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Seminar on Contemporary Issues for Corporate
Growth
A study on Customer Retention efforts by Shopping Malls in
India
Submitted to:
Prof. Neetu Ganapathy
Submitted By:
Sumit K. Jangid ‐ 7113
SDM Institute for Management Development
Mysore, Karnataka
Executive Summary
Dissertation Title: A study on Customer retention efforts by Shopping Malls in India.
Faculty Guide: Prof. Neetu Ganapathy
Name of student: Sumit K. Jangid PGDM No: 7113
India is the most attractive retail industry in the world. Retail formats of organized
retail industry are getting affected by this boom, favourably as well as unfavourably.
Number of Shopping Malls in India is growing at electric rate and thus the challenge
or opportunity of retaining the existing customers is also growing faster.
This study focuses on the need of customer retention efforts such as loyalty
programs etc., which enables the Indian Shopping Malls to be competitive and better
than others existing and upcoming Malls. The study of existing loyalty programs and
other customer retention efforts helps in understanding the current situation and
strategies better. Their analysis provides a view of the relationship between the
nature of the utility offered and the customer experience cycle by using Buyer Utility
Map.
It was found that loyalty card programs have not worked as well as expected, but the
most important benefit of having loyalty program is that retailers can quantify new
customer losses and introduce programs designed to retain or encourage the most
profitable customers.
i
Some of the major Recommendations are:
o Introduction of shopping mall loyalty card.
o College Savings Scheme
o Customized Loyalty Programs
Sumit K. Jangid Date: 05/09/2008
ii
Acknowledgement
The satisfaction that accompanies the successful completion of any task would be
incomplete, without the mention of the people who have made it possible with
constant guidance and encouragement.
I take this opportunity to express my profound gratitude and deep regards to my
Faculty Guide Prof. Neetu Ganapathy for her exemplary guidance, valuable
feedback and constant encouragement throughout the duration of the project and
preparation of this report. Her valuable suggestions were of immense help
throughout my contemporary study.
My several well‐wishers helped me directly or indirectly; I virtually fall short of words
to express my gratefulness to them.
Sumit K. Jangid
iii
Contents Page No.
Executive Summary i
Acknowledgement iii
Table of Contents iv
Ch. 1. Introduction 1
Ch. 2. Research Framework 6
Ch. 3. Literature Review 10
Ch. 4. Common features among Indian Shopping Malls 16
Ch. 5. Loyalty Programs by Indian Shopping Malls 20
Critical factors for successful loyalty programs 21
Loyalty program of Globus Mall 24
Loyalty program of Forum Mall 25
Loyalty program of Shoppers Stop 26
Ch. 6. Customer Retention efforts by Indian Shopping Malls 29
Forum Mall 32
Garuda Mall 34
Gopalan Mall 35
Ch. 7. Analysis 37
Success and failure factors for Shopping Malls 37
Application of Buyer Utility Map 38
Analysis of Buyer Utility Map 39
Ch. 8. Do loyalty programs really work well? 43
Ch. 9. Findings 46
Ch. 10. Conclusion 47
Ch. 11. Recommendations 48
Ch. 12. Further Research 52
Ch. 13. References 53
Ch. 14 Annexure 56
iv
1. Introduction
Recently, the press has been full of articles touting the growth of Shopping Malls in India,
especially in big cities and metros. Projections from F & R research: Malls in India 2007, say
that India will have more than 715 Malls, operating in the country by 2015 with the retail
space of 350 million sq. ft. in comparison with 47.4 million sq. ft. in year 2007. Articles
suggest that the retail industry will be beneficiated greatly by this new retail space available
for retailing as it will ensure more visibility and interaction with consumers and hence may
result in better turnovers and profits. More retail space is a necessity to handle and cater to
new retail brands (global as well as national brands) that are coming into the market. This
supports the idea that adequate retail space could be the missing link for prosperous retail
industry. However, the actual examination of the influences and impacts of these new
Shopping Malls opening at the arm distances has been less documented. What is the impact
of these new Shopping Malls on brands’ strategies, customers’ power in the channel,
customers’ buying patterns etc.?
Though, the vibrant retail boom is pushing up the number of Malls in the country but
uncertainty remains about the success of these Malls. The major concern for Shopping Malls
owners and its tenants is the low conversion rate. This has led to the closure of individual
shops, at several Malls. Many tenants express grief about the low percentage of conversions
from those who walk through the portals of these Malls. Observers routinely find shopping‐
bags are missing in the hands of the supposed shoppers visiting these Malls. It is an
indicator that the initial excitement about shopping in the Malls is already on decline and
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that consumers are reverting to their traditional shopping‐destinations. Therefore, it
becomes a marketing challenge to retain customers and encourage repeat purchase. It is a
well known fact that repeat customers spend more than the average customers.
The issue of competitive rentals has already come up as there are Malls in very close
proximity to each other in big cities. Success and failure statistics of the Malls in India during
the past few years indicate that not all the Malls are successful. According to industry
experts, only 10‐12 percent of operational Malls in India have been successful. These are
numbers available with various retail and real estate analysts. Shopping Malls in tier II cities
are still far from the kind of competition that Shopping Malls of big cities like Mumbai, NCR
or Bangalore are experiencing. This state of competition helps customers as they have more
options to shop, but for Shopping Malls to make people come to their Mall for shopping is
becoming difficult. The solution could be by differentiating your Shopping Mall from other
Malls. But the big question is, how?
Retaining existing customers is always the desirable situation for any business. In the
situation of tuff competition, these are the only asset of the business who helps dearly by
remaining with you and working as promoters through word of mouth.
India is the land of diversity; researchers have found that Indian customers prefer cross‐
shopping until or unless he/she gets some ‘extra’ benefit for rebuying that product from the
same place. This is mainly because, in Indian market, almost every retailer is trying to delight
his customers. On the basis of these findings, it can be said that loyalty is not easy to build
among Indian customers and that is the biggest challenge Shopping Malls are going to face
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in the near future; especially in metros and big cities, where Shopping Malls are very close
to each other.
Significance of the study
India is the most attractive retail industry in the world now; it tells the fact that the growing
number of Shopping Malls in India is not going to stop or slow down in near future. The
most ‘benefited’ cities from this rapid growth will be the big cities of the country like
Mumbai, New Delhi and Bangalore etc. As more Shopping Malls are opening up more
difficult it would be for Shopping Malls to retain customers with them. Sensing this issue
some Shopping Mall developers have started spending marketing efforts for gaining
customer loyalty for their Shopping Malls. The need for the hour is to attract the footfalls,
convert them into customers and try to retain them as long as you can.
Today the greatest growth for customer relationship programs is in retail and Shopping
Malls in particular, but effectiveness of these loyalty programs is also a major concern for
multi‐branded Shopping Malls.
Objective:
The objective of this study is to analyze loyalty programs of Shopping Malls, study the
customer retention efforts adopted by Indian Shopping Malls, analyze the success factors,
and to suggest ways to increase customer loyalty.
3
Shopping Mall in Brief:
Shopping Mall is the new and modern version of traditional marketplace. A Shopping Mall
or shopping center is a building or set of buildings that contain a variety of retail units, with
interconnecting walkways enabling visitors to easily walk from unit to unit or store to store.
People often use the word ‘Mall’ for big stores like Shoppers stop, Westside or Pyramid,
unknowingly. Actually, they are not Shopping Malls, but another format of organized retail
called ‘Departmental Store’. Forum of Bangalore, Inorbit of Mumbai or Metro Walk Mall of
New Delhi are some examples of retail formats which actually comes under the category of
Shopping Malls. India is having 179 operational Malls which are providing a retail space of
47.4 million square feet. The number of Shopping Malls is estimated to rise by 335% by
2010 to 600 Shopping Malls.
