Special Articles

Why Shopping Malls Underperforming In Cities?

Why Shopping Malls Underperforming In Cities?

Cities in India are seeing burgeoning number of malls and shopping complexes. There is an impression that these businesses are rocking and bustling. But that's not so. Here is an insight. 

In 2023, there was a big increase in underperforming shopping malls, with about 13.3 million square feet of empty retail space labeled as 'ghost shopping centers' which is a 59% rise from the previous year.

Knight Frank India's report, 'Think India Think Retail 2024: Shopping Centre and High Street Dynamics Across 29 Cities', shows a 238% increase in ghost shopping centers' leasable area since 2022 in top markets.

Due to these ghost malls, the estimates show a loss of value at Rs 67 billion in 2023.

Ghost malls are centers with high vacancies and low foot traffic.

The National Capital Region (NCR) had the most ghost shopping centers with 5.3 million sq ft, followed by Mumbai and Bengaluru. Hyderabad was the only city to see a decrease.

In Tier 1 cities, despite adding new retail centers, the total number reduced to 263 in 2023, with 16 centers closed.

Underperforming centers were demolished or repurposed, as detailed in the report, which studied 340 shopping centers and 58 high streets in 29 cities through primary surveys.

The reasons for underperformance can be attributed to demographics, age group and financial muscle of the people around particular complexes. Unless, many things appealing for all age groups dwell in a mall, it is difficult to see success.