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Evolving Customer Preferences Driving the Growth of India’s Organised Retail Sector

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India’s thriving retail sector is grabbing the attention of global retailers like never before. Many retail giants are entering the market through joint ventures, thereby boosting the country’s organised retail segment.

By Kaustubh Chandra, Manager- Marketing & Leasing, Brahma Group

Currently, retail is one of the most vibrant sectors of the Indian economy, which has gained significant momentum. India is the fifth-largest international retail destination in the world and ranks 63 in the World Bank’s Doing Business 2020 report. Because of its growth prospects, the sector is attracting considerable attention from entrepreneurs, investors, and real estate developers.

The retail industry in India has seen significant changes over the years, resulting in a growth in the demand for Grade A retail spaces. According to Kearney Research, India’s retail industry is likely to expand at a 9% rate between 2019 and 2030, rising from US $779 billion in 2019 to US $1,407 billion by 2026 and then to over US $1.8 trillion by 2030. Another report by Colliers India states that institutional investments in retail real estate in 2022 jumped more than six times to USD 492 million, due to a strong rebound in business at shopping malls following the COVID outbreak. This uptick in investment reflects the growing confidence of investors in the retail real estate sector, which is expected to continue its positive trajectory in the years to come.

Technology: The Game Changer

Technology is now enabling shoppers to experience a convenient and fuss-free shopping journey, making high-end retail spaces the preferred choice for modern shoppers. Technology such as online payment systems, augmented reality, and virtual fitting rooms have made it easier for shoppers to find what they need, compare prices, and make purchases quickly and securely. This has led to more shoppers preferring to shop in upscale retail destinations where they can experience the convenience and security of these modern shopping technologies. Furthermore, creating an environment that attracts customers is an important goal for high-end retail spaces such as high streets and shopping malls. Unique features such as an appealing facade, sculptures, fountains, and lighting displays add to the overall ambiance and aesthetic vibes of the shopping malls, drawing in more customers and creating a memorable shopping experience. Moreover, the right combination of colours, textures, and lighting, creates a visual appeal that entices customers to stay and explore the malls’ myriad offerings.

Shopping malls provide easy accessibility, comfort, sophisticated infrastructure, and ease with value-added services. As a result, malls in India are seeing an influx of retailers, resulting in increased space occupancy. This trend is indicative of the fact that consumers are increasingly looking to shop in upscale retail destinations due to the ease of shopping and to enjoy the experiential aspects of shopping. To this end, Grade A mall retail space developers prefer adding experiential elements, such as interactive displays, to the stores to attract customers of all ages.

India Undergoing a Retail Revolution

With organised retail marching into the lives of aspirational consumers, India is currently experiencing a retail revolution, which is opening up a whole new world of opportunity for Indian consumers, retailers, and retail space developers. Consequently, numerous upscale, organised retail spaces have opened nationwide, and many more are in the planning stages. The growth of the sector is also attributable to the rising disposable incomes, which in turn, is driving the shopping trend among consumers. Also, India’s thriving retail sector is grabbing the attention of global retailers like never before. Many retail giants are entering the market through joint ventures, thereby boosting the country’s organised retail segment.

Organised Retail is the Future

High-end retail spaces offer all products across brands under one roof. This makes it easier for customers to find exactly what they need at the best price without travelling to multiple locations. Additionally, customers can enjoy self-service in an organised retail setting and quickly pick what they want. Furthermore, high-end organised retail spaces offer several perks, such as multi-level parking facilities, entertainment zones, dining opinions, and much more. Such shopping destinations offer a great opportunity for families and friends to spend quality time with each other.

Furthermore, a well-planned design of such retail spaces enables customers to take their time browsing products without feeling rushed or overwhelmed. Thus, the experience of Grade A quality retail is becoming more popular among new-age consumers who prefer instant gratification in everything they do. Moreover, new-age consumers increasingly seek quality, convenience, and experiences that fit their lifestyles. Consequently, organised retail spaces are increasingly becoming the preferred choice for shoppers, as they provide access to a wide variety of products, services, and experiences.

Demand for Quality Retail Space 

This year, leasing activity is anticipated to be robust because of strong domestic consumption and solid supply pipelines projected for 2023. In addition, more international retail companies are expected to debut in India this year, further solidifying the country’s organised retail sector. Renting or owning space in a high-quality shopping mall can benefit retail brands by positioning them in a prime and easily accessible location. Additionally, amenities such as low operational costs, sophisticated security and surveillance systems, elevators, and abundant open spaces enhance the productivity and cost-effectiveness of their business operations.

With global retailers showing increasing interest in entering the Indian market to enhance their physical presence, mall developers are witnessing healthy growth in leasing activities. Consequently, they are gearing up to accommodate the surged demand for quality retail space among domestic and global retail brands. Recently, CBRE reported that retailers in India leased almost 4.7 million square feet of retail space across the top cities in 2022, the highest since 2019. Experts predict that retail leasing in 2023 may surpass even the record-breaking 6.8 million sq feet of new space retailers collectively occupied in 2019.

Conclusion

The demand for high-end retail space in India is booming at a blistering pace. It is set for a bright future with favourable government policies and emerging technologies. According to a report by JLL India, 60 malls, with a combined retail space of 23.25 million sq. ft, are slated to open across the top Indian cities between 2023 and 2025. The report further states that approximately 53% of the upcoming supply would come from Delhi NCR and Bengaluru. This indicates that the demand for Grade A retail space is witnessing an upward trend in India, driven by upbeat sentiments among retail brands, consumers, and mall developers.

This article was first published in the March 2023 issue of Shopping Centre News Magazine. 

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