Home Retail Bangalore Rises to Third Spot among India’s Retail Destinations

    Bangalore Rises to Third Spot among India’s Retail Destinations

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    Bangalore’s retail journey has been escalating with several international and national brands setting-up their retail stores in the city. Bangalore’s favourable demographics, robust economy, rising per capita income, easy availability of credit and large-scale retail developments have fuelled the retail boom. Growth in the IT/ITeS industry has led to migration of the educated middle class to the city, consequently steering residential developments as well. Growing population with high disposable incomes has led to emergence of the city as a preferred retail destination by both national and international brands. Over the years, retail spaces in the city have witnessed an evolution in terms of design and quantum of space. By 2016, Bangalore is expected to witness an addition of approximately 5.67 million sq.ft.

    Bangalore today has emerged as the country’s most preferred retail destination after Mumbai and Delhi with the total operational mall space accounting to 7.65 million sq.ft. with a vacancy of 7 percent attributed to intelligently aligning mall formats to the demographics of the locality. As the city grows laterally, suburban neighbourhoods in Bangalore North, Outer Ring Road (ORR)-Sarjapur and Kanakpura Road stand out as ideal locations for upcoming malls within the next three to five years. Around 13.79 million sq.ft. of planned mall space has been projected to aid the lucrative expansion of large-scale retail formats in these areas, further supported by rapid infrastructure development and proliferating residential complexes.

    Shopping malls in Bangalore can be predominantly categorised as neighbourhood, community and regional malls based on the anchor tenant, gross leasable area and size of the trade area it serves. While neighbourhood malls focus on daily needs of the immediate locality and are usually anchored by a supermarket, community malls additionally offer an extensive range of merchandise such as home furnishings and house departmental stores and multiplexes. Elements Mall with Auchan hypermarket as an anchor tenant and Vaishnavi Sapphire Mall with More supermarket as key tenant are amongst the upcoming neighbourhood malls conveniently located near or around sizeable residential areas.

    A regional mall in comparison offers an array of entertainment, exclusive dining options in addition to a retail tenancy mix potential, to cater to the trade area ranging from 5 to 15 km. Brigade Orion at Dr Rajkumar Road, Mantri Square at Malleshwaram, and Phoenix Marketcity at Whitefi eld are established along this format attracting footfalls due to their exclusive entertainment facilities. Planned mall by Nitesh Estates at Indiranagar and Mantri Mall at Agara Junction are likely to be positioned as regional malls by virtue of their size and catering to a larger Catchment.

    Bangalore also boasts of a specialty mall, wherein the retail stores have a unified theme and are anchored by premium MBOs and accompanied by fi ne dining and entertainment facilities. This format relies on discretionary income expenditures and provides one-stop shopping experience for a specifi c product type. The Collection, UB City is a fine example of this format and has successfully established the concept of luxury retail in the city.

    Until 1997, wholesale retail was restricted to the “petta” regions of Bangalore, but with Government of India (GoI) permitting 100 percent FDI in cash-and-carry formats, a radical twist to the concept has led to the entry of major cash-and-carry players in the organised retail sector with Metro Cash-and-Carry and Decathlon launching their stores. The stage is set to witness expansion in organised wholesale retail with international players like Walmart entering the market. Salarpuria Sattva in collaboration with Future Group is set to launch the colossal World Market at Old Madras Road, which will also influence the retail orientation and market statistics of the region.

    Until the last decade, development of malls was at a nascent stage, but today developers are keen to experiment with open air malls while the city’s retail infrastructure progresses towards a differential phase. Bangalore is expected to see entry of new mall formats including a strip mall and a town centre to accommodate advancing retail trends. One MG by G-Corp despite being an enclosed mall also hosts a multi-level retail store configuration facing the street, coherent with the design of a strip mall. The recently proposed Karle Town Center is set to align the vital characteristics of a typical town centre amidst a public space, re-creating an essential downtown ambience.

    Apart from the innovative mall formats, the product distribution in malls is essential to the increase in consumers. In community malls, anchor tenants occupy almost 40–50 percent of the total mall space, while in regional malls this fi gure increases to 50–55 percent approximately. These anchor tenants include popular apparel or footwear brands, hypermarket chains and also entertainment options. The hierarchy of eminent apparel and footwear tenants present varies among large-scale departmental stores and singular vanilla stores. Vanilla stores are observed to be dominated by apparel and footwear retailers followed by F&B tenants. F&B segment is expanding with developers venturing a step further from the regular food courts and willing to accommodate fine dining options in the malls.

    In the recent past, entertainment in retail malls was confined to multiplexes, but today it has grown in status to a predominant anchor. Popular malls such as Brigade Orion at Rajaji Nagar and Park Square at Whitefield have consciously roped in gaming retailers such as Blu-O, Ameoba and Timezone to provide extensive entertainment options for its growing young clientele.

    Although there is substantial growth in mall formats in the city today, shopping mall rentals across the heart of the city continue to remain stable since 2009. This can be attributed to the increase in space supply and better infrastructure in secondary and peripheral business districts. Mall rentals have appreciated between 5 and 12 percent since 2010 and malls are likely to contain this growth trend in the short term.

    Shift in the developers’ interest to construct large-scale residential complexes in neighbourhood of Bangalore North and Old Madras Road has paved the way for many retail projects planned in these micro-markets. Moreover, the connectivity by Bangalore Metro is likely to provide an impetus within the next three to fi ve years, and these locations will account for up to 70 percent of the upcoming mall space supply. Similarly, ORR-Sarjapur is projected as a potentially attractive micro-market for retail development due to the lack of existing and under-construction mall space.

    The anticipated relaxation of FDI in multi-brand retail is projected to strengthen the demand for retail space in the city. With conducive government policies, infrastructure advancements, a healthy increase in population, higher disposable incomes, Bangalore is destined to fl ourish as the next most sought-after retail destination in the years to come.