ICICI Property Services unveils a new report that outlines some possible paths out of the tangle many Indian retailers and real estate companies find themselves in. The past year has been one of extreme turbulence across nations and sectors primarily due to the US meltdown that has had a ripple effect on economies across the globe. Due to the conservative policies of the RBI and relatively sheltered nature of the economy, we appear to have avoided most of the concerns. Even as many financial structures in the developed world collapsed with startling speed, India escaped relatively unscathed, though the effect of a global downturn can now be felt in several sectors. The real estate, automobiles and retail sectors appear to have been the most affected in India as a result of this slowdown. However, according to ICICI Property Services’ new study ‘Retail Real Estate Report 2009’, the brake is not expected to impact for too long, thanks to the favourable macroeconomic factors driving economic growth in India. In coming to this conclusion, the report refers to the following fundamentals of the Indian economy:
The Indian retail market, which is the fifth largest retail destination globally, was ranked second after Vietnam as the most attractive emerging market destination for investment in the retail sector. Organised retail segment would see an investment of USD 70 billion by 2010. By 2015, the retail sector is projected to overtake the USD 650 billion mark, and organised retail will cross the USD 130 billion mark. The consumer spending in India has increased by an impressive 75 per cent in the last four years and will quadruple in the next 20 years. The industry raked in USD 25.44 billion turnover in 2007–08, as against USD 16.99 billion in 2006–07- a whopping growth rate of 49.73 per cent. Of the 12 million retail outlets present in the country, nearly five million sell food and related products. Mall space, from a meagre one million square feet in 2002, is expected to touch an estimated 35 million square feet by end 2008 in the top seven cities in India. At a time when the Indian consumer space is undergoing a metamorphosis, with increasing spending power and changing purchase habits, consumer space is getting slowly but surely better defined, more experimenting and even more discerning.
With the current rapid growth of the retail phenomenon, it is expected that by 2010, the Indian retail market would be in excess of USD 377 billion. Organised retail is expected to constitute roughly around 13 per cent of this market, which demands for more quality mall space to be added in the country. At the moment, as per various industry estimates, there are close to 300 operational shopping centres that, as per ICICI PSG estimates, are expected to touch 600 by the year 2010. It is also estimated that nearly 40 per cent of the new malls are coming up in the smaller towns. As per IMAGES F&R research, by 2011, India will have an additional 280 hypermarkets, 3,200 supermarkets, 400 department stores, and approximately 1,200 mega speciality stores and category killers besides 20,000 exclusive brand outlets across the various retail categories.
The report envelops the trajectory of retail happenings in the country, starting from the current retail scenario, the macro-economic trends, impact of the economic downturn and also the stimulators for growth in future. It includes the macro as well as micro aspects of the economy influencing the business of retail. The report talks about the players in retail, various retail formats existing in the country and their contribution to the industry. The report also entails ICICI PSG’s perspective on the current scenario and future prospects of retail real estate in India. In its contents are included the research team’s concoction of the immediate measures that can act as a quick balm to soothe the ongoing retail twinge.
(Source: Images Retail, March 2009 issue)