Customer Loyalty in Brief:
Customer loyalty refers to the feelings or attitudes that incline a customer either to return
to a company, shop or outlet to purchase there again, or else to re‐purchase a particular
product, service or brand. A problem is often raised that some proportion of customers will
still defect to competitors even if they are satisfied with the brand. Hence, customer
satisfaction does not ensure customer loyalty. Customer loyalty is purely a behavioural
phenomenon.
Customer may be satisfied by the offerings and services provided by Shopping Mall, but it
does not mean that he will be loyal to that Shopping Mall and will come again and again
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there only for shopping. The basic reason for caring about customer satisfaction is that it
leads to loyalty and customer retention.
It is possible for customers to be satisfied from the Shopping Mall environment, services
etc., but not repurchase due to, among other things, poor product supply, variety seeking or
multiple sourcing and large promotional deals. This is the same happening with the
Shopping Malls of big cities, customers come and do not find anything excited apart from
great retail stores. It turns them off about that Shopping Mall. These issues will be dealt in
detail at the later part of this report.
Similarly, customers may be unsatisfied but continue to purchase, for example, when
dealing with a monopoly as in the case of Shopping Malls of tier II cities.
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2. Research Framework
Methodology:
This study will examine the efforts made by Indian Shopping Malls to retain their customers
with them and build loyalty among their existing customers. It utilizes the secondary and
primary data for research. Secondary data involves the collection of data through past
research studies, journals, magazines, books, leading databases, articles and internet, while
primary data involves the observations of the customer retention efforts adopted by
Shopping Malls in Bangalore. This study also highlights the common phenomenon of
Shopping Malls across the country.
The study would focus on building customer loyalty using differentiation strategies. It uses a
four stage research strategy, outlining a research design, then collecting secondary data,
then collecting primary data, and finally analyzing the available data. Such studies are
capable of capturing data to answer the ‘why’ and ‘how’ questions associated with the
subject under research.
Nature:
Study’s objective is to achieve exploratory rather than explanatory results. Study is
analytical in nature which gives a better understanding of the various loyalty programs and
efforts adopted by Shopping Malls in India.
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Hypothesis:
Research Hypothesis for the study is that Loyalty efforts and programs adopted by Shopping
Malls are effective. Null Hypothesis of the study is they are not effective.
Limitations:
Common limitations of the study are unconscious influence while data collection and
interpretation. The other limitation of the study is that only Shopping Malls in Bangalore
have been studied thus, collected data cannot be generalized nation‐wide.
Models and Theories:
The study will be taking inferences from the theory of Differential Congruence: Coskun Samli
and Boston Consulting Group (BCG) matrix.
The study is using Buyer Utility Map for analyzing the efforts made by Indian Shopping Malls
to retain and attract the customers.
Buyer utility map:
It outlines all the levers companies can pull to deliver utility to customers as well as the
different experiences customers have while using the product or service. Cutting across the
stages of the buyer’s experience are the levers of utility‐the ways in which companies
unlock utility for their customers. By locating a new product or service on one of the 36
spaces of the buyer utility map, we can clearly see how the new idea creates a different
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utility proposition from existing products. A customer’s experience can usually be broken
down into a cycle of six distinct stages, from purchase to disposal in the case of product.
Utility Levers The Six Stages of the Buyer Experience Cycle
Customer
Productivity
Simplicity
Convenience
Risk Reduction
Fun & Image
Environmental
Friendliness
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In the buyer utility map for a Shopping Mall, the buyer experience cycle would be different
from the buyer experience cycle for a product.
Utility Levers The Four Stages of the Buyer Experience Cycle (for Shopping Malls)
Customer
Productivity
Simplicity
Convenience
Risk Reduction
Fun & Image
Environmental
Friendliness
Social
Responsibility
Here, the experience of customers’ start from the Interaction with Shopping Mall after that,
services offered in the Malls, which are almost to necessities for any Shopping Mall in
today’s world. Purchasing from the retail stores of the Mall is the next and most important
buyer experience stage in the cycle. After purchase, add‐ons given by Shopping Malls in its
offerings like music shows, mehndi competitions, dance competitions, quiz competitions
etc. comes.
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3. Literature Review
• Dr. Trivedi Shekhar (2008) “Zooming in on malls”, Retail Biz, May 2008.
Standardization of malls is one of the common phenomenons among malls developers. The
look and feel of all malls in general is same and somewhat presents a uniform appearance to
the customers. Standardization has its own benefits but uniformity may tend to dull
customer’s desire. Developers have not thought greatly about the local catchment profile.
Shopping Malls have given birth to a new shopping culture ‐ ‘Shoppertainment’. Nowadays,
contrary to the real shopping take place, people are opting shopping more for their
entertainment purpose.
Author talks about black spots of malls. He says malls attract different level of footfalls and
attention from shoppers within its various parts. For example, ground floor attracts more
footfalls than any other floor. Shops around the atrium get the maximum number of
shoppers. However, there are certain locations in the mall which are overlooked by visitors.
They are called black spots of mall. Generally observed black spots are outlets near the
entrance, outlets near escalators and elevators and outlets at the end of galleries.
• Shinde, Devendra (2008) “Care for your Brand, the way you care for your skin”, Retail
Biz, March 2008.
Customers are willing to travel to a nearby mall for that shopping experience that he doesn’t
get in the local kirana store. The most common mistake done by national retailers is
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Standardization. National retailers have to take care about making the brand relevant to the
local consumer in the catchment area of the stores.
• Gopal, Prashant (2007) “Malls betting on entertainment to draw in shoppers”, New
Delhi
(http://www.livemint.com/2007/05/14003113/Malls‐betting‐on‐entertainment.html)
When people go for shopping, they, especially youth spend their entire day at the mall. They
want entertainment also for spending an entire day there at the mall. Strong entertainment
needs to be in a mall to encourage loyalty to the mall. Increase in footfalls is not only
important but to convert those footfalls into consumption is the key to success.
Need of the hour is to create a mall, where people can spend time with their family.
Most of the malls are providing the same things for entertainment. Like movie theatres,
bowling alleys, arcade games, restaurants. No real differentiation could be seen among the
malls.
• Prof. Sundar, “Building successful Indian retail brands”
(http://www.bim.edu/pdf/Larticle/Building_Successful_Indian_Retail_Brands.pdf)
The research stresses on retail as a brand rather than retailers merely selling brands. The
focus of this study was on branding the retail business itself. Store differentiation is missing
from Indian organized retail. Leading retail stores like Shoppers stop, Lifestyle, Globus,
Pyramid etc. offer common brands, similar ambience and a same commitment to improved
service. Real differentiation is lacking among them. National and international retailers are
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finding difficult to understand the psyche of the local Indian customers, their tastes or
preferences etc. Localization with Globalization is necessary for malls.
Situation of lack of professional suppliers in India is also testing the supply‐chain of these
organized retail stores as the availability of stock is one of the major factors for building
loyalty for a particular store.
Recognisability, legitimacy, consistency, proximity, value are the essential characteristics of
a brand. Retail branding creates a brand preference, which goes beyond the product or
service in itself. Mall developers need to create distinctive brand identities for their specific
malls.
• Everitt, Lisa (2008) “How to build a Shopping Mall brand”, 29th April 2008
(http://industry.bnet.com/retail/100044/how‐to‐build‐a‐shopping‐mall‐brand/)
Seven types of shopper profiles have identified in the research. Two types of shoppers are
responsible for most of the sales of retail stores. These two types are ‘Navigators’ and
‘Social seekers’. Navigators are independent, creative type and they shop for what they are
passionate about. Social seekers also love shopping but they look to others for validation.
