CLOSE your eyes and you could be in any mall, anywhere. At each end is an overstuffed department store with roving fragrance spritzers and makeup artists. In between are children’s stores showing pink clothes on the left, blue on the right, interspersed with teen clothing stores where the lighting is dim and the salespeople are rail-thin. Throw in numerous shoe stores and another version of The Limited or The Gap. Hungry? Don’t fret: Somewhere in this mall are warm cinnamon buns.

That’s the problem. According to new Wharton research, consumers are aggravated and uninspired by the sameness and predictability of shopping malls, which for decades epitomised America’s consumer society. It’s not exactly the news mall developers want to hear, given the already difficult holiday retail environment.

In their fifth annual survey of consumer dissatisfaction, Wharton’s Jay H. Baker Retailing Initiative and The Verde Group, a research consultancy specialising in customer retention, found that 80% of shoppers had at least one problem during a trip to the mall in the prior month. Earlier Wharton dissatisfaction surveys concluded that fewer shoppers (50%) found fault with individual stores — an indication that the mall environment these days has become even less appealing.

The two most frequent complaints cited in the survey are first, a lack of anything new or exciting at the mall and second, a limited selection of restaurants. These criticisms were each cited by 35% of those surveyed. The third most-mentioned problem, cited by 28% of respondents, was that too many of the stores carry the same merchandise. Parking was the fourth most frequently mentioned problem, with 25% of shoppers experiencing trouble in mall parking lots. While mentioned less frequently than sameness as a problem, survey respondents told researchers they feel parking is the most serious problem they face on a visit to the mall.

“If the mall is boring and the infrastructure is not that great, it’s easy to see why people are stepping back and skipping the holiday buying frenzy” that is normal for this time of year, says Wharton marketing professor Stephen Hoch, who is director of the retail initiative. “Clearly people are spending less time shopping aimlessly. I think this is a long-term trend. People are still shopping and spending but they do it less often and it has to be more purposeful.”

According to Hoch, generations ofshoppers have grown up exploring malls, which were once modern wonders with fountains, food courts and kiddie rides. “People have had a lot of experience in malls. It’s not that there are no new elements in them, but that people have higher expectations,” says Hoch. “The same set of usual suspects is in every mall. In the biggest malls, it’s the same stores you have seen a zillion times, just more of them.”

Today’s mall shoppers are underwhelmed by the nation’s 1,200 enclosed and open-air lifestyle centres filled with chain stores designed specifically for success in the mall environment. “People go to the mall and nothing stands out or makes the experience fun or exciting,” Hoch adds. “There is no sense of discovery. Nothing catches the eye. It’s the same restaurants and the same stores in every mall.”

Hoch predicts as much as 10% of the nation’s retail infrastructure could disappear by the time the current recession ends.He also suggests that the dissatisfaction survey’s results canhelp guide mall owners who are interested in repurposing space that will be abandoned in a pending retail shakeout. Owners “need to think hard and ask if there is something else they can add that creates an element of novelty. Is there a way to mix it up?”

The Baker Retail Initiative and Verde Group Researchers surveyed 900 customers in October and November. They found that the typical shopper will visit five stores on an average trip to the mall and travel 23 miles to get there. A third of the shoppers surveyed spend two to three hours in the mall, and 90% make at least one purchase, with the majority spending an average of $150. Apparel is the top sales category at malls, although open-air malls have a greater emphasis on electronics and home goods compared to enclosed centres.

HANGOUTS FOR TEENAGERS

Beyond complaints about the ho-hum nature of mall shopping, consumers also find problems in three areas of basic mall infrastructure that drive loyalty:

COMFORT: Is the mall clean and well maintained, with easy-to-find washrooms and visible security?

ACCESSIBILITY: Is it easy to find convenient parking spots?

NAVIGATION: Is it easy to find the mall and understand its layout, and is there adequate signage?

What Aisles Them?

Paula Courtney, chief executive of The Verde Group, which has offices in Toronto and Atlanta, says the survey also tracked problems that were most likely to prompt negative wordof-mouth about a shopping mall. Earlier customer dissatisfaction surveys show that when people have a problem, they tend to talk about it with three other people. As a result, half the people who hear about a negative incident experienced by someone else at a store will avoid that retailer. In the latest survey, teenage loitering was cited as the problem shoppers were most likely to complain about to others, setting off a chain of bad-mouthing about a mall.

