Indian retail developments and the road ahead

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Like many sectors of commerce in India, the potential for India’s retail growth is huge. An ever growing middle class with changing aspirations, some 65 per cent of its 1.2 billion people under the age of 35, more disposable income and more populated urban centres are fueling the need for development. The road ahead although bright will have its challenges in how we continue to manage these centres well. The prerequisite of getting the act right lies in knowing the need of the catchment and local communities and building a right shopping centre with a justified tenant mix.

With Modi’s Government there is a growing mood of expectation as he dates with many a world leaders to woo foreign investors to our shores. And although more work is yet to be done, the Government is taking steps to ease the flow of foreign investment and ownership, which will increase the flow of money into the retail market and see more foreign brands in India.

This will help new retail centres offer more choice for the avid shopper. India seems to be absorbed by Americas love for statistics, and yet more growth values continue to flood in, as we are to understand by 2020 its retail market worth is to double to one trillion USD. It will achieve a growth of 20 per cent per year and have a GDP of 10 per cent. Yet with all these statistics the “proof of the pudding” is how we can create sustainable retail developments that stand the test of time for whatever the financial model of the developer.

The e-commerce industry is also set to rise from $35 million to $100 million in the next two years. We see this beginning to happen already as the so called “brick-and-mortar” companies such as Croma and the Future Group, align with online retailers such as Amazon and Snapdeal. Exciting times for not only new retail growth but a change in our shopping experience. The “physical” retail model certainly for the long term still seems the more popular option, but the future holds a new realm of experiences and possibilities as we move to a more “virtual” online mode of consumerism.

The greatest of India’s challenges is in the provision of adequate infrastructure to cater for such large scale developments. In particular concern are the most densely populated tier 1 cities such as Mumbai. The city desperately lacks visionary leaders to “master plan” the city’s hunger for development and demand.

Currently Mumbai’s population sits at 18,000,000 already a burden to its present infrastructure. By 2025 we will see this number grow close to 27,000,000 inhabitants. How we deal with this magnanimous implication on both environment and infrastructure
is an issue that can’t wait and needs to be addressed immediately.

The only way we can create sustainable livable environments that ultimately improve the human condition is to provide “our people,” basic needs for cleanliness, mobility of travel and opportunity. So be it retail development or any other offer, these challenges remain issues fundamental to the heart of a prosperous India. Of course the demands for mixed use retail models will increase and with this the need for adequate Infrastructure. With these demands, we are continuing to expand our sector work (asset classes) and are beginning to venture into larger master planning developments; particularly where there is a large retail driven mixed use component.

Retail developments in India are certain to change in the next 10 years. We will see a growing demand for virtual stores, a more interactive and digital experience evolving and with this a change in the nature of the traditional centre. Much has also been talked about open retail offers as part of mixed use offers where the focus will be concentrated on the creation of open streets and the creation of great public space. Indeed we can certainly see some such centres already becoming popular in Gurgaon.

The challenges ahead are many, from the need for better infrastructure, tighter profit margins in the organised sector (gross margins 7-8 per cent lower compared to international centres), and an increasingly uncertain global economy. India however continues to mature and understand the long term needs of effectively managing any retail centre, with this vision we will see the “organised” retail model change and be a growing part of our lives and landscape.

zubin cooperABOUT THE AUTHOR: Zubin Cooper is the CEO of Bentel Associates. Bentel Associates is the joint venture between ICS Group, India and Bentel Associates International, South Africa. The views and ideas expressed in this article are his own.

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