Navigators need an expert mall, where they find, what they want. Social seekers look into
malls which provide a sense of security and consistency.
Different loyalty programs should be introduced for different type of customers to
understand and reward them better, in their own desired way.
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• King, Sharon R. (2008) “Shoppers get awards; Malls get loyalty”, The New York Times,
Thursday, September 4, 2008.
(http://query.nytimes.com/gst/fullpage.html?res=9902E4DF103CF930A15751C1A96E958260)
Malls are giving rewards for shopping. Rewards range from prepaid calling cards, magazine
subscriptions, credit cards to vacation trip etc. creating relationship with customers is the
key to success in today’s competitive world.
Redeemable points offered by malls through various loyalty cards do not spur sales for the
mall from those customers/card holders. But, these efforts help in keeping them coming
back to the mall, add some more points and get better reward for some special occasions;
like Diwali, Christmas etc.
• Gotsis, Tracey “Involve teens in marketing efforts to create brand loyalty”
(http://www.icsc.org/srch/education/newsletter/involveteens.pdf)
Studies have found that teens become more brand loyal when they feel that a
company/brand understands them. Malls need to take proactive steps to tap this key
customer group. Community outreach programs with the support of marketing team are
also organized by the malls to create emotional sentiments in customers mind space.
• Pradhan, Swapna, “Shopping Malls in India – Implications for the future”, Retail Biz,
June, 2008.
In her article associate professor, Swapna Pradhan discusses the dynamic emergence of the
mall culture across the country’s evolving retail landscape. She talks about Gen X malls,
which have been defined by Chesterton Meghraj as greater than 500,000 sq ft and
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incorporate large entertainment area, with enough spaces for parking and excellent
infrastructural benefits that shall be passed on to the retailer. The target audience for the
Gen X Malls is the tourist/out of town visitor and the person from the city looking for
entertainment options.
• Rigby, K. Darrell and Vishwanath, Vijay, “Localization: The Revolution in Consumer
Markets”, Harvard Business Review.
(http://www.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?articleID=R0604E&ml_action=get‐
article&print=true)
Mall developers need to invest some quality effort in understanding the shopping‐needs of
customers in their targeted "catchment" areas and then build a carefully planned portfolio
of retail options that can meet the needs of these targeted customers. Mall developers also
have to create distinctive identities for their specific malls, much like the identities that have
developed over time for major shopping‐high streets in various cities in the country. Their
work is not done just when the mall has been commissioned!
• Anand, Kumar (2008) “Indian retail sector fails consumer‐friendly test”, The Economic
Times, 9th August, Page 5.
(http://economictimes.indiatimes.com/News/News_By_Industry/Services/Retailing/Indian_retail_se
ctor_fails_consumer‐friendly_test/rssarticleshow/3346373.cms)
Article raises concerns about the shopping experience provided by the Indian retail sector.
Better shopping experience may lead to more time as well as money spending on the stores.
The article also raises worry about issues like jam‐packed shopping centers, lack of seating
arrangement etc. which ultimately hampers the retailers only. Writer also says with the help
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of a survey that retail designing is the need for today’s retail market. Retail design does not
include only interiors but other factors also like determining consumers’ attraction etc.
• Jain, Pradeep, (2008) “Must for Malls: USP”, Retailer, July edition.
Writer is the MD of Parsvanath Developers Ltd. He talks about the anchor stores that they
are the champion for any Shopping Mall to attract ‘serious’ customers again and again.
Speciality Mall format is still not considered here but it can give a different position from
other Shopping Malls and able to attract genuine customers. Customers want perfect
shopping experience and even a minute imperfection can divert them to another substitute
Mall. Most of the time, Mall developers lease out the space to retail stores.
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4. Common Features among Indian Shopping Malls
• “Shoppertainment”:
People use to spend their whole day in a Mall these days. They do not go to a Shopping Mall
only for shopping, but they go to have fun, to have some time for relaxation. Shopping Malls
which caters to each and every segment of the market, where people can come and spend
time with their families. These new developments have given birth to a new shopping
culture – ‘Shoppertainment’. Now Shopping Malls are not only a retail format they have
become a destination for people for meetings, get together, having fun etc. The fact that
Malls should always keep in mind that they do not divert from their prime business of
retailing though entertainment s coming into their business models.
• Show Business:
Multiplexes in Shopping Malls are not a strange thing as entertainment aspect related with
shopping has already been mentioned earlier. In Mumbai, the four‐screen multiplex at
Mumbai's Eternity Mall and Wonder Mall (also Cinemax) on Ghodbunder Road have
become film hubs while, Nirmal Lifestyle also provides a six‐screen PVR, which can seat
1,850 people. Bangalore's Garuda Mall off MG Road can accommodate 1,300 people per
show at its INOX theatre. Forum Mall's 11‐screen PVR multiplex, which prides itself as India's
largest multiplex. The experience of watching movie on PVR Gold class screens is luxurious
and outstanding, which ultimately creates excitement about PVR and positive feeling about
Forum, the Mall as well. The trend of having at least one multiplex in Shopping Mall is
continuously and rapidly growing.
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• Standardization:
Standardization is one of the common happenings seen among the Shopping Malls in the
country. Almost all the Malls look like similar whether it is exteriors or interiors. They also
present a uniform appearance to the customers; which do not helps in enhancing customer
experience and upon that it dulls the customer’s desire to come again and again to the
Shopping Mall. Most of the Malls are providing the same things for entertainment also. Like
movie theatres, bowling alleys, arcade games, restaurants etc. No real differentiation could
be seen among the Malls these days in India. We will find the architecture, lighting, and
other sensory items which creates the shopping experience very much similar in a Delhi Mall
and in a Bangalore Mall. Though the culture, buying patterns, customer segments are very
different. ‘Localization’ of the Mall should be taken care of while developing a Shopping
Mall.
• Missing Local Flavour:
As mentioned above the Localization of Malls is very much important to appeal the
customers each and every time they decide to shop. The next most important thing in
retailing after price is the experience, the interaction of customer with the store. And that
experience cannot be build up until a Shopping Mall has taken care of the local preferences,
tastes, local culture, and value systems. All the big Malls developers are going national from
local. They all want uniformity in their Malls on argument that the differences in Malls will
give the negative outlook of biasness towards a particular city or else. To some extent
uniformity is needed but when it comes to emotional senses local catchment is the
necessity for success. A Shopping Mall can have uniformity in terms of services, policies etc.
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but it cannot have uniformity on size, colour, interiors, exteriors, tenant mix, and
promotional events etc. throughout the country like India (diversified cultures).
• Space Crunch:
Packed parking lots, busy food courts and restaurants, crowded anchor stores – this is the
situation of most of the Shopping Malls in India. The average size of Shopping Malls in India
is 2.5 lakh sq. ft., which is very less in compare to Malls of United States. Because of lack of
adequate space, shoppers find themselves in a shop only and not in any Shopping Mall. The
experience of Shopping Mall does not even come into the picture when the Mall is over‐
crowded. American Shopping Malls have the luxury of space and thus able to attract
customers better as they have wider variety of offerings like amusement attractions,
aquariums, skating rinks, hotels, or community halls etc. You name it and that will be there
in their Shopping Malls, but this is not the case with Indian Shopping Malls because they
cannot scale themselves due to space constraints.
