Ashutosh Limaye
The Maharashtra State Government recently passed the Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, enabling owners of shops, hotels, theatres, and multiplexes in the state to keep their establishments open round the clock, with an easier process of getting permissions and licenses.
This means that malls, multiplexes, restaurants and even small shops can be kept open till late in the night, with the caveat that police permission is required. This is in accordance with the Model Shop Act proposed by the Centre to facilitate ease of doing business, and the bill is now awaiting clearance from the legislative council.
On directives from Chief Minister Devendra Fadnavis, the state government and Brihanmumbai Municipal Corporation are also conducting a pilot project on Mumbai’s nightlife. This project will demarcate 3 non-residential zones in Mumbai which can operate until the wee morning hours (as late as 4 AM) and have liquor licenses.
Once enforced, these two regulations are likely to boost F&B, entertainment and retail markets in the ‘city that never sleeps’, as large malls, high street establishments and restaurants will see a gradual increase in footfalls. We are also likely to see rooftop restaurants opening in five star hotels, as the rooftop restaurants policy is being actively reconsidered by the government.
In fact, even the food trucks are in for a new lease of life. Mumbai currently does not have a clear regulatory framework for this business model, and the CM has issued a directive to formulate a special policy to encourage the food trucks business.
The increased hours for shopping and entertainment can have several implications:
• Increased footfalls in malls – which will, however, be gradual as mall operators will first test the waters by keeping malls open for only a couple of additional hours. F&B is likely to benefit most.
• Increased impulse purchasing rather than planned shopping during these additional hours. The rub-off effect for shopping is likely to come from late night diners.
• Increased revenues for hospitality retail - especially pubs, coffee shops, fine dining restaurants and quick service restaurants (QSRs) - likely to be driven by younger, late night shift BPO employee and time-pressed foreign tourists who want to experience Indian food and entertainment.
• Increased employment in the retail and hospitality sectors, which will again happen gradually as regulations for shift workers slowly become streamlined. The government is also taking steps to ensure safety of women retail employees doing late night shifts.
• Offline retailers gaining more flexibility to compete with online players such as Flipkart and Amazon due to the extended shopping hours.
• Easing of traffic congestion on the back of a more uniform spread of footfalls across 24 hours rather than a concentration of footfalls during particular hours.
• Once regulated and formalized, the food truck business will gain visibility within malls as well, replacing the typical fashion accessories kiosks in the flea markets of malls. Currently NCR, particularly Gurgaon, has a number of food trucks offering superior quality international cuisine as well as experimental ‘fusion’ food options.
• For entrepreneurs with real estate costs are always a major concern, food trucks offer a viable option for experimenting with a food business before investing in a restaurant.
As a general rule of thumb, value formats in Indian retail estimate footfalls between 6-10 PM as double of those seen from 10 AM to 6 PM.
This applies to potential revenues as well. Generally, the same rule is accepted for weekends vs. weekdays, where weekends witness twice the footfall seen during weekdays.
With consumer behaviour generally following the pattern of shopping, movie/entertainment and dinner (in that order) the most likely beneficiaries of late night permissions will be the food and entertainment category. F&B and entertainment is already recognized as the key differentiator for India malls, as the space currently allocated to this category across some of the top malls illustrates:
The real benefit and outcomes of the policy will become evident only once it is implemented, and the spirit of the implementation will be a good indicator for assessing the essential benefits it brings.
(The writer is National Director – Research of JLL India)
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