The retail sector in India has been evolving at a swift pace. Rapid urbanisation and digitisation, rising disposable incomes and lifestyle changes – of particularly the middle-class – are major contributors to the revolution of the retail industry.
How do you see retail industry shaping up in India?
Retail is back with a big push. A lot of foreign brands are looking to enter India, a number of Indian brands are expanding rapidly, a number of new Indian brands are opening up retail stores. Equally, I see a huge amount of promptness within the Indian retail real estate on the bounce back of organised retail in India. Modern retail is growing fast. 10 years ago, the contribution of modern retail format was only 2 percent and today it is getting into the double digits.
Which retail format will come out clear-cut winner in future?
There will be newer formats that will be very important to get into the retail real estate spaces. F&B and new formats in entertainment will continue to do very well.
Anything which is experiential and cannot be bought online and has an ability to touch, feel, taste, hear and smell, those formats in the physical space will continue to do well.
With e-commerce expanding at a rapid pace, what is future of malls in India?
Expanding e-commerce in India has a positive impact on the physical retail real estate. E-commerce space cannot divulge into physical space. Both of them are integrating with each other like Walmart has recently bought Flipkart, Amazon in setting up its physical stores, there are number of e-commerce players which are planning to set up their retail stores and many e-retailers are also investing/ buying existing physical stores. We can say it is an integration of e-commerce and physical space.
What is the future of malls a few years from now?
Going ahead, technology is going to play a big role for both retailers and mall developers. The taste of the consumer coming in, the ability to drive the footfalls to the right stores, to understand the demographics of the people who are coming into mall are all going to be important learnings which the mall developer will pass on to his partners – the retail brands.
In future, technology will integrate the experience, partners and will help in driving the sales, deriving right retail formats in the malls. Just like in the more mature markets, where technology plays a huge role in the mall operation, similarly it will be replicated in India as well.
How can the malls stay relevant to the consumers for years?
It is true that a mall has to continue to change its skin. It is necessary to bring something new to attract different retailers. Change is a perennial process. Malls must continue to attract footfalls by adapting to change.
What is your outlook on retail spaces in Tier II cities and beyond?
Big retailers are occupying a huge space in Tier II cities as the profit margins are very high and the rentals are low. Also, since consumers coming to these stores have more time to spend, they have an ability to experience on the entertainment, leisure, retail and food. We are not only bullish on Tier II cities but Tier III cities as well. Retailers are often seen complaining about lack of good retail real estate spaces in India.
How do you see this changing in the future?
At this point of time, we are starved for good quality retail spaces. It is absolutely true that there are more retailers who want to get into the malls which are successful. We are hopeful that over the next 2-3 years there will be a better equilibrium because there are number of malls that are under-construction and it is expected that these malls will be able to cater to the increasing requirement of retailers.
I also think that these mall developers who are building up the malls have also learnt that how to build, operate good quality malls and how to attract right kind of retailers within those malls.