Achieving the right tenant mix.
The stores seen inside the mall is a result of a distinct screening process which determines profitability for tenants and ease of access for consumers. Tenant selection is a crucial task for many mall operators in the Philippines.
A lot of factors are in play before finally considering the right mix of tenants for the mall or a commercial complex. This process also includes getting to know the tastes and needs of the mall goers and shoppers.
Planning the tenant mix is thus an important step in determining the kind of tenants who will be allowed to sell and where to strategically plot their store location within the mall.
Sta. Lucia Grand East Mall's leasing head Carla Abo describes the process of tenant selection as 'very crucial.'
She said that, 'shopping malls are becoming new places that consumers visit where the shopping itself has changed meaning and focus.'
Planning the appropriate mix of tenants in shopping malls is a tedious task which requires 'creating variety in shopping mall with its product offer, satisfying the needs of the mall's target consumers, sales revenues per square meters and awareness of the retail store brand.'
Abo further noted that the favorable interaction between the tenants and the mall management would most likely result in maximum exposure for the business owners.
Studying the market
The process involved in studying market and sellers, however, requires a thorough understanding of the products and services, the environment and the retailers themselves.
'To achieve a sustainable rental income, we (conduct a) market review, check the customer profile, trade area, market sizing, and average spending of our target market and their lifestyle,' Abo explained.
Brand status of the tenant is on top of the list of the leasing committee. The popularity of a brand must satisfy or surpass the needs of the target market.
In the case of Sta. Lucia Mall in Cainta, Rizal which caters to the A, B, C and D markets, the selection of tenants has greatly changed over time. Sta. Lucia, according to Abo, has opened doors to new tenants whom they think can respond to the growing needs of the market.
'We need to consider [the] competitive situation in our market. We need to identify our potential market and identify the shopping behavior of our customers. Being the first mall in the East, we strive to keep up with the latest trends by providing new options to our consumers as this would give us an edge over our competitors,' Abo explained.
Sta. Lucia's 'zoning' strategy has been implemented to further increase the sales and value of the mall. Abo defines zoning as formulating the right tenant mix and its placement of various tenants, which translates to the financial feasibility of the tenant in the mall.
In their case, Abo describes the two types of consumers who frequent the mall as the focused buyer and impulse buyer.
A focused buyer is a consumer who already knows what he or she needs to buy or look for in the mall. Hence, they spend a minimum time on the shopping grounds. An impulse buyer meanwhile takes his or her time in window shopping before arriving at a decision on what to purchase.
'Formulating the right tenant mix based on zoning not only helps attract and retain shoppers by offering them multiple choices and satisfying multiple needs, but also facilitating the smooth movement of shoppers within the mall, avoiding clusters and bottlenecks,' Abo further noted.
Proper zoning could thus help shape a shopper's mall preference. A consumer's frequency of visit in a store leads to an increase in sales. The gathered data from the measurement of foot traffic in a store also determines whether the leasing committee needs to increase rent for the tenant.
'Sta. Lucia Mall is utilizing digital capabilities to take the shopping experience [of the mall-goers] to the next level,' Abo concluded.