Market sizing Building a mall Profit

Hi there,

I would be happy to share my thoughts on your question:

• First of all, can you please provide a proposal that I can review?
• Moreover, please keep in mind that most major strategy consulting firms have not used standalone market size estimations for a long time. While this does not mean it never happens, this type of case study question may not be very meaningful for both the candidate and interviewer, as only a few skills are being tested.
• That being said, simpler market size estimations may still be a part of a case study, for instance when estimating the revenues of the client is required.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

Hey, 

Market sizing for a case like building a mall involves estimating the potential profitability of the mall. The goal is to determine whether the investment in the mall will yield attractive returns. Here's an end-to-end approach to tackling this type of case:

1. Understand the Objective

• Clarify the Goal: Confirm if the goal is to estimate total revenue, profit margins, or ROI (Return on Investment). Understand the scope: is it the first year of operations or a longer period?
• Key Metrics: Revenue, Costs (operational, construction), Profit, ROI, Occupancy rates.

2. Clarify Assumptions and Gather Information

• Location: Understand the location's demographics, population size, and economic status.
• Size of the Mall: Clarify the size (square footage) of the mall.
• Types of Stores: Ask about the mix of anchor stores (big department stores), smaller retail shops, food courts, entertainment, etc.
• Target Audience: Understand who the mall will cater to—income levels, shopping preferences, etc.

3. Estimate the Revenue

• Foot Traffic: Estimate the number of people who will visit the mall daily, weekly, and annually. Base this on the population in the catchment area (area within a reasonable distance of the mall) and comparable malls.
• Average Spend per Visitor: Estimate how much an average visitor will spend per visit. This depends on the types of stores in the mall and the target audience.
• Revenue from Different Streams:
  • Retail Space Leasing: Calculate the revenue from leasing out retail spaces. This involves estimating the rental price per square foot and the occupancy rate.
  • Parking Fees: If applicable, estimate revenue from parking.
  • Other Income: Revenue from advertising, events, or partnerships.

4. Estimate Costs

• Capital Expenditure (CapEx): Cost of constructing the mall, which could include land acquisition, construction, permits, and fees.
• Operational Expenditure (OpEx): Ongoing costs such as utilities, maintenance, security, staffing, marketing, and management fees.
• Financing Costs: Interest on loans, if any, used to finance the construction.

5. Calculate Profitability

• e.g., Gross Profit, ROI, Breakeven 

Other Examples from my cases I teach: 

1. Estimating Market Size for a New Cinema in a City
2. Building a New Amusement Park

Hope this helps! :)
BR Alessa

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Hi,

For this, I think its important to clarify if its asking you to estimate Profit, or just Revenue.

For a mall - the bulk of the income i would argue would come from the leasing/rental fees of the tenants. 

To be fully MECE, consider also breaking down and accounting for all the different streams of revenue they could get - including event fees, advertising etc.