• Retail Estate:
Almost every Mall owner group is originally a real estate group which has diversified
themselves into retail real estate after seeing this vibrant growth in Indian organized retail
market. K RAHEJA CORP. is one of the leaders in Real Estate Development, having diverse
interests in Retailing & Hospitality businesses. Today, they are the proud owners of Inorbit
Malls, HyperCITY, Shoppers’ Stop and Crossword shops. They are the pioneers in organized
retail by taking a first giant step to successfully establish "Shopper's Stop". The Prestige
Group is one of South India’s most successful developers of real estate. It is the owner of
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Forum Malls in India. The group is about to expand its presence in Mall business by opening
up Malls in major South Indian cities like Hyderabad, Cochin etc. These are only some of the
real estate groups becoming Mall owners. We must understand that operating and
developing Malls need certain kind of expertise and real estate owners alone cannot tackle
this situation, they need people who are experts in ‘Mall management’. Because of the lack
of expertise in Mall management, most of the Mall developers offer the same kind of Malls
which have spaces for shopping, food and films, but as the number of Malls will increase
people will look for Malls location and what new it’s offering that will become a major factor
in raising or lowering its asset value.
After observing the common phenomenon among the Indian Shopping Malls, it can be said
that now after a long period of time after introduction, big cities’ Malls need some
differentiation in their offerings, services etc. to re‐generate the level of excitement among
people, which could be one of the prime motives for the customers to stay with a particular
Shopping Mall.
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5. Loyalty Programs by Indian Shopping Malls
Other than these customer experience focused facilities, Shopping Malls are not doing much
to retain the customers or to build loyalty among customers. Mainly, because most of the
Mall owners are in the business of real estate so they consider these Malls in very
constricted sense. Like constructing a Mall, getting fixed rentals from the retail stores and
be happy with the rentals retail stores are paying for the retail space provided by them.
They do not focus on marketing strategies for these Shopping Malls like other developed
countries. Now, we will analyze the loyalty program of some big department stores that are
pretty much similar to a Shopping Mall like Shoppers Stop, Globus Mall and some Shopping
Malls.
Loyalty Program Overview
Almost 80 percent of shoppers in the Europe now belong to at least one loyalty program
and the trend is fast catching up in India but how well do they really work? They are not
working the way they were expected to. The matter has to probe into and analyzed as how
advances in customer data collection are helping some companies to revise their Loyalty
business strategies in different ways. There are frequent shopping programs, frequent flyer
programs, frequent Mall cards and frequent petrol programs. There are points at the pump
schemes, Service tax holidays and, some of them even donate to charities like CRY for
people who use their Credit card reward points. There are plastic cards, smart cards,
thermal cards, magnetic strips Co‐branded Credit Cards. Within the next couple of years
players like Airtel, Reliance, are working on using 802.11 to Flash your mobile phone at a
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reader as you whiz through checkout, and you'll get a couple of rupees knocked off your bill.
Call it the loyalty craze. Credit Card companies are offering programs by tying up with
various Shopping establishments to offer discounts and lure the customers towards using
their shops and Credit Cards. While loyalty cards, Shopping Festivals and prizes have always
been, first and foremost, a cheap way for businesses large and sMall to start tracking their
customers shopping habits, more customers than ever now consider themselves entitled to
special treatment.
Critical factors for successful loyalty programs
• Specific Objectives:
A successful loyalty program is based on specific measurable targets and objectives. It
enables the retailer to design appropriate loyalty strategies and target relevant
consumer segments. The progress can be monitored against the goals and targets after
the launch of the program and strategic changes can be made accordingly.
• Proper prior Research:
Gaining the most accurate information about customer behaviours, motivation and
expectations is crucial to the success of a loyalty program. The research needs to be well
balanced and must contain data from various perspectives like demographic profile and
expectations, special interests and lifestyle factors.
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• Innovative and Creative:
Innovation and creativity are among the key factors that define a successful customer
loyalty program, particularly in the retail sector. The primary objective of the retailer is
to keep the high‐potential customer from being loyal by offering a loyalty program that
is unique and exciting.
• Emotional Touch:
Emotional connect is the most critical factor, which can decide the fate of a loyalty
program. The basic and the prime objective of a customer loyalty program is to make
the customer feel privileged and valued. The best programs constantly work on building
a long term relationship with the customer through various initiatives like customized
loyalty cards, newsletters that not only help the firm and the customer stay in touch but
also create a sense of belonging; a card or a gift on birthdays and special occasions and
organizing members‐only events. Member‐only events like giving special privilege to
loyalty card members on seasonal sale etc.
• Software:
As with any strategic involvement, the operational aspects are as crucial to the
effectiveness of a loyalty program as the concept and plans. Loyalty software that
combine multiple functions like data tracking and storage, automated transactions,
updating membership details, points and chum etc. can ensure that the loyalty initiative
is well co‐coordinated, efficient and hassle‐free.
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• Organizational Commitment:
Customer loyalty programs need complete support and commitment from the top
management in order to be successful. Nothing could be more disastrous than a
disgruntled employee weakly or unenthusiastically administering a loyalty program.
• Continuous Communication:
A loyalty program is not a one‐time event. The best programs maintain an active
relationship with the customer by informing them of new developments, offers etc. and
seeking their feedback.
One must understand and remember that loyalty programs can be designed in quick
time but the effectiveness with which they are implemented is of utmost importance. It
takes many long years for an organization to really identify the right kind of customers
to whom it should target its loyalty programs. The truly successful loyalty programs are
not just short term measures to expand the customer base. By aligning with the
organization's strategy, mission and vision, they contribute significantly to long term
profitability, growth and competitiveness.
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Customer Loyalty Program of GLOBUS Mall‐ "PRIVILEGE CLUB"
The customer reward program followed at Globus is called the 'Globus Privilege Club'. This is
the first of its kind program in India where the members are rewarded immediately for their
purchase at any of the stores.
Two types of membership cards:
• Privilege Card
• Gold Card
Privilege Card:
When a customer purchases merchandise worth Rs.2000 or more, then he becomes eligible
to become a privilege card holder. These purchases can be spreads across the first three
months of the first purchase at Globus.
Privilege card benefits:
• Members get invites to events specially organized for them.
• Members can enjoy the exclusive new product privileges. They get the opportunity to
purchase the new products before the launch.
• Special hours are reserved for the members during festive season and other occasions
giving them the freedom to shop at their leisure.
• The members can also avail the benefits of the special tie ups that Globus has with the
national and multinational brands and other leading outlets.
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Gold Card:
When a customer shops for Rs.15000 or more in a single year, then he becomes eligible to
be a gold card holder.
Gold Card Benefits:
• Members can enjoy the benefits of reserved car parking at the outlets.
• In case of any alterations in the garments, it will be home delivered free of cost to the
members.
• The Gold card members can utilize the benefits of the special counter, opened
exclusively for them.
• The members can also enjoy exclusive previews of the seasonal collection.
• The members can also enjoy the benefits of free travel packages.
Customer Loyalty Program of Forum Mall
This is the first step taken by any Shopping Mall in India to come up with some loyalty
program. Though, it is not a customer loyalty program from Forum Mall officially. But Forum
and ICICI Bank have launched a co‐branded credit card called the 'ICICI Bank Forum' credit
card.
The strategic tie‐up of ICICI Bank and Forum Mall will help the bank provide a privileged
status to its customers for every purchase they make at the Forum Mall.
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Benefits:
• The credit card gives a host of benefits to the customers, which includes reward points
and special discounts in addition to the existing features of the ICICI Bank credit card.
• The ICICI Bank Forum credit card is a Visa credit card and it allows the credit card holder
to earn 8 reward points for every 200 rupees spent at the Forum Mall in Bangalore.
• A welcome voucher of Rs. 250, redeemable at Forum Mall in Bangalore awaits every
ICICI Bank Forum credit card holder.
