1. 42 > Shopping Centre News > JANUARY-FEBRUARY 2010
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JANUARY-FEBRUARY 2010 > Shopping Centre News > 43
Non-Rental Income (NRI) or Commercialisation is one of the growth
areas for the upcoming shopping centre industry in which the centre
sells the right to have a presence in the mall to third party companies
wishing to promote or sell their brand or product to the shoppers and
providing valuable income streams.
Types of NRI activities:
Casual Mall Leasing • Retail Merchandising Units (RMU)
• Fixed Kiosks
• Temporary Storage
Services • Pay phones
• Gift cards
• Information kiosks
• Kiddy rides & amusement
• Vending
• Valet parking
• Photo booths
Advertising • Posters (internal, external and toilets)
• Plasma screens, Digital Display Units & Video walls
• Banners and danglers
• Table tops and floor graphics
Promotions • Mall promotions & Sales promotions
Sponsorships & Alliances
IT & Telecom
Mall Commercialisation
Non Rental Incomes
By Vythnathan Mahalingam
centre to centre – depending on
the size of the scheme, shopper
profile, geographical location and
physical space availability – but
predominantly fall into one of these
categories:
• Casual Mall Leasing
• Services
• Advertising
• Promotions
• Sponsorships & Alliances
• IT & Telecom
There are some grey areas
where what might be core revenue
(a retailer with a long-term leasing
arrangement) for one centre,
might be considered as a non-
rental income stream for another.
An example of this might be a
food outlet operating from a kiosk
but with a long lease. A crèche/
Recently,
NRI has been a buzzword in
the shopping centre industry
worldwide. More and more brand
managers and product managers
are beginning to realise the value of
promoting to a massive number of
people in an environment that they
have chosen to be in, as close to
point of purchase (POP) as can be
achieved.
It is important that NRI
activities promote or reflect the
centre’s brand values. While
such activities may differ from
play centre might be partly or fully
funded by one centre (and hence
be a cost that the centre chooses
to bear to increase dwell time or
footfall), whereas, in another centre
a childcare facility might generate
revenue.
In India, NRI or
commercialisation is in a very
nascent stage and is evolving
into an industry in its own right,
enhancing customer experience,
supplementing marketing activities,
contributing many thousands
to operational expenses such as
common area maintenance (CAM)
and of course generating significant
capital values to the property.
Merits of Commercialisation
• Creates value: Can create
significant financial value in
shopping centres and generates
additional revenue from
non-productive mall spaces.
RMUs and kiosk retailers
pay significant rent as well
as it becomes a wonderful
opportunity for the advertisers
and brand promoters to
display to a large segment
of customers who visit the
shopping centre. This can
help in increasing the Net
Rentable Income from an asset
management perspective.
• Adds variety and extends
the retail mix offer: RMUs,
kiosks, promotions, and
commercialisation activities and
services can create points of
difference between centres and
can counteract against excessive
uniformity. Also, it can sell wares
that complement the existing
retail mix with seasonal offerings
and products that appeal to
the demographic profile of the
centre.
• Enhances shopping
experience and promotes
shopper interaction: Retailers
and promoters operating within
the open mall are more visible
and able to engage passers-by
more easily, and have closer
interaction with customers.
Exhibitors of children’s toys, for
example, can demonstrate their
products such that families can
get involved in trying things out
before they buy.
Spring Fashion Show at the Oracle
Mall in Reading, Berkshire, UK

2. 44 > Shopping Centre News > JANUARY-FEBRUARY 2010
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JANUARY-FEBRUARY 2010 > Shopping Centre News > 45
Business of commersialisation license holders like RMUs and kiosks should
not interfere with sightlines of permanent retailers in the mall, and should
not result in introduction of an external competitor into the centre.
• Helps brew new retailers:
RMUs and kiosks can serve as a
catalyst for new start-ups. There
is less risk to a retailer in taking
a small kiosk on a short-term
lease or license than in taking
a long-term lease for a store.
