The Indian middle class' love affair with shopping malls is on the wane, a survey by industry body Assocham has found. Footfalls in shopping malls are expected to see a sharp decline of 35-40 per cent, the survey said, which means that the festive season has failed to lure consumers to loosen their purse strings.

The reasons are not difficult to guess. Economic slowdown, high interest rates and job uncertainties have hurt consumer sentiments. The sharp depreciation in the rupee has also impacted consumer spending, especially for electronic goods, the survey found.

Poor revenue model, low footfalls-to-sales conversion and lack of special purpose malls have dented the "mall magic", retailers and consultants who participated in the survey said.

The survey found some malls are operating at 60 per cent occupancy, while others are struggling with less than 20 per cent. For 250-300 odd malls that have come up over the last two years, 70-80 per cent spaces were vacant, the survey found.

The Assocham survey supports a finding from a "Malls in India" report released by Images Research last month, which found that over 90 per cent of India's malls are struggling. (Failed malls in India point to soured retail boom)



In the two key cities of Delhi (including national capital region) and Mumbai, 55 per cent and 52 per cent malls were vacant, the Assocham survey found. It's not surprising then that these two cities have witnessed the sharpest decline in mall rentals.

Rising vacancy has forced many developers to waive off rent for up to six months. The ones that failed to attract large retail brands despite drastic measures are shutting down, the survey found.

The shutdown of malls is bad news, not only for realtors, but also for the retail industry, which has emerged as a big avenue for employment generation. According to the Images Research report said, India's retail sector is set to grow at an annual rate of 16 to 19 per cent, reaching Rs 56.8 lakh crore ($901 billion) in 2016.

Unbridled expansion and economic slowdown have hurt consumer spending, but a number of other reasons have also led to declining footfalls in malls, the Assocham survey found.

Some malls are struggling because of poor location; others have poor design and parking facilities. Multiple taxes, lack of clarity in policies and shortage of experts in areas such as supply chain and store management have also contributed to rising vacancy and falling footfalls, the survey found.

The Assocham survey was conducted among 650 leasing managers, representatives of malls' management, strategist, marketers and supervisors in Delhi-NCR, Mumbai, Ahmedabad, Chennai, Kolkata, Hyderabad, Chennai, Bangalore, Chandigarh and Dehradun.