Mega-mall business is a fad in Pakistan. Big business groups are venturing into it. There ought to be returns in it as real estate based retailing business is preferred over manufacturing. And it looks like the Nishat, Younus Brothers and Packages Group are committed to generate profits from the mall economy.
Influx of dozens of local fashion brands, presence of a few international chains along with rising trend of eateries, and emergence of cinema culture is making big malls vibrant. There are three sizeable malls operating in three cities of the country and two other are under construction.
Dolmen in Karachi sets the precedence. It was the first big mall and proved to be a successful venture. It has a covered area of 850k square feet (excluding parking), and has retail space of around 550k square feet. It is a well-planned and a managed mall. There is ample clearance, and the mall gives a soothing feel of openness.
Besides, the mall has virtually all the known local brands and an array of international brands.
According to industry experts, the footfall in Dolmen Mall is close to 40k per day with over hundred shops selling products worth Rs30-35 million.
Unlike Dolmen Mall Karachi, Centaurus of Islamabad is not very well managed. There is hustle bustle in Centaurus with 25-30k people visiting and very little brand consciousness among a major chunk of them.
The average daily revenue of the mall is estimated to be less than Rs10 million - one third of Dolmen.
Islamabad and Karachi are two different markets with opposing dynamics and that partially explains the stark difference in performance. Karachi is a mature market. There used to be a shopping mall based on imported Thai stuff in 80s in Karachi at Tariq Road. Later after the emergence of country's own brands, Park Tower was opened in upscale Clifton area, which was followed by Forum.
Market was tested for Dolmen, and it brought scale to the mall business. Credit goes to Nadeem Riaz whose lifelong dream was to open a mall in Karachi. On the flip, Islamabad was always a lazy and easy-going market with not many brand conscious customers. Even today, there are more visitors from Pindi to Centaurus, who have low purchasing power.
Recently, the biggest mall of Pakistan has opened its doors in Lahore, and is surrounded by web of middle class residential societies. The retail space in Emporium is similar to Dolmen and is run by the biggest business group in the country - Nishat Group. Lahore market has been receptive to mall business as well as Mall of Lahore, a midsize mall, has been a success. Smaller malls like Galleria, Mall 94 and Xinhua Mall, all in Gulberg Lahore, are also doing wonders. Hence, the market is there for big malls like Emporium to capture.
The catch in mall business is that all the brands ought to have strong presence irrespective of the business they generate. Its their marketing need to have presence to keep the brand alive. Mian Mansha attempted to capitalize on this by setting the rental rates too high.
A few local business groups stood against it and were successful in negotiating better terms. Soon the mall will be filled with all the colourful local and foreign brands along with already present Hyperstar. The mall has plans for around 10 cinema screens and other entertainment avenues.
While the Nishat Group would surely make money, time will tell how successful brand outlets would be.
It is worth highlighting that the Emporium is not in the upscale area of Lahore; it however, it has a promising middle class there to generate the footfall. Another mall by Packages Group will be online next year in upscale neighbourhood of DHA Lahore. Hindsight suggests that this particular one is likely to generate more business.
The prime revenue generation source from a mall is rental, which is inversely proportional to brand equity and space occupied - highest rent is for less known brand with small rented space. Rental rates in Dolmen range from Rs150 to Rs900 per square feet. Lowest rent is that of Hyperstar that has 22 percent of the retail space. Average rent in Dolmen is around Rs300-350 per square feet, while the annual rental revenue is estimated to be around Rs2 billion.
The rental in Centaurus is probably around Rs250 per square feet, and its revenue generation is close to 70 percent of Dolmen's. Here is the catch; despite the fact that sales volume of Centaurus is one third of Dolmen, the gap in income generation for owners is thin.
The mall business is lucrative and less risky; hence all the big business groups are venturing into the segment. And while we are at it, it also generates employment and provides Recreation Avenue for an entertainment starved country.
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