Dolmen Mall.

Chapter 4 discussed in detail distribution and channel strategies. Dolmen Mall is one of the premium channels through which some of the biggest brands in Pakistan gain access to their target markets. There are three branches in Karachi. The main revenue stream is through ‘tenant brand rentals.’ Though it was hit hard by the Covid pandemic, it took immediate measures: many tenants’ rentals were waived; it collaborated with online food delivery to offer services for its food tenants; it introduced Domen Patio; and it was a pioneer in running ‘Buy Online, Pick-Up in Store’. Its post-Covid strategies included improved customer service, richer in-mall experience, and project upliftment. It now wonders: what next? (Dr. Aamir Khan, Case Advisor).

The mood in the boardroom was tense as the Senior Management of Dolmen Mall (DM) gathered for a quarterly meeting at the Head Office on March 25, 2021. They had assembled to discuss the fate of the retail landscape which was badly affected by the COVID-19 pandemic.

Dolmen Mall (DM) is part of the Dolmen Group (DG), one of Pakistan’s leading real estate companies, operating since 1984. The Group has been engaged in a series of real estate projects commanding a leading position in developing, constructing, and managing prime commercial real estate.

The Dolmen Group has featured on the top stories of the Wall Street Journal, Global Capital Asia Money, IFR Asia, and many more when Dolmen City REIT became South Asia’s and Pakistan’s first real estate investment trust (REIT) in 2015 with a market capitalization of PKR 22 billion. It has also been accredited with redefining the retail experience in Pakistan with the advent of Dolmen Malls. Operating in three different locations of Karachi namely Clifton, Tariq Road, and Hyderi; these malls were built on the highest international standards enabling 150+ local and international retailers to have access to a growing customer base of the seventh largest city in the world. With a success story in Karachi, there have also been plans of expanding to the city of Lahore.

The agenda of the meeting was quite clear. The advent of the pandemic and ensuing lockdowns had disrupted shopper habits. Shoppers preferred ‘convenience’ over ‘experience’. This trend was evident in Dolmen Mall’s declining footfall, occupancy rate, and revenue in 2020. A multitude of questions had risen at this crucial meeting. Could Dolmen Mall play a vital role in reviving the retail ecosystem? How could it retain tenant brands which were already fighting dwindling sales? How could it reduce the physical versus digital divide? It was a race against time and the Board Members knew that they had to strategize fast.

Dolmen Mall Sets Foot in Karachi:

The first DM opened its doors to the people of Karachi in 2001 in the commercial area of Tariq Road. Known for its busy streets with many shopping centers, mall culture was not prevalent in this area, with shops present only in pockets of the district, catering to the needs of the respective buyers. However, with the launch of Dolmen Mall Tariq Road (DMTR) as a community-centric mall, consumers were guaranteed a secure and convenient retail experience where they could find the best in shopping, dining, and entertainment under one roof. It had outlets that catered to consumers from most socio-economic classes (SECs). Within ten years, DM expanded its operations and developed two new malls in key locations of Clifton and Hyderi in Karachi.

Dolmen Mall Hyderi (DMH) was launched in 2008 to cater to the densely populated areas of North Nazimabad, and other adjoining zones serving the SEC A and SEC B consumers. DMH was relatively smaller in size with 50 local and international brands. This area had other shopping spaces such as Madni Mall, Saima Pari Mall, etc. housing many stores featuring multiple product categories. Lucky One Mall, considered one of the biggest malls in Pakistan, also opened in the vicinity.

Dolmen Mall Clifton (DMC), the first international standard mall in Pakistan and an iconic project of DG, became operational in 2011 providing a world-class retail experience. It was home to 167 brands with an annual footfall of 11.5 million customers. The vicinity had other malls too such as Park Towers, Forum, and later on, Ocean Mall and Emerald Mall, housing major local and international brands. Additionally, this location had shopping areas such as Zamzama which housed many local products and international branded shops.

All DMs had almost every major brand available. However, merchandise mix and assortments varied with location and its respective target groups (TG). These target groups such as leisure shoppers, food court visitors, planned shoppers, and window shoppers, were categorized based on different shopping purposes. The mall shopper’s mission varied with the time and day of the week. DM’s Revenue Streams:

DM’s main revenue stream was through tenant brand rentals. Rents were decided based on the mall location, shop location, size, visibility, and brand profile. This revenue model charged either a minimum rent from the tenants or a fixed sales percentage. The mall offered a 3-5-year contract to its tenants with a yearly standard escalation clause. The other sources of revenue included in-mall branding, brand activations, and casual leasing spaces for kiosks and carts.

The Genesis of Business at DM - Getting Brands Onboard:

In 2011, recognizing that changing trends in the retail landscape were rapidly impacting businesses, DM decided to adopt a streamlined brand onboarding process. Extensive research formed the basis of all leasing decisions, ranging from brand profiling to market performance.