When the business has proved
itself viable, the retailer can
discuss with the management
on the possibility of leasing a
store.
• Increases footfall and dwell
time: Interactive promotions
and children’s amusements
may keep some members of a
family occupied while others
shop. Plasma screens showing
a combination of information,
entertainment and advertising
can also increase dwell time and
reduce stress amongst shoppers.
Casual Mall Leasing
Casual Mall Leasing refers to the
short-term licenses given to RMU
and kiosk operators. RMUs add
interest, choice and vibrancy to the
mall. These units need to be placed
in an area where there will be
sufficient passing traffic to sell to,
without compromising the safety or
look of the mall. Care needs to be
taken that the presence of RMUs
do not obscure the sight lines or
access to the mall’s permanent
retailers. Changing the product
offer and positioning on a regular
basis helps to create greater interest
and increase sales. An operator
with access to numerous product
lines is likely to be experienced and
easy to deal with, also capable of
offering alternatives if a certain
product does not work for a
particular mall.
For the upcoming shopping
centres, the designers need
to review their designs to give
significant provision for the
commercialisation opportunities
especially the placement of kiosks,
RMUs, arenas for promotional
activities etc. A flat area is
preferable with sprinkler protection.
Each kiosk must have three metres
of clear space around it to allow
smooth flow of traffic. Also, avoid
positioning too many RMUs side-
by-side as this creates a barrier, and
inhibits customer movement across
the mall.
Consider the products offered
by existing retailers and whether
there are any gaps or possibilities
for complementary products. For
example, a phone accessories stall
outside a mobile phone shop could
prompt customers to look for a
new phone. Phone stores may also
be unable to offer a wide range of
accessories. Consult any retailers
who might be affected by the
introduction of a mall retailer offering
a competing product or service.
The centre management team
should work with RMU and kiosk
operators to ensure that the overall
business succeeds. This includes
communicating effectively and
trying to ensure that their business
model is viable. As per best
practices for RMU operators and
promoters, they are to be treated
like customers and receive as good
a service from centre management
as permanent store retailers are
given, including opportunities to
advertise in a centre’s news letter or
on the website.
In terms of rentals, RMUs can
be either flat rent or percentage
rent with increased rate during
the festive seasons like Diwali,
Christmas, and New Year etc. It is
wise to ask for a month’s deposit
to maintain the presentation
standards.
Advertising
Shopping centres prove to be
the perfect location to present
the products, right at the point
of purchase and it is becoming
common practice for the centre
owners to work with third party
media companies to provide
advertising spaces in and around
their centres. Before signing up any
contracts, attention should be given
to location of the media hardware,
control of message, power and
quality.
Always, the priority needs to be
given to the retailers and the centre
signage. Advertising should be
complimentary to it and should not
clutter around it. A few important
points must be taken into account
when it comes to advertising in
malls. For instance, do not overdo
it as blank space also has value.
It does not serve any constructive
purpose to overwhelm customers
by bombarding them with
advertisements and other messages.
Besides, there is also a risk of
diluting the offering by excessive
‘back-of-door’ advertising.
Also, the location must be given
due thought such that plasma screens
are positioned where you want
people to congregate, and displays
are put up where they can be seen
without viewers obstructing other
customers and without blocking store
entrances. It is better to have large
screens, showing a combination of
news, advertising, local information
and centre information. As with all
commercialisation activities, sightlines
should be maintained.
It is a good strategy to combine
external advertisements with
advertisement products and
promotions within the centre.
Retailers want to be able to
advertise within a centre at little
or no additional cost. Thus, centre
managers need to work out a
reasonable compromise between
advertisements to generate revenue
for the centre and those to help
retailers increase their own revenue.
It is important to ensure that
digital displays are in working
condition and do not suffer from
glare. Broken touch-screens or
displays are counter-productive
and irritate customers as well as
advertisers. Displays that cannot be
seen or read because of glare from
natural or artificial lighting are also
of little value.
