Rising Trend of Ghost Shopping Malls in India: Implications and Challenges
News Mania Desk / Agnibeena Ghosh/13th May 2024
The proliferation of ghost shopping malls in India, characterized by a vacancy rate exceeding 40%, has emerged as a significant trend reflecting evolving consumer behavior and challenges faced by the retail sector. According to a report by Knight Frank India, the count of ghost shopping malls increased from 57 in 2022 to 64 in 2023 across eight major cities, marking a notable surge in vacant retail spaces. This transformation underscores the impact of changing consumer preferences, with a growing inclination towards online shopping and larger shopping centers for a more comprehensive retail experience.
The report highlights that the National Capital Region (NCR) accounted for the highest stock of ghost shopping centers, followed by Mumbai and Bengaluru. However, Hyderabad witnessed a decline of 19% in the stock of ghost shopping centers, indicating regional variations in the prevalence of vacant retail spaces. The total area of ghost shopping centers in 2023 amounted to approximately 13.3 million square feet, representing a significant increase of 58% compared to the previous year. This expansion in vacant retail space underscores the challenges faced by small malls in attracting tenants and maintaining footfall amidst changing consumer preferences.
The rise in ghost shopping malls has also resulted in substantial financial implications for the retail sector. Knight Frank estimates the loss of value due to the increase in ghost shopping centers to be around Rs 6,700 crore or USD 798 million in 2023. This significant decline in the value of retail properties reflects the economic repercussions of vacant retail spaces on the overall real estate market. Despite the addition of eight new retail centers, the total number of shopping centers in Tier I cities decreased to 263 in 2023, with 16 shopping centers being shut down. Underperforming shopping centers were either demolished or permanently closed, with developers opting for residential or commercial developments instead.
The report sheds light on the challenges faced by the retail sector in India, particularly concerning the rise of ghost shopping malls. These challenges include difficulties in attracting tenants, maintaining footfall, and sustaining profitability amidst evolving consumer preferences and market dynamics. The closure of underperforming shopping centers underscores the need for adaptive strategies to revitalize retail spaces and enhance their competitiveness in the market.
The implications of the rise in ghost shopping malls extend beyond the retail sector, impacting various stakeholders including developers, investors, and consumers. Developers face challenges in optimizing the utilization of retail spaces and maximizing returns on investment, while investors grapple with the devaluation of retail properties and reduced profitability. Moreover, consumers may experience limited retail options and diminished shopping experiences due to the closure of shopping centers and the concentration of retail activity in larger malls.
In response to these challenges, stakeholders in the retail sector need to adopt innovative strategies to adapt to changing market dynamics and consumer preferences. This may involve revitalizing existing retail spaces, enhancing the retail experience, and leveraging technology to bridge the gap between online and offline shopping. Additionally, policymakers need to create an enabling environment conducive to the growth of the retail sector, facilitating investment, innovation, and sustainable development in the retail infrastructure.
Overall, the rise of ghost shopping malls in India underscores the need for proactive measures to address the challenges facing the retail sector and ensure its long-term sustainability in the evolving market landscape. By embracing innovation and collaboration, stakeholders can navigate the changing retail landscape and create vibrant, thriving retail spaces that cater to the diverse needs and preferences of consumers.