A stringent 4-part tenant evaluation and onboarding process looked at:

• Tenancy mix: Brand fit of the potential tenant in the existing brand mix at the malls.
• Customer preference: Demand for the potential tenant’s product offering.
• Outlet area requirements: Coherence between mall outlet area availability and the space requirement of the potential tenant.
• Brand’s market performance: Overall footfall generation, conversions, and return on investment (ROI).

The Pandemic Rollercoaster

As the Covid 19 pandemic hit most parts of the world, retail was one of the most disrupted sectors and one that was sought with the greatest level of uncertainty. Changing times redefined the shopper’s lifestyle; online shopping took over physical shopping, initially by force and then by choice.

DM also witnessed this shift with a consistent decline in its footfall and revenue figures.

(Please refer to table 1)

Table 1: Mall Occupancy, Income, and Footfall

Occupancy rate DMC

Income DMC

(PKR – million)

Avg. Monthly Footfall

2019

98.32%

2,368

843,919

2020

91.99%

1,933

729,018

As the pandemic worsened, there was a need for the implementation of a ‘new COVID protocol’ across DM. The DM management formed a COVID Committee for all its offices and retail tenants. This was a cross-functional project team representing the front and back-end departments including Marketing, Security, Operations, and Tenant Relations. This Committee was responsible for creating and implementing COVID Standard Operating Procedures (SOPs) across all DMs. To ensure smooth implementation, front-end staff who were in close contact with all those entering the vicinity of the mall; customers, employees, tenants, vendors, etc. were given extensive training by this Committee. It also created separate communications to raise awareness about the pandemic alongside a dedicated helpline to cater to the concerns of tenants and customers.

COVID-19 Committee at Work

The Government of Pakistan urged businesses to curtail working hours and control mall crowds through reduced business hours. Official timing intimation was sometimes received just a few hours before the next operational day at the mall. Timely information dissemination to the customer was the key, especially mall opening and closing times; the top customer queries were received by DM through its dedicated Call Center - Dolmen Connect.

• Entry Checks:
• Wearing a mask and mandatory show of recent vaccination cards was ensured at all mall entrances. Visitors were also checked for any visible symptoms such as high temperature, cough, and general well-being. A friendly reminder at all mall accesses was made to the entrants to shorten their visit to the mall. Senior citizens and children below the age of twelve were strictly not allowed in the mall as they were the most vulnerable.
• In-mall Customer Experience:

Being a customer-centric mall, customer well-being was DM’s utmost priority. Safety protocols were also introduced inside the malls and additional guidelines by the World Health Organization were adopted.

Hand sanitizers were installed at different mall locations and constant reminders were made to always wear a mask. Social distancing was also implemented by security personnel around the mall. Maintaining a distance of at least 3 feet (1 meter) from other people to minimize the risk of spreading the virus was compulsory. A maximum in-store customer influx was set based on store size. Stickers were placed near checkout counters at shops to guide customers where to stand to avoid unnecessary crowding.

• Tenant SOPs:

DM also developed a tenant SOP checklist. This checklist included requirements such as mandatory vaccinations for staff, and a reduction in staff headcount to ensure social distancing protocols. Mask and sanitization rules were also imposed. If any employee was found positive for the virus, the entire team of the same shift had to quarantine. The maximum head count was calculated for each shop and communicated outside the store.

Tenants Relaxation Package

In March 2020, a nationwide lockdown was imposed. This period was detrimental to the retail sector in Pakistan, and DM management’s aim was to safeguard the tenants’ interest in this challenging time. Stakeholder relationships were one of the core values of DM. There was no doubt that in this unprecedented situation, tenants were also stuck and some immediate measures were to be taken to help them.

• Tenants go rent free:
• DM reassessed its tenant strategy during the different phases of the pandemic. It maintained a healthy relationship with all its tenants and announced to waive off rentals for its Dolmen Mall Clifton, Hyderi, Tariq Road, and The Harbour Front tenants. The rest of the mall industry across the country followed DM’s lead by offering relief packages to its tenants.
• Business collaborations for Tenants:
• COVID impacted the food industry the most. Complete bans were imposed on in-door dining during the time. DM collaborated with an online food delivery service to offer delivery services for its food tenants. Tenants were allowed to run their operations and sell their outlet inventory online while the mall was closed to customers. It also came up with the concept of Dolmen Patio; an outdoor dining facility at the DMC and DMH locations.
• Drive-through shopping:
• DM served as a pioneer by adapting an international retail trend of ‘Buy Online, Pick-Up in Store – BOPIS’. It offered a temporary pick-up service platform for mall customers to have their shopping collected from a pick-up point. This helped generate sales while the lockdown was imposed for physical shopping.

