Nirupa Shankar, Joint Managing Director, Brigade Group, on the mall’s current focus areas, innovations and much more
New Delhi: Nirupa Shankar is the Joint Managing Director of Brigade Group, overseeing the Bengaluru-based real estate company’s office, retail and hotel portfolio.
Brigade operates three malls in Bengaluru, including Orion Mall at Brigade Gateway, The Arcade at Brigade Metropolis and Brigade Solitaire. The company currently has various other projects that are either in the planning or construction stages in Chennai, Hyderabad, Kochi and Trivandrum, among other cities.
Shankar talks about India’s future potential as a retail market, the company’s upcoming malls and the new breed of exciting beauty brands that have mushroomed in India over the years.
Edited excerpts:
You run three malls in Bengaluru and now you are also going to Chennai, Hyderabad and other cities.
Our primary focus is on the South. Bengaluru, Chennai and Hyderabad are three key focus markets for us.
Malls are going through sea changes with a lot of interesting elements added to them. What can we expect in your new models?
For us, as a mall developer, it is important to look at the design aspects of a mall. When you create a shopping mall, people come there for many reasons other than shopping. So, we are trying to do a heavier focus on all the other elements. Of course, you’ll have apparel and department stores and large anchor stores in our mall. At the same time, we are trying to focus on creating more food and beverage (F&B) options—we are now allocating 12%-15% of the mall to F&B from 7%, earlier.
Similarly, we would earmark a larger space of 10%-15% in our upcoming malls for entertainment, up from 7-8%.
So, there’s going to be a higher focus on F&B and family entertainment zones because people come for those experiences and spend more time at the mall because of them. For instance, people are increasingly using the FEC (family entertainment centre) for occasions like their first date, anniversaries or birthdays.
We’re trying to create a plaza concept in our new retail spaces, where we can have large concerts, events, comedy shows, cricketing events or even an open-air movie space to watch movies under the stars like in Europe, where even in small towns, they have a little square where people come together for events and celebrations.
Malls are increasingly becoming social spaces and in the Indian context, we don’t have much social space. Some of our parks and open spaces in the city are not well looked after. They don’t have access to good quality toilets or a place where you can get a cup of coffee or something to eat. The infrastructure to enjoy an open space or a park is very limited.
So, one of the responsibilities of a private developer is also to create these spaces for the public to come and enjoy. For instance, in one of our malls, we’ve created a manmade lake where people can just come and sit and have a cup of coffee. We’re not saying you can come here only if you shop. You can enter the property without entering the mall.
People spending more time there can lead to impulse purchases. Like they will buy some coffee or an ice cream. More than business, it builds brand loyalty and brand recognition for the mall. If you’re spending so much of your time in a particular location, you will recognise that brand.
And how big are your new malls going to be?
There are two ways one can go about building malls. One is you create a lifestyle destination mall, a premium space which needs to be at least 6 lakh sq. ft to 1 million sq. ft.
The other is to create mixed-use developments. Brigade Group is into all asset classes be it residential, retail, hotel or office spaces. We create mixed-use developments and build 40-50-acre or even 100-acre townships. We create social infrastructure in those townships, which includes retail. When I say social infrastructure, it could be F&B spaces, a supermarket, some apparel stores, a salon, a gym or an FEC as land parcels that large are available on the outskirts of cities.
That social infrastructure can either be placed next to an existing mall or be created. So, we are creating such spaces in Varthur, which is close to Whitefield in Bengaluru and also on Hosur Road.
But we cannot replicate the same model everywhere. We have to map the market to check if there is already a larger lifestyle mall close by. What is the competition? For instance, in Whitefield, I could be doing a lot of apparel, I could be doing a cinema, I could be doing some food and beverage, some entertainment. But in Hosur, it’s only entertainment and F&B. I’m not doing a cinema. So, it depends on the catchment.
Your current composition is 60% residential and the rest 40% is offices and retail. Out of that, how bullish are you on the retail portfolio and what would be the composition in future?
We typically have a 60-40 play. So, 60% is residential and 40% is what we call annuity income. Annuity income can come from malls, hotels and office spaces. These are rent-generating assets.
We are fairly bullish on the retail space because we believe that India is still fairly underserved when it comes to retail with less than 20% of Indian retail being in the organised space. We are still talking about a few key cities having a lot of malls. But there are other opportunities in India like outlet malls, highway malls and malls in tier 2, and tier 3 markets. There’s a huge market out there. However, it will take time; it will not happen overnight.
A vast network of our roads and highways still has to be developed. When they get more interconnected, we might see more outlet malls and highway malls coming up there.
Will you be tapping into the markets beyond metros?
Building malls in tier 2 and tier 3 towns right now could come with its own set of risks. But whoever goes in there first, will have the advantage. But again, you need to see where you want to put your focus as a company.
We’ve decided on Bengaluru, Hyderabad and Chennai as our key focus markets. We do have some properties even in Kerala, in Kochi, Trivandrum. We also have one in Mysore—which will be our first test case as it will be our first neighbourhood mall in a tier 2 market.
India is currently at about $3,000 per capita income, which is bound to go to $5,000 or even $6,000, depending on various estimates. What is going to happen to the overall consumption story once we reach $6,000 per capita?
We are just a fraction of what we see in countries like Singapore, South Korea or the US.
Organised retail is still only at 20% of our total market. If you look at luxury retail, it’s only $10 billion or so in India and it can go up to $100 billion. So, we are still just scratching the surface and I think that India’s retail journey is still a long and exciting one.
I am pleasantly surprised, with the kind of local brands that are mushrooming, especially post-Covid. Earlier, if you had to look at beauty brands, it was mostly foreign brands. You had to go to a department store to pick up a certain brand. The choice was limited.
Now, in our malls, we are creating retail spaces for such brands.
Can you elaborate on this?
We are creating a zone in our malls for beauty brands where brands like Sugar, Mamaearth, Plum, Juicy Chemistry and several local brands can set up trial shops. They can come, plug and play and take the space for 11 months. So, I can give access to six different beauty brands that can rotate on an 11-month basis or a six-month basis. We’re doing the same thing for local designer brands as well.
If they do well, they can graduate to a full-fledged store and we will have the confidence to give a store because we know that they have really hit the secret sauce and are doing extremely well.
The idea is to also create freshness for the mall. Today, most of the leases are for nine years. There’s a decade of difference between what a consumer may want now and 10 years down the line.
So, we’re trying to do two things. We’re trying to reduce the tenure of each retail store from nine years to five or six and we are incorporating a performance clause. Because if a store is not performing, it’s better to cut the losses. So, either they move on or renovate or do something different to make it work, take some corrective action.
Typical retail leases for department stores are 12 to 15 years, and for cinemas, it is 18 years. We don’t know what’s going to exist in 18 to 20 years. Technology is changing so much, consumer preferences are changing so much, that you can’t be prepared. So, you need to build in as much flexibility as you can.
Can you list some Indian brands that you are gung-ho about? And are you investing in any of them?
In beauty, I like the organic brand Juicy Chemistry. There are many other brands. But I don’t do much angel investing. We run our accelerator programme where we work with a lot of proptech (property technology) companies. We have mentored about 70 prop-tech companies to date across the real estate portfolio.
Two of them are in the retail space. One is Litestore, a company that helps online brands go offline and gives them data analytics. So, they rent from us for say three or four years and then sub-lease it to different online brands to experiment.
Does it work for you?
Yeah. We have a minimum guarantee and a revenue share. So, if they sell more, we also get a part of that. Many of those brands have been doing extremely well.