While 80% of all shoppers experience a problem at the mall, that figure rises to 97% for shoppers aged 18 to 24. Courtney says the high number of complaints is probably because they spend more time than other age groups at the mall, giving them more time to experience trouble. Those in the 25 to 40 age range are the top-spenders, dropping $188 on average. Their biggest complaint is a lack of restaurants. Shoppers over 60 complained most about being unable to find signs directing them around the mall.

The researchers examined the relationship between the amount of time spent in the mall and customer satisfaction. They found that those who spend more than two hours in a mall are more loyal, visit the most stores, report a better shopping experience and spend more money. At the same time, longer shopping trips apparently lead to more opportunity for problems, such as complaints about crowds and teenagers.

New visitors represent opportunity for malls. The survey shows they travel greater distances to shop, visit more stores and spend more, on average, than other shoppers. The problems they experience are related to finding their way to and around the mall, which is not a problem they are likely to complain about to others. Frequent visitors to the mall tend to live closer and are more satisfied with their experience than other shoppers, according to the survey.

The survey, which was heavily weighted toward women by a factor of 2 to 1, reflects gender differences among shoppers. Men say they experience more problems than women, have more trouble parking and finding their way around the mall, and are more turned off by the sameness of malls than women. But while men have more problems, women are more likely to tell others about it. Working women were more dissatisfied than other women with malls, complaining about a poor selection of restaurants, and a lack of interesting shops and special events.

According to Courtney, the survey results should offer mall owners some clear and simple solutions to shoppers’ complaints. “The message to developers is that there is hope,” she says. “A lot of these issues are actionable. There are many ways developers can draw shoppers into their malls.”

A first step would be to evaluate the mall’s common areas. Mall owners can use the space they control to develop programs to counteract the sameness of the stores and merchandise that is turning off mall shoppers. For example, survey results show that shoppers were disappointed in the level of malls’ sensitivity to environmental or green causes. Therefore, malls should initiate more community-based events taking into account each centre’s own demographic footprint. They should understand that different types of consumers come to the shopping experience with varied expectations and different triggers that will generate mall loyalty. Improving signage is an easy and inexpensive fix that would respond to a frequent complaint that surfaced in the Wharton research.

“Consumers don’t have money, but developers probably don’t either,” says Courtney. “So instead of trying to make broad sweeping changes, they should focus on low-hanging fruit, such as signage. Creating opportunities for discovery in the common areas and thinking of the mall as a destination will encourage shoppers to stay at the mall longer.”

One innovative use of common areas she cites is a partnership between mall owners and Coca-Cola known as the Red Lounge. It is a section of the mall with red seating where Coke products are sold and teenagers are encouraged to gather. The lounge generates sales and brand awareness for Coke, while containing teens in a designated spot, thereby reducing the opportunities for them to annoy other shoppers.

Verde research in Atlanta revealed some other ideas. Shoppers suggested that stores put individual numbers on their doors co-ordinating to the mall’s map. They also asked for more sitdown restaurants rather than food courts, better lighting and more trees in the parking lots. Valet service should be free with a purchase, and valets should be made to park at the far edges of the parking lot to free up spots closer to the mall for other shoppers. They also suggested that malls create more environmental, educational and entertainment programming.

But because there has been a massive investment in malls and in the chain stores that fill them, Hoch notes, it will be difficult to recast this retail infrastructure to provide a better sense of ‘discovery’ for shoppers. One major obstacle: Some of the abandoned space is likely to be created by the departureof large anchor department stores with many entrances that are not easily transformed into new uses.

Despite shoppers’ dissatisfaction with the sameness of shopping malls, Hoch suggests it is unlikely that local independent retailers with niche concepts will find a place in malls. “People are complaining about the same-old, sameold, but I think it’s not clear that mall shoppers are the most creative group out there. They do go for predictability,” he says, adding that mom and pop establishments are usually highly specialised destination stores that would not benefit from paying high mall rents to capture sales from walk-by traffic.

“Malls need to figure out what to do, because there is going to be more and more excess space as chains close down their less profitable outlets,” he says. “There’s going to be a lot of space in the mall that is dark. Malls have to be very concerned because if parts of their properties go dark, it can [look like] an abandoned neighbourhood.”

While the likes of Future Group, Shoppers Stop, Westside and Reliance Retail are driving the focus on customer relationship management (CRM), restaurant chains like Speciality Restaurants (SRPL) are also gung-ho on the same. “The CRM programmes are important for any retail chain and they work, especially during a recessionary trend. They give customers some comfort and ensure that they keep coming back again and again,” SRPL chairman and MD Anjan Chatterjee told ET.