This credit card also gives the cardholder privilege parking and privileged ticketing at PVR
cinemas.
Customer loyalty program of Shoppers Stop
Though, Shoppers Stop does not come under the category of a Shopping Mall still we are
considering its loyalty efforts for the good of the study. The reason for consideration is the
largest department store in the country and they proclaim their stores as Shopping Malls.
The customer loyalty program followed at Shopper's Stop is called the 'First Citizen'.
Types of First Citizen Cards:
• Classic Moments
• Silver Edge
• Golden Glow
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Benefits:
Reward Points:
A Classic Moment member gets 1 point for every Rs.100 spent at Shopper's Stop. A Silver
Edge member earns 1 point for every Rs.50 spent at Shopper's Stop. A Golden Glow
member earns 1 point for every Rs.34 spent at Shopper's Stop. Additional reward points for
spending on private labels. A Silver Edge member earns 1% extra point and a Golden Glow
member earns 2% extra Reward points for purchasing in‐house labels like STOP, Kashish,
and Life.
Associate cards:
A Classic Moments member can apply for one associate card by paying Rs.100.A Silver edge
member can apply for two associate cards by paying Rs.I00. A Golden Glow member can
apply for three associate cards, two Complimentary, one paid.
Other benefits:
• Free car parking facilities including valet parking made available at all outlets of
Shopper's Stop, for the members.
• Members are sent regular updates on all mega events at Shopper's Stop.
• Exclusive cash counters are provided for the members inside the store.
• Special in‐store and out‐store offers are made available exclusively for the members.
• The members are given exclusive preview of the merchandise during the sale period.
• Free home delivery of alterations, reserved parking facilities, additional 5% discount
(during sale) for the Golden Glow members.
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Enrolment:
A customer needs to fill up the application form and pay Rs.150 to become a member of the
First citizen program. The customer earns 100 bonus points and also receives a Classic
Moments permanent card along with a benefit guide.
Up gradation:
A Classic Moments member has to complete a shopping of Rs. l0, 000 within the validity
period of two years to upgrade to Silver Edge. A Silver Edge member has to complete a
shopping of Rs. 4O, OOO during the two year validity period to become a Golden Glow
member.
Renewal:
• A Classic Moments membership card cannot be renewed.
• A Silver Edge member has to maintain a shopping of Rs. l0, 000 during the Validity
period for his card to get renewed.
• A Golden Glow member has to maintain a shopping of Rs. 4O, OOO during the validity
period for the renewal of his card.
Redemption:
Points can be redeemed by the member by presenting the card and receiving the reward
point certificate. This certificate can be used with in 6 months from the date of issue.
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6. Customer Retention Efforts
By
Indian Shopping Malls
Not every Indian Shopping Malls offer loyalty programs to its existing customers to build up
loyalty or to retain them with the business, but they are trying to retain the customers by
focusing on excitement feature, customer experience characteristic. Here, we try and list
down some of the common efforts adopted by Shopping Mall owners to attract potential
customers and retain them. Later in the report we will discuss the loyalty card programs
used by some of the Indian Shopping Malls.
• Music Shows/Competitions:
The most common strategy adopted by Shopping Malls worldwide to attract people
continuously is to organize some events like musical shows, dance or singing
competitions, games etc. especially for youth. Most of these events started on the
festival occasions, but today almost every day with collaboration with some corporate
entity Shopping Malls arrange these shows to retain the charm of excitement among its
customers.
• Art Shops:
Shopping Malls have art shops like Portrait making, Pottery painting, creating cartoons,
casting gold and silver impressions, getting a glamorous photo shot, handicrafts’ shops
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etc. These small shops occupy the vacant space available in the Shopping Mall like places
near escalators, one side of the walkways, and open area in Mall etc. Generally, they are
not allotted the actual store space available in the Shopping Malls as these are very
small money invested shops. But the growing trend has enabled enough attraction into
companies like Colour factory, First Impressions, Make my Toon, Star Shots etc. for this
sector. The target customers for these shops are upper middle income group, elite class
customers and youth. These stores keep attracting people because first, they are not
highly expensive and second, they offer personalized services which give the feel of
luxury at very acceptable price.
• Product Displays:
Display of products like cars, antique objects etc. in the Shopping Malls attracts the
people into the Shopping Mall. Forum Mall, Bangalore is adopting this product display
strategy effectively to bring footfalls in the Mall. Gopalan Mall, Bangalore has allotted
the front space to a motorcycle company to display its products. This strategy is basically
to pull people into the Shopping Malls from outside.
• Iconic or Concept Tenants:
Kind of retail stores also play an important part in attracting potential customers. For
example famous or big brands attract people. Also some very different or unique shops
like Scary House in Garuda Mall also able to pull customers, especially youngsters into
Shopping Malls and those stores. Apple and Bose store thrills and invite people into
Forum Mall, Bangalore.
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• Sign Boards:
In the earliest Malls of the country, we would not find any sign boards or convenience
assistance to guide us, but now they are an integral part of any shopping center as they
help customers and provide them extra convenience to make their experience better
with the Shopping Mall. Some time these small things matter a lot, mostly to women
and elder people who do not want to roam in search of the retail stores. These sign
boards give them the extra help.
• Baby care corners:
As the number of working ladies is increasing in India and in cities particularly, a new
concept of Baby care corners has come up in Shopping Malls and big department stores.
Shopping Malls have a corner, where mothers of new born, who need any assistance
they will get it from the personnel or if they want to do shopping they can leave their
babies in that baby care with baby sitters and do their shopping without worrying about
their children. This concept actually targets new mothers and by giving them the feeling
of care, Malls are trying to make them loyal.
• Seating Facility:
As most of the Malls are targeting to youth, they are forgetting about aged people or
new mothers, who cannot roam in a Mall without taking rest like youngsters. They need
some time for relaxing themselves to again start their shopping. Some Shopping Malls
have started thinking and improving on this aspect like Garuda Mall, it has chairs near
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lifts so that people do not need to stand while waiting for lift. This shows the concern for
customer convenience and customer experience. But still this issue has not taken into
consideration seriously, by majority of Shopping Mall developers.
• Personal Attention:
In Malls like Globus which is more of like department store, a lot of personal attention is
given to the customers. The salespeople help the shoppers with the shopping cart. Once
the dress is finalized they send it to the billing counter. This reduces the weight of
carrying the shopping bag with you. But in Shopping Malls this service could be very
tricky to provide.
To substantiate the data collected by secondary resources, primary data of 3
Shopping Malls in Bangalore has been collected. Data collection is done by observational
method.
Forum Mall:
• Popular Shopping Mall in Bangalore, located on Hosur Road in the Koramangala
suburb.
• Winner of the Best Mall Award at Real Estate Excellence Awards 2007 held at Le
Meridien, New Delhi, on 27th May, 2007
• Forum has the only Apple store in South Asia. If you want to get a Mac or an Apple
product, you will get it only here.
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• It also has a Bose and Swarovski store.
• The Mall does the product displays to attract people. Mostly the products displayed
are of big, famous companies like Audi, Volkswagen in cars etc.
• Interiors of the Mall are good and in fact better than other two Shopping Malls
observed in the survey.
• As mentioned earlier Mall has a good amount of luxury or iconic brand stores which
tempts people to come again and again.
• It has baby care corners near rest rooms, which highlights the concern on customer
convenience.
• To assist customers in searching the desired destination or retail store, Directory
boards are put up on the walls at convenience places. These directory boards give
information about every retail store on that floor, escalators, lifts etc. through
graphical representation.
