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Why South India is witnessing a renewed retail surge

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Industry leaders on the factors propelling retail growth in South India and their projections for future expansion metrics in the region

Bengaluru: South India is poised to see hectic expansions by retail brands in the coming years amid a surge in consumptions in those states.

Bengaluru-based tech-driven retail company Ace Turtle intends to double its offline retail store count in India from 100 to 200 stores by the end of 2024, with 35% of stores planned in South India. Multinational conglomerate Apparel Group is also planning to expand retail presence in the region to solidify its market position. The natural grocery store chain The Organic World is about to launch 100 stores across the region by the end of 2025.

As per a survey by Retailers Association of India (RAI), retail sales witnessed a 4% increase in December 2023 compared to 2022, with the Southern region experiencing a significant 7% year-on-year increase while North, West and East signalling a growth of 3%, 3% and 2% respectively. Retailers are enticed by the growth in the southern states.

The region is home to approximately 20% of India’s total population. This translates to over 250 million people providing a massive consumer base, states Nitin Chhabra, chief executive officer of Ace Turtle.

When the per capita income in India has grown at a compound annual growth rate (CAGR) of 9.3% for the last 10 years (2013-2023), some southern states have managed faster income growth than the national average with Karnataka leading at a CAGR of 14.7%, followed closely by Telangana at 13.7%, as reported by the Centre for Monitoring Indian Economy (CMIE) and the Press Information Bureau (PIB).

Discover the perspectives of industry leaders on the driving forces behind retail growth in South India and anticipated metrics for future growth in the region.

Growth factors

Retailers across diverse industries identify various factors for their expansion into South India.

Malabar Gold & Diamonds, a jewellery group based in Kerala, attributes its growth to the rising demand for gold in South India which leads in gold jewellery consumption, representing 40% of the total demand in India.

“The jewellery consumer landscape in the southern market is undergoing a notable evolution, particularly in cosmopolitan cities like Bengaluru, Chennai, and Hyderabad. These urban centres reflect a growing demand for new-age jewellery from discerning customer segments,” said M.P. Ahammed, chairman of Malabar Gold & Diamonds.

“Key states like Kerala, Tamil Nadu, Karnataka, Andhra Pradesh and Telangana contribute almost 60% to the national gems and jewellery market. While traditional designs remain popular, there is a growing demand for contemporary styles,” he added.

Fast-growing middle class in South India with increasing disposable income, leads to a higher spending on discretionary items like fashion and lifestyle goods, states Chhabra of Ace Turtle, which operates globally licensed brands such as Lee, Wrangler, Toys”R”Us, Babies”R”Us, and Dockers.

“Due to well-established IT hubs in Bengaluru, Hyderabad and Chennai and a higher rate of urbanisation in South India, there is an increasing adoption of modern lifestyles, especially among the younger generation,” added Chhabra.

Another contributing factor to growth is the comparatively lower real estate costs in key Southern markets like Bengaluru, Hyderabad, and Chennai, in contrast to Mumbai and Delhi.

“Advancements in transportation and logistics make it easier for brands to distribute products across the region. Development of modern shopping malls, high-street markets provide brands with diverse retail options,” he added.

The multi-designer jewellery house Aulerth places its trust in the responsive and curious consumer behaviour of South India for its expansion.

“We found the consumer base in Bengaluru and Hyderabad particularly responsive to learn about the ‘why’ behind what we do. We changed the way we see preciousness in jewellery, away from a focus on just materials, towards a focus on design, finesse in craftsmanship. Hence, these two cities figured early in our first store expansion drive,” said Vivek Ramabhadran, founder of Aulerth.

Chandrika Raamz, the ethnic menswear brand based in Banjara Hills, Hyderabad is rooting for the region from a fashion perspective.

“South India presents abundant opportunities due to the rich cultural landscape, where individuals actively participate in numerous events. The demand for occasion-specific clothing is high, making it a promising market for those catering to the varied sartorial needs,” said co-founders.

Vedant Fashions, the ethnic wear player renowned for brands like Manyavar and Mohey, emphasises the region’s tendency to exhibit consistent growth in wedding-related expenditures each year.

“South India signifies a thriving market for our business, aligning perfectly with our strategic focus on the wedding wear segment,” said Vedant Modi, chief revenue officer at Vedant Fashions Ltd.

Way more to go

The UAE-based Apparel Group, boasting a portfolio of brands including Aldo, Charles & Keith, Bath & Body Works, Victoria’s Secret, and Beverley Hills Polo Club is gearing up for expansion in South India.

“Recognizing the immense potential of South India’s fashion-forward consumers and the positive response from our existing customers, we are embarking on an exciting expansion plan to build a strong retail presence in the region, fostering deeper customer relationships and solidifying our market position,” said Tushar Ved, president of Apparel Group.

Ace Turtle intends to focus on Bengaluru, Chennai, Hyderabad for Lee, Wrangler and Toys”R”Us, meanwhile it also sees potential in cities like Coimbatore, Mangalore, Mysore, Trichy, Kochi, Visakhapatnam and Vijayawada due to growing middle class and rising disposable incomes, according to Chhabra.

Godrej Interio, the furniture brand in both home and institutional segments have set a target to generate revenue of around $350 crores from Southern India by fiscal year (FY) 2026.

“Currently holding 22% market share in the organised furniture sector in Southern India, our aim is to achieve a 35% share within the next three years. We plan to augment our retail presence by launching 10 exclusive showrooms and adding 180 retailers in the next three years,” said Dev Sarkar, senior vice president (B2C) at Godrej Interio.

Beyond the fashion, lifestyle and home sectors, certain food brands are also preparing to make their mark in the region.

Haldirams Nagpur Group’s new premium chocolate brand Cocobay is at its initial stage of journey in the region. “We want to penetrate in all major tier I & II markets of south India. We expect the South region to grow 2-3 times in the first three fiscal years,” said Adeesh Jain, general manager of Cocobay.

While The Organic World (TOW), a chain of organic and natural grocery stores owned by Nimida Group, is to invest in company-owned stores as well as explore the franchise model to reach a wider audience in South India.

“Currently, TOW has 17 retail stores across key catchment areas in Bengaluru. In 2024, we plan to expand our presence in Hyderabad, Chennai, Mysore, Coimbatore and Pune,” said Gaurav Manchanda, director of Nimida Group.

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