SRPL’s loyalty programme currently has 70,000-odd customers within its folds, who account for 30-35% of their sales. “We are now planning a marketing blitz to penetrate into 70% of our target audience by July-August,” said Mr Chatterjee.

Within six months, Future Group is planning to roll out a single loyalty programme that spans across formats. The group is currently investing heavily on the IT backbone. Currently, the group’s Green Card loyalty programme at Pantaloons accounts for 55% of sales.

“As the first step towards a uniform loyalty scheme, we have rolled out a prepaidcum-loyalty card in Pune and Kolkata. We’ve clocked nearly Rs 15 crore business out of this. Eventually, we expect 70% of our sales from lifestyle formats to be generated from loyalty scheme customers,” said Future Group president-customer strategies Sandip Tarkas.

Interestingly, Reliance Retail already operates its ‘RelianceOne’ loyalty programme across formats with four million customers. “We see a significant percentage of our sales coming from our loyalty card holders,” said a Reliance Retail spokesperson.

Shoppers Stop has just launched a new loyalty scheme for its hypermarket ‘Hypercity’. “The loyalty programme is a long-term strategic initiative, which drives repeated purchases. We add nearly three lakh customers under loyalty every year,” said Shoppers Stop MD BS Nagesh. As of end-2008, the retailer had more than 11.8 lakh loyalty members.

Westside has relaxed the entry norms for its loyalty programme ‘Clubwest’ to cash in on the large footfalls the store is witnessing due to Nano bookings. Earlier, to become a silver member, one had to shop for Rs 2,000 on one occasion and register. “Now, a customer can enrol for the programme even by shopping for Rs 500 and subsequently get upgraded, if he completes Rs 2,000 billing within three months,” said Westside marketing-head Smeeta Neogi. The chain currently has over eight lakh members, who generate over 50% of sales.

But Indian consumers won’t be able to partake of Wal-Mart’s everyday low prices. India’s restrictive commercial laws prohibit most foreign companies from setting up shop to compete with domestic retailers. So Wal-Mart’s debut outlet, which will open in the city of Amritsar in northern India later this month, is a wholesale-only operation that will sell mainly to vegetable vendors, hospitals, hotels, restaurants and other companies. The Amritsar outlet won’t even carry the familiar Wal-Mart brand. To deflect the attention of politicians and activists who oppose the entry of foreign multi-brand retailers, the Little Rock, Ark., company has named its Indian outlets BestPrice Modern Wholesale.

Despite the stealth approach, industry experts expect Wal-Mart, known for squeezing efficiencies out of suppliers and supply chains, to have an impact on India’s $375 billion retail market, which is dominated by mom-and-pop businesses and outmoded distribution networks. “We can learn the science of retailing, how to build scale and efficiencies,” says Kishore Biyani, chairman of Pantaloon Retail, India’s largest homegrown retailer with 114 hypermarkets.

The world’s largest retailer isn’t new to India. For the past decade, the country has been an important Wal-Mart supplier of textiles, apparel, home products and jewelry. But in anticipation of its India launch, Wal-Mart for the last three years has been developing a network of suppliers to stock its stores with fresh produce and staples like lentils, wheat and rice — all with an appreciation for variations in local cultures and tastes. “India is not a homogenous market, so ours is not a cookie-cutter approach from the U.S.,” says Raj Jain, president of Wal-Mart India.

Although it is restricted to wholesale operations in its wholly owned stores, Wal-Mart has a small retail presence in India through a fledgling joint venture with New Delhi-based Bharti Enterprises. The U.S. company provides back-end support for Bharti’s chain of 25 Easy Day grocery stores that opened last year.

Although other foreign hypermarket chains are entering the country — British retail group Tesco has a joint venture with India’s giant Tata conglomerate, while France’s Carrefour is said to be in talks with Reliance — Jain says Wal-Mart is in no hurry to unfurl the Wal-Mart flag nationally. “The easiest thing is to roll out stores, but the most difficult is to sustain and feed them,” he says.

Indeed, Indian mass-merchandisers over the last several years expanded frenetically, trying to get a jump on foreign chains should Indian politicians eventually decide to open up the market to direct competition from overseas. Reliance Industries built 940 stores across the country in 18 months. Aditya Birla group has opened 548 stores since 2007. Today, with India’s economy slowing and with losses piling up, the domestic retailers have shut some outlets and laid off employees, partly because of difficulties in keeping large chains supplied with goods. “When you start opening stores and then work backwards, even we get scared,” says Mahadeo Pawar, a vegetable grower from Karjat, 31 miles (50 kms) north of Mumbai.