• Mall has sketch‐picture making shop at the entrance of the Mall.
• Parking facility is good as there are ramps at different levels. It is an amazing idea for
providing extra comfort to customers. If a customer wants to go to 4th level of the
Mall, he does not have to park his vehicle at the basement parking area and go
through the lift or escalator to 4th level of the Shopping Mall. Now, he can directly
park his vehicle to the adjoining level for parking to the desired level of the Mall.
• Forum Mall sells Gift vouchers – Forum Gift Voucher. It gives offerings like fashion,
accessories, gifts, movies and food. The Forum Gift Vouchers are available in the
denominations of:
o Rs. 1000.00
o Rs. 500.00
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o Rs. 250.00
These can be purchased at the help desks against cash or credit cards and for the
bulk orders against cheques which will be delivered to your address. It gives an
opportunity for the corporate houses to use these vouchers for incentive programs
and order these Gift vouchers for their employees.
Garuda Mall:
• The Mall is located on Magrath Road, Bangalore.
• It houses the brands like Mango, Guess, Marks & Spencer, Shoppers Stop, Westside,
Planet Sport, Adidas, Reebok, Fabindia, Swarovski and Titan.
• At the entrance level of the Mall, msn was conducting a competition among the
people there. It was the center of attraction, as the crowd was all over the place to
watch the event.
• The Mall has some unique brand stores like scary house which no other Malls in
Bangalore have. It gives an additional advantage to Garuda.
• Mall developers have taken care of sign boards to help customers to roam around
easily. Sign boards give information about the floor only not about the whole
Shopping Mall.
• Seating arrangement was not proper. The Mall has seating facility only near lifts.
• A section of a floor is dedicated to entertainment. It was having a healthy number of
people.
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• The Mall offers shoppers a wide range of cuisines at the food court with over 20 food
counters along with Sikandar and Kobe sizzlers.
• There are dining options in five exclusive restaurants serving Oriental, Continental,
Mediterranean and Frontier cuisines.
• Mall has its own parking which is categorized into visitor parking, corporate parking
and tenant parking.
• Garuda also sells gift vouchers ‐ Garuda Mall GIFT VOUCHER. These Gift Vouchers in
the Mall are available in two types:
o Diamond Gift Voucher Rs. 1000.00
o Gold Gift Voucher Rs. 500.00
Gopalan Mall:
• It is located on the prime location at Mysore Road, Bangalore. But, still it has not
been able to pull the customers after its introduction period, consistently.
• A motorcycle was on display after the entrance.
• Tenant‐mix was not very attractive and contemporary. Retail stores were mostly of
slow moving brands.
• No entertainment section was in the Mall.
• Food court as usual had a decent crowd.
• Roaming around the Mall is not very convenient. To find the escalators or stairs,
thanks to the lack of sign‐boards and personnel’s assistance.
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• The customers are mostly the aged customers not the youth. Thus, the seating
facility is very important. Mall has the seating facility, but the chairs were not
installed in the sufficient number as well as at appropriate places.
• Parking facility was good in the Mall.
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7. Analysis
Success and failure factors for Shopping Malls:
Following factors have been identified as most crucial for the success or failure of any
Shopping Mall:
• Tenant mix ‐ The term tenant mix refers to a combination of factors, including the
proportion of space or number of units occupied by different retail/service types, as well
as the relative placement of tenants in the centre.
• Anchor tenants in the malls ‐ An anchor store implies a store that is a large entity in
terms of size or a square footage. It caters to the need of the people across all ages, it
usually has a large variety of sellable items ranging from cloths to household items from
different brands. Like Westside in a Shopping Mall.
• Interiors and Design of the malls ‐ The interiors and design of the mall have to address
two kinds of customers i.e. tenant and the end consumer.
For the tenants factors like floor, build‐up area, energy efficiency, security movements
of goods, effective and timely garbage removal system and safety should be taken care
of. Whereas, for the end consumers factors like safety, easy customer circulation, wide
passageways to shop around with trolleys, ample parking space, easy access from
shopping areas with trolleys to the vehicle parking area, adequate rest rooms, place for
the tired to sit and relax and phone facilities should be provided. Customer’s loyalty
comes from the overall excitement that the shopping experience offers.
• Other factors ‐ Ample parking space, location of the malls, and serious footfalls etc.
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Application of Buyer Utility map on Indian Shopping Malls:
The Four Stages of the Buyer Experience Cycle (for Shopping Malls)
Customer
• Small Art shops • Loyalty Cards
Productivity
• Personal • Multi‐level
Simplicity • Gift Vouchers
Assistance Parking
• Multi‐level
Parking
• Baby Care
• Valet Parking corners
• Sign Boards • Gift Wrapping
Convenience
Desks
• Escalators
• Customer Help
• Lifts Desks
• Seating Facility
Risk • Personal
• Security Check • Gift Vouchers
Reduction Assistance
• Multiplexes • Music Shows
• Interiors
Fun & Image • Arcade Games • Various
• Exteriors
• Concept Shops Competitions
Environmental
Friendliness
• Programmes
Social
on public
Responsibility
awareness
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We can now monitor the real objectives of these strategies and tactics adopted by Indian
Shopping Malls. Where they are targeting on customer benefits? And on Which stage of
buying experience cycle they are targeting?
Interaction Stage:
At the first stage of buyer experience cycle – Interaction. Personal assistance provided by
the Shopping Malls personnel in a Shopping Mall directly hits to create convenience for
customers with the additional benefit of simplifying the process of customer interaction
with the Shopping Mall. Interiors and Exteriors are the most important aspect of any
Shopping Mall for the very first impression in customers’ minds with the spaciousness of the
Mall. They create an image in the mind of the customers about the Shopping Mall.
Services:
Services like Multi‐level parking, Valet parking, Sign Boards, Escalators, Lifts, and Seating
facility etc. also focus on making the customers’ experience with the Shopping Mall
convenient. This experience stage of services is the support stage for the rest of the stages
as these services helps at every stage of buyer experience. Multi‐level parking simplifies the
process of complete shopping experience as now customers can park their vehicle to the
level which they intended to shop or visit. Growing security concern among customers can
be a major factor in success. Absence of which may result in customer un‐favourability.
Proper security check reduces the risk among the customers and makes the experience fear
free.
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Purchase:
Though, Shopping Malls cannot do much during purchasing stage of the customer
experience cycle except selecting an appropriate tenant‐mix as retail outlets generally face
the purchasing stage of the cycle. But by selecting a good and contemporary tenant‐mix,
Shopping Malls ensure that the Shopping Mall remains up to date and attract customers. By
introducing the creative concept of shops like portrait making, pottery painting, and photo
shot etc. Mall developers try to enhance the productivity of customers as now they can
shop for much more modern and fresh fashion in the market. As discussed earlier, many of
the Malls have introduced Gift Vouchers for its customers. The benefit to the customers is
that now they do not have to worry about the likes‐dislikes of another person. They can but
these vouchers and gift it to the person they want to gift. That person can come with that
gift voucher and shop according to his/her likes and dislikes. This reduces the risk for the
customers and simplifies the purchasing process.
Multiplexes, Entertainment section (Arcade Games), and concept or unique shops helps in
creating an image of a Shopping Mall among the customers. As these all are the part of the
retail business of the Shopping Mall, they come under purchase stage of experience cycle.
An example of this came across to me when I was collecting the primary data for Forum
Mall in Bangalore. Often, People use the name of PVR to resemble the Forum Mall because
of the publicity of PVR cinemas in Forum Mall.
