“Select the city for initiating operations as carefully as you would select a bride for inhabiting your home” – we have replaced the word ‘architect’ with ‘city’ in this famous extract from ‘The Fountainhead’ by Ayn Rand.
The reason is quite obvious and straight. And the context here is India’s much-vaunted IT city, Bengaluru.
“Bengaluru means big money…” – Rajan Malhotra, CEO, Big Bazaar
“There lies an opportunity…” – Vikas Bagga, VP, marketing and corporate affairs, M&B Footwear
“The city of choosers…” – Hemchandra Javeri, Industry veteran
“Bengaluru’s high streets are a success…” – JLLM
Retailers and brands have been unapologetically bullish on their expansion plans for Bengaluru. Chiefly on the strengths of increased salaries, evolving lifestyles, a slew of imported luxury brands, and probably an urge to be noted as host to millions of brand-conscious consumers in the country, Bengaluru has emerged as one of the most preferred retail destinations in the country.
Many national and international brands have been quite unanimous in their strategy of locating their biggest Indian outlet in Bengaluru. Besides exclusive brand outlets, numerous companies have been exploring options of setting up luxury high streets and shopping centres in the city.
According to an industry observer (associated with one of the leading retail, real estate and market research companies), high streets in Bengaluru seem to have gained more popularity than the air-conditioned shopping centres and malls. “People here prefer shopping in the open and, hence, the concept of enclosed shopping centres in the city is a failure. High streets including Brigade Road and Commercial Street have emerged as viable markets for retailers and brands. Retailers prefer opening a standalone store in the high streets, and will probably continue to do that,” the person said.
The IT revolution in the city might also be a reason for developers not being keen on coming up with new malls and shopping centres. “Developers are more aggressive on building new IT Parks as they can very easily pocket a huge amount of money from that,” according to the observer.
In the research titled ‘High Streets of India: Embracing Change’ by Jones Lang LaSalle Meghraj (JLLM), revitalisation of high streets in India for allowing inclusive growth of retail is the new buzzword among the retail fraternity. JLLM explained that retail supply in the city is limited to inner locations of high streets.
“Despite the high valuations and the spectre of time-to-time sealing in the non-regularised commercial streets, Bengaluru’s main high streets have been successful in targeting consumers as well as national and international retail brands,” says the report.
According to an industry veteran Hemchandra Javeri, “Bengaluru consumers are evolved and shop at high streets as well as malls in the city. Primarily, the ones looking for entertainment prefer malls, while high streets are the real shopping destinations.” Javeri has considerable understanding of the market as he has been instrumental in the launch of premium brands while he was president of Madura Garments.
It’s not only the high streets or the city’s central business districts (CBDs), but also the markets of Koramangala, Indiranagar, Airport Road, Jayanagar and Malleshwaram that have been a jolly witness to the openings of renowned retail outlets. Pantaloon Retail, which owns the country’s largest hypermarket chain Big Bazaar, has already reserved space of around 10 lakh square feet in these parts of the city.
Speaking to Indiaretailing about the company’s understanding of Bengaluru as a potential market, Rajan Malhotra, CEO, Big Bazaar, said, “We have already made a huge and successful presence in the city. Bengaluru means big money for us as the huge middle-class population is prepared to spend. We have already opened eight Big Bazaar outlets here, and all are doing well.”
“Before launching any store in a city, the catchment areas should be studied properly. Companies should invest a large chunk of their budget in studying the market potential and the viability of their brands. In our analysis of Bengaluru market, we found that the city is ably suited to our modus operandi,” said Malhotra.
The company plans two more Big Bazaar locations in Bengaluru, taking the total to 10, which means almost every potential area will have one Big Bazaar with not less than 40,000 square feet. According to Malhotra, Bengaluru looks set to have the largest number of Big Bazaar outlets in the country.
Besides, some high-end brands have also made large openings in the city. In 2006, Jeans major Levi’s had opened ‘Levi’s Square’, its largest store in the Asia Pacific region and the second largest in the world, at over 9,000 square feet, in Bengaluru.
Citing reasons for choosing Bengaluru to open its largest store, Shumone Chatterjee, country manager, Levi Strauss India Pvt. Ltd said: “Bengaluru is not only a vibrant market, but is also the third largest revenue-generating centre for us in India. After Delhi, it is the most important market, and the company also has a nostalgic link since Levi’s started operations in India 15 years back from here.”
Close on the heels of the Levi’s launch, Adidas India inaugurated Asia’s largest Sport Performance Centre in Bengaluru. Spread across 9,000 square feet and over two floors, the store showcases a wide range of Adidas athletic footwear, apparel and accessories. Nautica’s largest outlet in India is also in the city.
According to the government estimates, Bengaluru is the seventh most affluent city in India. The city households have an average annual expenditure between Rs 50,000 and Rs 1 lakh, while 40 per cent of the city’s population has annual incomes ranging between Rs 70,000 and Rs 1.4 lakh.
Bengaluru’s population has increased around 30 per cent. It is estimated that over one-third of the 15-45 age group constitute a captive consuming class, and to tap this potential range of consumers, retailers and brands will have to be make apt decisions – be it to open in a mall or to go for a standalone store in a high street.
– Satrajit Sen