Some centres are attempting
to send messages to customers
carrying Bluetooth-enabled phones,
such that they can access third party
promotional offers and content
linked to retail sites, and also access
information about the shopping
centre itself.
Promotions and Alliances
This fast emerging area of
commercialisation brings together
the aspiration of centre owners to
generate revenue and create an
attractive destination, with the wish
of promoters to reach the many
customers visiting a centre.
There is scope for conflict if
the promotion is perceived to
have a detrimental impact on
trade or creates problems due to
crowd control or security. But the
promotions tied to products sold in
the centre work well. This could be
a promotion for a skin care product,
book launch or computer game.
Experiential promotions which have
appeal to a wide audience and so
genuinely increase footfall – rather
than simply capture customers
who are already there – are also
endorsed. There can be some
overlap with marketing activities.
For example, a fashion show which
features clothes provided by retailers
but does not generate revenue
directly for the centre owners would
be a marketing event, whereas one
where retailers pay to exhibit would
be considered commercialisation.
Large scale promotions, such
as a fashion show or a car launch,
require a suitable promotion space
with wide access. Not all centres
have such space but the owners
need to look into this aspect at the
design stage itself.
Permanent retailers, particularly
like promotions which serve as
tasters for products they sell, where
free samples are handed out to
customers with discount vouchers
Placement of digital displays
should ensure that they can
be seen by viewers without
obstructing other customers and
without blocking store entrances.

3. 46 > Shopping Centre News > JANUARY-FEBRUARY 2010
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JANUARY-FEBRUARY 2010 > Shopping Centre News > 47
About the author:
Vythnathan
Mahalingam
is an architect
with Masters
in Advanced
Construction
Management and
has got a specialisation in Shopping
Centre Management from British
Council of Shopping Centres (BCSC,
UK). With an industrial experience of
over five years in building operations
and property management, he is
currently performing a national role
with WT Retail Services - a JV between
Pelorus Property Group (Australia) &
Assetz Property Groups (Bengaluru) and
is responsible for setting up business
operations in India. Vythnathan is based
out of Bengaluru and his current focus
is implementation of best practices and
intensive asset management services to
shopping centres.
to be redeemed in stores. If a
promoter is also selling a product,
this should not duplicate a product
that is already sold in a store in the
centre. For e.g. A centre manager
agreed to a promotion for a major
coffee brand assuming they would
be handing out sachets, however,
they were actually making cups
of coffee to distribute free to
customers at the mall, which
had serious consequences for
trade at the centre’s coffee shop.
Allow retailers to get involved in
relevant promotions by giving them
sufficient notice of forthcoming
events.
Try to match the promotion
with the demography and the
positioning aspects of the centre.
Some centres might be more
appropriate for the launch of a
Mercedes car, whereas a new mini
Nano might be better launched
elsewhere.
Sponsorships and Media
Partnerships
Sponsorship is very different
from the other areas of NRI in
that it requires true partnership
to be formed between the centre
management and the third party
brand, with clear objectives agreed
upon and closely monitored.
Sponsorship partners should hold
some relevancy to the centre or the
area being sponsored.
Local media always have similar
objectives as most common centre
managers – for instance a radio
station needs listeners like how a
centre manager needs shoppers.
commercialisation streams in a
shopping centre. The policy must
include the following:
(a) A floor plan (a
“commercialisation plan”) that
clearly shows:
(i) the mall areas within the
shopping centre in respect of which
casual mall leasing licences may
be granted, and the size of those
areas;
(ii) The part of the mall area
within the shopping centre
designated as a centre court (if any),
and the size of that area;
(b) The number of sales periods
for the shopping centre in each
accounting period;
Managing agents must avoid
granting a casual mall license
in respect of an area that is not
included in a commercialisation
plan, as in force, in respect of the
shopping centre.
Care must be taken to ensure
that the business conducted by
the holder of a commercialisation
license in respect of a shopping
centre does not substantially
interfere with the sightlines
to a permanent retailer’s shop
front and also should not result
in introduction of an external
competitor into the centre.
