Home Retail A Model to Turn a New Leaf in Indian Retailing

    A Model to Turn a New Leaf in Indian Retailing


    A metaphor close enough to describe the dynamism of the Indian retail sector would be that of the Big Bang theory. Triggered by giant collision courses involving several thousand unorganised retailers occasionally rubbing shoulders against smart , the Indian retail sector, following the years of heating and cooling, has evolved into a strong all-encompassing mass.

    Today, topping the Global Retail Development Index for the third consecutive year as the most attractive market for retail investment, India has one of the most vibrant retail sectors in the world, where huge malls and supermarket chains co-exist with below-the-line traders.

    Currently, there are 12 million retail outlets in India, which is estimated to triple by 2015. The 25 per cent projected increase in retail growth illustrates the strong fundamentals of the sector, which is expected to contribute to 22 per cent of India’s GDP by 2010. The fastest growing segments in retail are, not surprisingly, wholesale cash-and-carry stores, supermarkets, and hypermarkets. Shopping malls are another growth segment, with over 100 malls in the country now and over 600 malls under construction – mostly in Mumbai, Delhi and other A1-class cities.

    One of the key challenges of the Indian market is to build organised retail. Concepts like franchising are only now gaining currency, and I recall the tremendous effort that had to be put in even in the late ’90s to build a fashion retail chain through international franchises.

    The mindset of the typical Indian customer, however, has shifted over the years. Today, global brands have high visibility and awareness among urban customers, who drive the organised retail sector.

    This change was relatively slow and has only hastened now with the economy gaining momentum. Reports show that the retail sector grew from US$198 billion in 2001 to US$226 billion in 2005 – a modest 14 per cent growth. However, the organised retail sector grew by 93 per cent from US$3.96 billion to US$7.68 billion in the same period, though its share of the total grew modestly from 2 per cent to 3.4 per cent.

    A paradigm shift is projected for the organised retail sector, which is one of the areas where Emaar’s retail expertise will make a difference. Emaar’s approach to retailing is not limited to developing big malls – as has been proven with The Dubai Mall, one of the world’s largest shopping and entertainment destinations.

    Emaar’s approach to retailing, centred on its communities, will gain more currency in India with the numbers in the consuming class increasing. The high disposable income, gained from economic growth, has pushed the total number of households in the consuming class from 26.5 million in 2001-02 to 40.8 million in 2006-07. These are the consumers, who are also the end-users of the master-planned communities and residential colonies in India.

    It is estimated that in the next three years, over US$560 million will be invested in retail sector expansion in the country – resulting in 50 hypermarkets, 305 large department stores, 1,500 supermarkets and 10,000 exclusive retail showrooms. At least one-third of the multi-brand outlets are projected to be converted to exclusive outlets.

    In this scenario, the concept of neighbourhood retailing as promoted by Emaar Retail will become more significant. Emaar’s retail ethos is driven by one key philosophy: Deliver residents in its master-planned communities the services and products they need in a friendly ambience, and back it up with amenities such as parking and leisure choices.

    There are several striking parallels between the retail sectors of India and Dubai. For one, the retail sector of Dubai was predominantly led by Indian traders – an association that goes back to several centuries. The evolution of Dubai’s retail sector as a truly world-class shopping destination was swift and phenomenal, and in this growth, shopping malls have played a key role.

    Dubai’s shopping malls have removed the dichotomy of shopping and leisure, and created a perfect blend of retail and entertainment that appealed to families – both residents and visitors. The integrated lifestyle approach that drives the development of The Dubai Mall, the flagship development by Emaar Malls Group, can also serve as a referral point for India’s retail sector.

    Emaar Malls Group – a subsidiary of PJSC, which through a joint venture with MGF Land Development is the largest foreign direct investor in India’s real estate sector – has helped transform the look and feel of shopping malls. The operational philosophy of Emaar Malls Group is to design shopping malls as vibrant retail and leisure destinations.

    The Dubai Mall, for example, is redefining the shopping and leisure experience with its rich array of components including the world’s largest indoor Gold Souk; one of the world’s largest aquariums featuring 33,000 living animals; an Olympic-size ice rink; an entertainment section including the region’s first SEGA indoor theme park; and ®, an 80,000 square feet children’s ‘edu-tainment’ centre.

    The Gold Souk is designed to reflect the rich Arabic heritage blended with the modern features of The Dubai Mall, and will showcase a collection of over 220 of the region’s most trusted gold and jewellery retailers. At the souk, gold and jewellery can be readily purchased or tailor-crafted. The aquarium, at 51m x 20m x 11m, will feature the world’s largest viewing panel measuring 32.8m in width x 8.3m in height. With the capacity to hold 10 million litres of water, the aquarium will illuminate the marvels of the ocean floor and showcase a diverse collect