Google News
spot_img

New directions in Indian retail real estate evolution

Must Read

Indian retail real estate spaces have undergone tremendous evolution since the advent of organized retail in the early 90s. There has been transition in retail real estate sector in terms of design, size, provision of facilities, tenant mix as well as in terms of business models. From the emergence of organized retail formats in 90s to the rising popularity of large-size malls dotted with international and domestic brands today, it’s indeed been a fascinating ride. The Indian retail sector is also becoming quite competitive with the entry of online retailers over the last couple of years.
With rising disposable incomes, growing urbanization and changing aspirations, there has been surge in consumption. Today, shopping is not limited to just buying products – shoppers are seeking of differentiated experience and expect innovations. For this reason, leisure and entertainment have become imperative factors in the success of shopping malls today.
Developers today are making their retail spaces more vibrant; the focus is now on providing an experiential shopping experience to consumers. Design plays an important role in offering a shopping experience of international standard, along with upgraded ambience. In the metros, the average size of malls has increased over the years in order to provide a wholesome shopping experience to consumers. These malls now offer a comprehensive tenant mix and adequate parking spaces.
More than ever before, the tenant mix now tends to take into account the catchment, consumer demand and other socio-economic factors. Special emphasis is laid on zoning and smooth circulation in the mall. The entry of international brands has led to a literal jostle for space within quality shopping malls. The arrival of these brands has induced mall developers to develop high quality spaces with good infrastructure.
Malls have started focusing on offering a real value proposition to consumers, and services such as concierge, valet, tailoring, foreign exchange, car wash, travel desk, gift wrapping, rent a stroller and infant feeding rooms have become commonplace.
We are also witnessing a major sea-change in the business models that drive organized retail in India. In contrast to the strata-titled malls developed earlier, the ‘lease only’ model has gained prominence today. This model has been proven to lead to better accountability and mall management. Within, the lease-based model, there have been further innovations such as the introduction of minimum guarantee and revenue share models.
The growing popularity of e-tailing has begun reshaping retail real estate spaces and shifting the purpose of brick-and-mortar retailing toward providing innovative and entertaining customer experiences. Owing to rising competition from e-tailing, categories such as F&B and entertainment have gained importance, as these cannot be provided by online retailers.
Although organized retailing has been growing in every city in India, the maturity in retail markets across different cities varies drastically. The large metropolitan cities have witnessed a transition from the emergence of small-sized malls in the mid-2000s to currently housing many malls with millions of square feet space, offering not just fashion and accessories but also emphasizing on entertainment and F&B. On the other hand, there are tier 2 and 3 cities which are still experimenting with the conventional big-box retailing formats. The markets in many of these cities are different from the metros in terms of demographics, culture and shopping behaviour and inclination of consumers.
Both malls and high streets are in demand today, as both have their own unique selling proposition. A brand’s visibility is generally higher on a high street than in a mall. High streets also generate higher casual footfalls. On the other hand, malls offer a climate-controlled environment with value-added facilities for consumers. The success of any retail destination depends upon the amalgamation of factors that include accessibility, convenience, variety in tenant mix and good infrastructure. Malls offer better conveniences and facilities, but the charm of high streets has also not faded away.
By offering sharp competition to traditional retail formats, e-tailing is changing the retail market dynamics in India. However, while e-tailing is gaining prominence, the importance of brick-and-mortar stores has not eroded. The experience and the touch points provided by physical stores cannot be matched by online retailing. Likewise, some categories like F&B, entertainment and leisure cannot be provided by e-retailers. Meanwhile, brick-and-mortar retailers are combating the competition from online retailing by right-sizing their stores and restructuring their expansion plans through proper research. These measures are now leading to better sales and profits for these retailers.
Transit-oriented shopping destinations such as airports, metro and railway stations have become popular owing to the convenience they provide to the shoppers. Categories such as F&B, books, gifts, electronics, footwear and jewellery are some of the categories that may perform well in such destinations. This trend not only benefits shoppers by the reduced travel time to shopping destinations, but also leads to more efficient utilization of the spaces in these prime areas. Since the footfalls in these areas are generally very high, retail brands will always benefit from opening their stores here.

Latest News

H&M opens 61st India store in Pune

The new H&M store is located at Kopa Mall.New Delhi: Swedish fashion brand Hennes & Mauritz (H&M) has opened...