Steps Ahead
It is essential to have a
commercialisation strategy for
each shopping centre to be able to
decide what type of retail activity
is to be included and when to say
“No”. This strategy should provide
a decision making framework and
will not put the management in
collision with mall’s permanent
retailers or infuriate any shoppers.
This strategy needs to be presented
to the retailers in the tenant
meetings and has to be upgraded
based on their inputs. This will
indeed help them to participate
or sponsor any of the proposed
activities. One of the important
aspects should be to protect
the sight lines and safeguard
any pedestrian movements into
stores. The strategy document
should also emphasise the quality
aspects of the products sold or
the advertisements displayed. It is
essential to measure the impact
of commercialisation using some
analytics like footfall data, shopper
satisfaction index and fine tune the
strategy on a periodical basis. 
Adjustment of CAM Charges / Outgoings
The owners or the managing agents must, before making an
adjustment after the end of an accounting period in accordance with
the provision of a retail shop lease, reduce the total amount of the non-
specific outgoings or maintenance expenses to which lessees of retail
shops in the retail shopping centre are liable to contribute in respect
of the accounting period by an amount calculated in accordance with
the following formula in relation to each casual mall licence granted,
permitting trade in the casual mall licence area during the accounting
period:
R = (TO/ TLA x TD) X CMLA X CMLD
Where,
R= the amount of the reduction;
TO = the total amount of the non-specific outgoings to which lessees of
retail shops in the shopping centre are liable to contribute in respect of
the accounting period;
TLA = the total of the lettable areas of all the retail shops in the
shopping centre in square metres;
TD = the total number of days in the accounting period;
CMLD = the number of days during which the person granted the
casual mall licence was permitted to trade in the casual mall licence area
during the accounting period;
CMLA = the casual mall licence area in square metres
The more the listeners, the more
advertising revenue they can secure.
So it is no surprise that local media
see mutual benefit in working
together. We might need to explore
this opportunity as a potential
brand building exercise as well as
a source of NRI. The type of deal
may vary such as “Diwali Lighting
brought to you with Red FM!”, to
more targeted activities like local
newspaper sponsoring the centre’s
customer service awards. Some
media are looking for exclusive
rights to be the sole media used
inside the centre and become the
main partner for any in-centre
promotional activities.
Title rights can also be a new
area to explore, for example, a food
court named as “Pepsi or Coca
Cola-Food Joint”, may involve a
specific customer service (a lounge
facility – eg “Kingfisher Lounge”)
etc. In return for the sponsorship
payment, the third party will be
looking for exposure of the brand
in the centre and gain some form of
exclusivity.
Services
Services such as amusement
rides, vending machines, photo
booths, gift cards etc – even if they
do not bring much revenue – bring
in some intangible benefits to the
centre. Vending machines and
other services have a useful role to
play, and in fact, in smaller centres
these forms of commercialisation
are generally the main sources of
revenue. The contracts can be on
agreed terms based on royalties or
can be a percentage of the products
being purchased.
The general consensus is that
in larger centres, these services and
activities should be kept away from
the main mall area, and should be
“offered to consumers, as part of
the package, in an off-pitch way.”
The positioning of equipment and
services needs to be considered.
It would be worthwhile to have
an area in a centre dedicated to
services such as gift wrapping,
photo booths, and clothes
alterations, key-cutting, shoe-
mending, and possibly other
services such as a post office.
IT and Telecoms
In addition to the IT
infrastructure, telecom providers
also can explore the advantage of
advanced technology by introducing
better location-based services to the
consumers in the shopping centre.
It includes customer hot spots,
charging stations, internet access,
Wi-Fi services and promotional
information relevant to that
location.
Need for a Commercialisation
Policy
It is advisable to have a policy
to have adequate control on the
Mall design must account for suitable promotion space. Large scale
promotions, such as a fashion show or a car launch require space with
wide access.
Promotions tied to products sold in the centre, eg promotions for a skin
care product, work well.