Caution in India may be a watchword considering the global recession and Wal-Mart’s blemished track record overseas. In 2006, the company pulled out of Germany and South Korea in the face of stiff competition and poor sales. Still, Wal-Mart has been weathering the economic crisis better than most. The company on May 14 announced it earned $3.02 billion in the three months ended April 30, about equal to the profit it made in the same period in 2008. Revenue fell 0.6% to $93.47 billion from $94.04 billion a year earlier. Highlighting the growing importance of markets such as India, nearly one-fourth of Wal-Mart’s sales for the quarter — 22.7% — came from its international division.

Nandos, Hey Potato, KFC and Nineteen Ten Mexican Kitchen have signed up to be part of the new development, which will comprise 16 food outlets and three restaurants with open plan kitchens and grills.

Neil Huntington, development director for Westfield, said: “We are delighted to announce the project and these signings. Interest in the scheme has been solid and we expect to announce more names very soon.

“The success of the dining offers at Westfield Derby and Westfield London show the potential to evolve the traditional ‘food court’ model. At Merry Hill we plan to attract a fascinating mix of contemporary and traditional operators, combining tastes from around the world to make sure there is something for everyone.”

The restaurants will face a new centre entrance and car park – which will be themed with street-side dining and landscaping.

Nandos, Hey Potato, KFC and Nineteen Ten Mexican Kitchen have signed up to be part of the new development, which will comprise 16 food outlets and three restaurants with open plan kitchens and grills.

Neil Huntington, development director for Westfield, said: “We are delighted to announce the project and these signings. Interest in the scheme has been solid and we expect to announce more names very soon.

“The success of the dining offers at Westfield Derby and Westfield London show the potential to evolve the traditional ‘food court’ model. At Merry Hill we plan to attract a fascinating mix of contemporary and traditional operators, combining tastes from around the world to make sure there is something for everyone.”

The restaurants will face a new centre entrance and car park – which will be themed with street-side dining and landscaping.

Speaking at the Cannes Lions International Festival of Creativity today, Schmidt said he believes one-third of all restaurants and retail outlets will allow for mobile payments within the next year, the Financial Times reports him as saying. He reportedly told those in attendance that that number should be enough for widespread adoption of mobile payments.

“I judge that based on how long I think it takes, because the terminals are available now, the software is available now or this summer,” the Financial Times reported Schmidt as saying. “How long does it take an infrastructure player to upgrade a significant percentage of their infrastructure–it’s on the order of a year, it’s not a week, it’s not a month but it’s also not five years. It’s an educated guess.”

Schmidt, who stepped down as Google CEO in April, has a vested interest in seeing more establishments allow for mobile payments. Late last month, his company unveiled Google Wallet, a service that uses near-field communication (NFC) to let users pay for purchases with their Android-based devices. Google said it will be partnering initially with Sprint, MasterCard, Citi, and FirstData on the service.

Google Wallet will be available on the Nexus S and will work with “a PayPass-eligible Citi MasterCard and a virtual Google Prepaid card.” The search giant was quick to point out that there are currently more than 124,000 PayPass-enabled merchants in the U.S. and more than 311,000 operating around the world.

Google said last month that all future Android smartphones will be NFC-compatible. Rumors suggest the next iPhone will also feature NFC technology.

But as Schmidt pointed out today, support for NFC in devices is just one piece of the mobile-payment puzzle; payment processors must also double down on the technology. However, Schmidt isn’t worried about that happening for one major reason: “fraud rates are so much lower” with the use of NFC, he said.

“Nobody knows how quickly this will occur,” Schmidt said of credit card companies updating payment terminals with mobile-payment support, “but it’s in their interests to convert as fast as they humanly can.”

The Connecticut headquartered brand is present in 50 Indian cities with 263 franchisee-run restaurants across the country. Commenting on the potential of the market, Subway President and Cofounder Fred DeLuca said: “India is a promising business destination with a young, educated population having growing disposable income.”

Subway will continue to evolve and adapt its product offerings to suit the Indian taste and plans to grow here through franchise route, he said in a statement. While the investment of $58 million (over . 300 crore) to set up the planned number of stores will be made by franchisees, Subway will invest in providing training and technical know how to its partners.

The brand is aiming to expand aggressively in tier-II and tier-III locations. The planned expansion will generate employment opportunities for another 15,000 people, the statement said.— PTI