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Add‐ons:
Shopping Malls provide add‐ons, which are not asked by the customers but to enhance the
customer experience and build loyalty among existing customers, Shopping Malls offer
loyalty cards for existing customers. This is a common practice among the Shopping Malls
abroad. In India, it is not a common practice by Mall developers, but Forum Mall has started
a loyalty cum credit card with association with ICICI Bank. This card gives benefits to its
customers in terms of privileged parking, privileged ticketing at PVR cinemas, special
discounts at participating stores and gift vouchers etc. after collecting certain reward points.
Baby care corners concept tries to target the mothers of new born and focus on giving
convenience while shopping in the Mall. Though India’s Shopping Malls are not quite big,
but still people sometimes need help for these kind of customers ‘customer help desks’ at
the ground floor of the Malls are placed. It focuses on convenience utility of buyers. Various
competitions and music shows try to create the excitement, the fun atmosphere in a
Shopping Mall as well as in customer shopping experience, which relaxes customers and
give them some time free from the worries of the world they carry with them.
Some Shopping Malls in Mumbai have organized some public awareness programmes on
Pollution, Diseases like Polio, AIDS etc. These programmes come under corporate social
responsibility (CSR). Although this is not the only reason for which Shopping Malls do these
programmes, they also try to project themselves as a part of the society and want to get
noticed among the masses.
No Shopping Mall has yet focused on the aspect of Environmental Friendliness of their
operations, activities etc. This aspect could provide a massive competitive edge to Shopping
41
Mall over others as people are becoming more and more environment conscious, better
knowledgeable about problems caused by wastages etc. Thus, a Shopping Mall can project
itself as an Environmental Friendly operated Shopping Mall like its environment friendly
wastage treatment procedure, plants trees on achieving certain amount of sales or footfalls
etc.
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8. Do Loyalty Card Programs really work well?
The straight answer would be ‐ not as well as they might have been. The success of these
struggling to get it right. The most important question need to be addressed from the view
of a retailer is whether they really drive loyalty or not. The fact argued by loyalty program
experts like Jim Barnes is that loyalty programs have little or no effect on genuine customer
loyalty. A very large percentage of senior executives feel that they are developing
relationships with their customers through these loyalty card programs, and add‐on services
etc. but most of the customers do not think the same way.
Why the senior management level executives are so out of touch with their customers when
it comes to emotional connections?
Results of the various surveys performed by retail organizations show that consumers
perceive a ton of value in loyalty programs and use them often to earn rewards. But, they
have precious little to do with loyalty. According to Jim Barnes loyalty Programs expert, one
must not confuse loyalty programs with loyalty. At the end of the day, these programs drive
short‐term behaviour, not loyalty. Most customers are in it for the points and the rewards
that come with them, not because they hold the company in especially high regard. Do
loyalty programs influence customer behaviour? Of course they do. But, if we are looking to
build long‐term customer loyalty, the kind of loyalty that is grounded in an emotional
connection, retailers should not go running off to start a loyalty program. The most negative
part of these loyalty programs is that they lose focus on the most important aspect to
43
identify the loyal and the non loyal customers and develop a unique relationship among
them.
A study by Mc Kinsey states that loyalty programs fail to increase customer loyalty that they
are expected to. From the perspective of a retailer a loyalty program has to generate brand
loyalty to the retailer. The top four reasons for retailers’ dissatisfaction with loyalty
programs were:
1. Customization: Loyalty programs have not been designed with respect to the consumer
segments.
2. Costs: Administration costs are too high for implementing these loyalty retail programs.
3. Revenues: These retail loyalty programs have not lead to expected increase in revenues
of these retail stores for whom these programs were developed.
4. Customer knowledge: Retailers have not used and collected appropriate details about
customer's data and knowledge to design these loyalty programs.
Most loyalty programs are not designed with very fine data mining, to distinguish between
customers who would recommend a particular business to friends and those who would
not. Knowing this could mean millions of additional revenue for companies. The tendency of
loyal customers to bring in new customers at no charge to the company is particularly
beneficial. Many companies also tend not to do enough with their loyalty program data to
make the customer feel special. One of the big benefits of a successful loyalty card program
is that retailers can quantify new customer losses and introduce programs designed to
retain or encourage the most profitable customers. "Without a loyalty card, one has no clue
44
about the size of the inflow and outflow of new customers,” Learning to play the loyalty
card game better can help companies reap big cash rewards. Profits rise as a customer's
relationship with a company lengthens. There is therefore a need to take the lead in loyalty
programs because it's just about the only department that can coordinate between business
processes, external data‐analytics, vendors and the executives who can translate output
into action. In retail today, every customer has a different need and every customer belongs
to a different social class and hence forth the motivation and satisfaction levels are also
different, it is not sufficient that customers are treated alike.
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9. Findings
o India is facing a vibrant growth in the number of Shopping Malls and this growth will
remain at least for next some years.
o Uniformity in Interiors, Exteriors, and Offers etc. of Shopping Malls is preventing to
create a strong differentiator on these parameters.
o Entertainment has almost become a necessity for any Shopping Mall to have in order to
attract footfalls on regular basis.
o Avg. Indian Shopping Mall size is very less compare to Shopping Malls abroad like in U.S.
o Tenants always play the most vital role for the success or failure of any Shopping Mall.
o Environmental friendliness utility among the buyer utilities is yet not focused by Indian
Shopping Malls for differentiation.
o Loyalty Programs adopted by Indian Shopping Malls have not been successful as
expected. Retailers are also dissatisfied because of the high costs related with these
programs and lesser than expected revenue growth, with the difficulty in customization
of these loyalty card programs.
o One of the benefits of loyalty card programs is that retailers can quantify new customer
losses and introduce programs designed to retain or encourage the most profitable
customers.
o Shopping Malls are focusing more on how to create a better customer experience, but
are not focusing greatly on how they could improve the efficiency or add convenience
into the consumption chain of the customers. (Reference: Discovering New Points of
Differentiation by McMillan and McGrath, HBR 1997)
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10. Conclusion
The study gives an insight about the opportunity as well as the challenge of building
customer loyalty for Shopping Malls in India as more and more Shopping Malls are opening
up in the country especially in big cities and metros. To conclude, the increase in Shopping
Mall retail space provide sufficient space for new brands but it also results in more options
to the customers, which results in low customer loyalty towards a specific Shopping Mall. To
retain customers, Shopping Malls are undertaking several strategies and tactics like extra
services, better facilities etc. As the customer loyalty is becoming more crucial,
differentiation in terms of consumption chain or the customer experience can help in
building the desired loyal customer base to fight against the nearby Shopping Mall.
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11. Recommendations
1. Not Just another Card:
In India, the market has been full of loyalty cards and customers also expect loyalty
cards and their tangible benefits. The call of the hour for Shopping Malls is not to
develop yet another me‐too card, but some different offerings or totally different
concept of loyalty card. Differentiation is the only key available with the Shopping Malls
to build customer loyalty.
One concept could be an introduction of Shopping Mall loyalty card with the coalition
of tenants like Adidas, Sony etc. and service provider like Visa, MasterCard. The concept
would work like this: Customers will get the bills separately from each retail stores as
usual. They will earn some points based on their shopping in that particular mall in total,
but the customer has to redeem certain % of earned points on the store where he had
shopped and rest of the points he can redeem on other stores of the Shopping Malls.