Embracing the New Normal

By the third quarter of 2020, COVID restrictions were eased, and innovative marketing campaigns were introduced to drive up the footfall at DM. These campaigns were kept simple by bringing forward one idea of reiterating the “new way of life after COVID-19”. The customer mindset of staying home and shopping was to be targeted to ensure people are interested in visiting malls and spend time there with a basic level of health and safety protocols. Influencer Marketing was used to highlight this “new norm” in a light and fun way to revive the spirit of community living.

Dissemination happened through multiple digital and physical mediums such as websites, social media, SMS, in-mall communication, audio notifications, pylons outside malls, and tenants’ shop windows. All Government SOPs were translated into the local languages – Urdu and English - and put up in various locations.

These provided not only assurance to the shoppers who had become reluctant to visit physical spaces but also helped improve their in-mall experience.

Post-Covid strategies to improve sales/footfall and mall experience:

• Improved Customer Service - All customer-facing staff was retrained to provide an impeccable customer experience and minimize the complaint ratio.
• In-mall Experience - DM focused on new in-mall experiences for customers in terms of fresh ambiance, sales/discount deals, and family recreational events.
• Mall Amenities - Mall amenities were revamped such as dedicated parking for women and senior citizens, mother’s room, driver’s waiting areas and diaper changing stations, etc.
• Project Upliftment: Mall renovations were done for Dolmen Mall Hyderi. Construction work at DG’s corporate projects was restarted to ensure more occupancy of the office block ensuring greater footfall at DMC.

What Next?

The pandemic situation improved in the first quarter of 2021 but left behind changed shopper habits and new retail trends for DM to adopt. E-commerce saw a boom in Pakistan during COVID-19. It was estimated that E-commerce sales in Pakistan went up by 55.5% in 2020. Conversely, this booming online sector posed a challenge for physical retailers. The Management at the mall took up the challenge to provide an even better shopper experience through:

a. Retail-tainment (Mall Entertainment)

A unique mall experience with a focus on increasing brands’ mall activations and events would be something that the post-covid customer might be interested in. Options included celebrity visits, art activities, celebrations of seasonal festivities and occasions, instant rewards, or lucky draws with grand prizes. However, there would always be a risk of spreading the virus due to crowd gatherings leading to a potential backlash. Moreover, an artificial boost in footfall was not necessarily a boost in sales for tenants.

b. Restructuring Tenant Rentals

Relaxing the terms of the rental agreement was another option. Reduced rents would decrease operating costs for brands, allowing them to offer discounts to customers and increase footfall. However, sales /profitability was still uncertain as all tenants had developed their E-commerce setups during COVID pushing sales through their online channel.

c. Phygital (Physical + Digital)

BOPIS (buy online, pick up in-store) was a well-established phenomenon in most parts of the world that got a further boost during the pandemic. DM could create a fusion between digital and physical retail by bridging the gap between the two mediums. For instance, a shopper could look for a tenant’s product at any of its websites, social media pages, or WhatsApp groups, and could then place an order for collection from DM’s pick-up point. If introduced, this would be a new concept in Pakistan that would require massive marketing efforts.

The team also discussed some other options. Could it improve its social media platforms such as Facebook and YouTube by including e-commerce capabilities? This would specifically aid the convenience-seeking shoppers to browse and shop for multiple brands without leaving the platform. Internationally, brands had used AR/VR/ Metaverse for their marketing activities and full-sensory immersive interactive experience. DM could use these technologies to improve its in-mall experience.

The recent increase in online shopping meant reduced per-trip spending. Could DM bring the benefits of online shopping to a mall setting? Another option was to consider building non-retail revenue sources such as more amusement opportunities, themed restaurants, etc.

Discussions were also done for conducting a detailed study to understand shopper behavior, as understanding the consumer mindset was the key to success. Multiple options would not only increase footfall in the short run but also help DM differentiate itself from the burgeoning competition in the mall industry. The question was which ones would be most suitable?

Questions to stimulate conversation on the case

• What, according to you, have been the success factors behind Dolmen Mall’s continued success as a recreational space in Karachi?
• How can Dolmen Mall ensure increased footfall and consumer spending, given the changing retail trends? Discuss in terms of changing customer expectations and shopping channel preferences.
• Devise a strategy for Dolmen Malls to sustain and further create the need for the physical retail environment for the masses.
• What recommendations would you make to Dolmen Malls to further strengthen its tenant relations?
• https://www.youtube.com/watch?v=D9SVrdFR5P8, please go through this video and discuss how shopping dynamics have changed in recent uncertain times.
• Link & media:
• https://dolmengroup.com
• https://www.mckinsey.com/industries/retail/our-insights/why-retail-outperformers-are-pulling-ahead
• https://www.sbp.org.pk/reports/annual/arFY20/Specialsection.pdf
• Omni-channel is not just about online to offline – it’s ‘digital to digital’ too, WARC article accessed August 23, 2022
• The story of the epidemic has not yet come to an end, and regaining strategies started yesterday, WARC article accessed August 23, 2022
• Future shopping and retail trends in Thailand, WARC article accessed August 23, 2022