generate a good flow of business and high traffic, provided that it has a clear and well thought-out positioning, that it offers ancillary services and that its management is very professional.

The retail brand must meet certain conditions to guarantee its success in a shopping mall configuration. When we talk about getting established in a mall, we are talking about opening a structured point of sale, were opening hours are much longer than in a conventional street store. This therefore involves management, tailored and professional retail operations.

You need to have a well-studied merchandising plan, especially for clothing brands. Some brands are lacking the consistency in the positioning of certain Malls which will not be sufficiently attractive for customers: Establishment of unsuitable segments, poor complementarity, absence of products for large generators of purchases like women and children …).

Success thus depends, among other things, on the cost of space rental. “The rent is very variable from one mall to another and, in the same shopping center, from one location to another. Each mall has its rental price structure and its pricing policies. As most of the time, you will be paying a high cost space rental, you must discuss with mall management the support that they might offer your brand and lead you to success. This can be done through marketing activities which can be achieved either in the common space of the mall or at the mall visibility spots (Branded wall, mall entrance, elevators…). Negotiating a grace period could be an option as you will need time to get your brand known and by having a breathing cost window can help you focus on your marketing and communication.

In you have the possibility as a retail brand to request the traffic history from the mall management. This will give you a clear idea about the potential clients’ flow and will help you work on your Profit and Loss model. You should take in consideration as well the shopping center notoriety. What’s this mall known for? Is it a premium brands mall, a discount outlet mall, a luxury mall, a family mall…etc. Your products positioning will depend on the visitors’ segments.

You might want to run a market study that involves your current competitors in that specific shopping center, their pricing structure and marketing strategy. This will help you identify the best retailing configuration and offering at that specific mall.

Author: Jalal JIHAZI
(Global Retail TV Director)

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