The system will tell the information about the point’s status for each customer as well as
particular stores.
o For example: I shop from an Adidas store in Garuda Mall for 1000 Rs. and I
earned let’s say 200 points. Now as per the loyalty program rules, I can spend
120 points in that Adidas store only and rest 80 points in other shops of that
Mall.
certain % of sales is ploughed back and held in a fund to aid college expenses of the
48
customer or his nominee at a future date. This scheme will target to those shoppers
whose children are in schools and will be joining college in near future. This scheme can
have associates from family, friends also who can also help by giving their shopping
points to the same customer. It will also attract current college students for short term
savings. This scheme will work as CSR effort by the Shopping Mall but the catch will be
by getting socially good image, emotional connect with shoppers, concern about their
future needs, by allowing associates (which may mean more customers, new customers)
the Shopping Mall actually adopting a sales promotion strategy. This model is doing
fantastically well in United States. India has a greater probability because of more
emotional customers, more family oriented culture.
3. Another concept can be developing a "Mileage Program (MP)" based on purchase
in the Shopping Mall, the usual more you purchase the more you earn mile/points. This
will be of 2 types. One MP is outlet/category specific (McDonalds/fast food restaurants,
Nike/Sportswear outlets) and the other MP is entire mall based. Any consumer
purchasing worth XXXX amount in any category store of your mall will be in the MP1 and
also in MP2 list. Based on certain slabs of points the consumers will get various prizes for
MP1 or MP2 or both. For MP1, the ideal prizes will be discounts/coupons etc. as that is
instant and attracts consumers. But for MP2 the prizes can be status symbol things, i.e.
Membership of exclusive Country Club, Return tickets for 2 to any holiday resort,
Membership of any airlines Privilege Class, Tickets for Top end Fashion Shows (Versace,
CK, etc)/concerts/Opera Shows etc.
49
o This card is basically to cater both kinds of customers together; customers
who seek tangible benefits like discounts etc. as well as to customers for
whom status is also important.
4. Differentiation:
As discussed earlier in the report Standardization in Interiors and Exteriors is one of the
common phenomenons in Indian Shopping Malls. Shopping Mall can take a step forward
to differentiate itself from others on these aspects. Example could be like Theme of
Shopping Mall (on seasonal basis). Current Shopping Malls are not spending much effort
on Environmental Friendliness; a Shopping Mall can differentiate itself by implementing
and communicating the environmental friendly operations like Eco Trash Removal
System etc.
5. Customized Loyalty Programs:
Today, every customer has a different need and every customer belongs to a different
social class and hence forth the motivation and satisfaction levels are also different, it is
not sufficient that customers are treated alike. Customized Loyalty program can
overcome this issue and will be able to build strong belongingness among the
customers.
6. Investment Commitment:
To design a leading loyalty program, Shopping Mall owner should always be willing to
invest in the strategy, technology and processes to ensure maximization of potential.
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There is also a need to invest in sophisticated analytics to generate the insights that a
Shopping Mall needs.
7. Enhancing the customer experience:
Conducting focus groups will ensure that the customers will come up with their
requirements which can be included while designing the loyalty programs or strategies.
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12. Further Research
Beyond this study, the emerging challenge and opportunity of customer retention creates
vast research opportunities. The applicability of the Buyer Utility Map to Shopping Malls and
generalization of some loyalty programs call for further validation. Further researches may
analyze the potential and complications related with the recommendations suggested in the
study.
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13. References
Articles and Research studies Referred:
o Anand, Kumar (2008) “Indian retail sector fails consumer‐friendly test”, The Economic
Times, 9th August, Page 5.
o Chakraborty, Somasroy, (2007) “Only 10‐12% of malls in India successful”, Business Line,
Saturday, June 23, 2007.
o Dhanabhakyam, M. and Shanti, A., “Indian Retail Industry – Its growth, Challenges and
Opportunities”.
o Dr. Trivedi Shekhar (2008) “Zooming in on malls”, Retail Biz, May 2008.
o Everitt, Lisa (2008) “How to build a Shopping Mall brand”, 29th April 2008
(http://industry.bnet.com/retail/100044/how‐to‐build‐a‐shopping‐mall‐brand/)
o FICCI and Ernst and Young Report, 2007 “India to have 600 Shopping Malls by 2010”.
o F & R research, “Malls in India”, 2007 edition maps Shopping Centre Developments
across India.
o Gentleman, Amelia, “India's malls pull in people who aren't buying”, International
Herald Tribune, May 11, 2005.
o Gopal, Prashant (2007) “Malls betting on entertainment to draw in shoppers”, New
Delhi.
(http://www.livemint.com/2007/05/14003113/Malls‐betting‐on‐entertainment.html)
53
o Gotsis, Tracey “Involve teens in marketing efforts to create brand loyalty”
(http://www.icsc.org/srch/education/newsletter/involveteens.pdf)
o Jain, Pradeep, (2008) “Must for Malls: USP”, Retailer, July, 2008.
o King, Sharon R. (2008) “Shoppers get awards; Malls get loyalty”, The New York Times,
Thursday, September 4, 2008.
(http://query.nytimes.com/gst/fullpage.html?res=9902E4DF103CF930A15751C1A96E95
8260)
o Pradhan, Swapna, “Shopping Malls in India – Implications for the future”, Retail Biz,
June, 2008.
o Prof. Sundar, “Building successful Indian retail brands”
(http://www.bim.edu/pdf/Larticle/Building_Successful_Indian_Retail_Brands.pdf)
o Rigby, K. Darrell and Vishwanath, Vijay, “Localization: The Revolution in Consumer
Markets”, Harvard Business Review.
(http://www.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?articleID=R0604E&ml_actio
n=get‐article&print=true)
o Shinde, Devendra (2008) “Care for your Brand, the way you care for your skin”, Retail
Biz, March 2008.
o World’s biggest Mall planned in Gurgaon, The times of India, 22 June 2005,
(http://timesofindia.indiatimes.com/articleshow/1149016.cms)
54
Websites Referred:
o http://en.wikipedia.org/wiki/Shopping_mall
o http://www.garudamall.net
o http://www.globus.in
o http://www.krahejacorp.com/retailing.html
o http://www.shoppersstop.com
o http://www.theforumexperience.com
o http://www.upromise.com
55
14. Annexure
o Mall Space Growth in India:
Source: F&R Research: Malls in India 2007
o Number of Shopping Malls in India:
No. of No. of
State Malls State Malls
Maharashtra 50 Haryana 8
NCR 55 Kerala 8
W.B. 30 Chhattisgarh 6
Karnataka 20 Uttarakhand 4
A.P. 19 Assam 2
Tamil Nadu 13 Chandigarh 2
Gujarat 15 Jharkhand 2
Punjab 14 Goa 1
U.P 13 H.P. 1
M.P. 11 J & K 1
Rajasthan 9 Orissa 1
Source: http://www.researchandmarkets.com/reportinfo.asp?report_id=579542&t=o&cat_id=
56
o State wise distribution of Shopping Malls (Graph):
60 50 55
50
No. of Malls
40 30
30 20 19
20 13 15 14 13 11
9 8 8 6
10 4 2 2 2 1 1 1 1
0
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States
o Distribution of Shopping Malls in big cities:
City No. of
Malls 14
Bangalore
Mumbai 32
New Delhi* 30 Chennai
11
Kolkata 21
M etro C ities
Chennai 11 21
Kolkata
Bangalore 14
30
*(except Gurgaon, Noida, and New Delhi*
Faridabad)
Mumbai 32
0 5 10 15 20 25 30 35
No. of Malls
57
o Observational Form (checklists) to collect primary data:
Category Remarks
o Parking Facility
o Public Transport
o Security Check
o Customer help desks
o Interiors & Exteriors
o Retail Outlet Mix
o Customer Profile
o Seating Arrangement
o Sign Boards
o Eateries & Food Court
o Rest Rooms
o Loyalty Cards
o Product Displays
o Art Shops
o Multiplexes
o Music Shows,
Competitions etc.
o Others
o
58