Interview with Rajneesh Mahajan

Rajneesh Mahajan
Executive Director
Inorbit Malls India Pvt Ltd

GST will help retailers operate on a supply chain model compared to tax model

Inorbit Malls, a subsidiary of the K. Raheja Corporation, pioneered mall culture in India seeking to provide a one-stop destination for fashion, lifestyle, food and entertainment for families. Rajneesh Mahajan, executive director, Inorbit Malls India, gives a glimpse of the evolving retail scene in India.

The Indian retail landscape has changed a lot over the last 5 years. What are the changes that you expect to see in the next two?

The FDI retail policy is a welcome move taken by the government which has paved the way to strengthen organized retail. This policy opens the door to foreign investors to invest in retail. The retail sector earlier faced problems in channels like backend technology, supply chain and human resources. But with this initiative we will see improvisation in these areas and will lead to intense expansion. FDI will also help single brands open larger format experiential stores in high street locations. The industry will flourish in terms of quality and consumer expectation.

At what rate is the retail industry in India growing? What is fuelling this growth?

Various reports peg it to around 8 per cent. Over the last few years the retail scenario has undergone a rapid change. With a rise in the standard of living, people have become more fashion conscious. In addition to this, the digital influence has given consumers an exposure to fashion. People can access information on latest trends at their fingertips. Urbanization too has contributed to expansion of retail avenues giving people access to various brands. Consumption today is driven by health, beauty, and fashion retailers.

How have e-commerce and the omni-channel buzz impacted sales at malls like Inorbit, perhaps the oldest in the country?

Our foot falls never got impacted, though e-commerce took a bit of our consumption. However, now we can see the gap closing with discounts getting dried up on e-commerce platforms.

What steps could boost the business of retail in the country?

Doing the basics right is the key to success. This includes better quality of stores and better consumer experience. There is always a growing demand for large shopping spaces and good brands. The larger format stores entice customers to shop more. Nowadays shopping is all about experience. Great customer service contributes to great experience. Therefore it is essential for malls to change as per consumer needs and exceed shopper expectations.

Malls versus high streets - how is this expected to play out in the next two years?

Brands will start taking flagship stores in high street locations. Malls will be high on fashion and entertainment. High street too will see lot of large format experiential stores, but high street will majorly remain strong at F&B formats.

Elsewhere in the US, the demise of the malls is being talked about. What could be the scenario here in India?

With development of micro markets and population growth in top cities, demand for more number of shopping avenues will increase. Unfortunately, India still lacks the supply of malls vis-à-vis the population. Most of the tier I cities have malls and retail stores to fulfil consumer demands. Tier II and tier III cities are still at a growing phase. There is ample potential in these cities.

What impact will implementation of GST have on the retail scene in India?

Introduction of Goods and Services Tax (GST) will be beneficial to the retail sector at various stages. This move will facilitate the ease of procurement of raw materials which indirectly will open gates to new suppliers. In addition to this under GST, the taxes on services can be set off against taxes on goods. GST will help retailers operate on a supply chain model compared to tax model.

The government recently granted permission to keep malls and shops open 24 x 7. What is the feasibility of this model? Has Inorbit implemented it? How has it fared so far? What are the additional costs of staff etc panned out vis-a-vis footfalls and conversions?

Yes, we are positive and we see this as an opportunity. This policy coming into force will take some time to be converted into a law by the state governments. We are also closely monitoring the same since it involves evaluation of costs in terms of water supply, electricity, housekeeping and safety measures. But at the same time, cities which are stressed with infrastructure will get longer operational hours to give to consumers, which will be a boon for shopping.

What are the key lessons that Inorbit has learnt about consumer behaviour?

There is a lot of potential to increase overall consumption, we are still in the nascent phase and have not reached to the point where consumer is fully exploited. If we provide the right services, consumers will spend.

Which cities do you plan on focussing in India? Any plans of exploring tier II and tier III cities?

We usually keep evaluating various opportunities - both greenfield and brownfield from time to time. This again depends on several factors like valuation, location, size of the land etc. In case we come across good opportunities in the Northern part of India we will be happy to evaluate them. We are also evaluating options in the markets where we are currently present to further build up our portfolio. Apart from tier I cities there are good opportunities in tier II and tier III cities. We have a mall in Vadodara which is performing well.

What are the major challenges that you face currently?

There is no regulatory guideline for the retail-real estate industry which can act like a ready reckoner. Also lack of town planning and poor infrastructure is a major challenge faced currently.

Published on: 19/09/2016

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.