Innovation is Quintessential in Order to Have a Sustainable & Profitable Modern Retailing

The figures and future of retail looks very profitable and that’s the reason many traditional developers who were primarily into residential and office development are now looking at expanding their wings to organised retail.
The Indian retail market is expected to touch US $1.3 trillion by 2020 from its existing level of around US $500 billion. Indian retail industry is considered as one of the world’s top five markets in terms of economic value. The industry is experiencing tremendous growth, with retail development not just limited to major cities and metros but also developing in tier-II and tier-III cities. The young, well educated professionals with double income are the core customers and organised retail is becoming a lucrative business.
Traditionally India’s retailing industry was essentially individually owned small shops by specific communities. The unorganised retail across India is still managed by a network of these communities. Organised retail is comparatively a new phenomenon of the past 10 – 15 years but is fast spreading across the country. Like any other developing country the individually owned street shopping will be extinct and competitive organised retail will become the future of this country.  Currently organised retail penetration in India is 7% lower than any other developing country.  The vast population, rising income and scope of growth in per capita retail space present a strong case for long term retail development in the country.
Like any business there is a rule book for success and since retail is a comparatively new chapter, there are very few lines written. Modern retailers are facing problems like non availability of land, suitable location, infrastructure management, high rentals etc. There is no doubt that this sector is going to expand rapidly by 2020. We have to be innovative in order to have a sustainable, profitable and successful story of modern retailing in India.
We have been working with our South African counterpart in the last decade, on planning of retail and mixed use centres across India and have came across very unique challenges specific to the political, economic and social behaviour of India. Innovations in retail real estate is not just the responsibility of developer, development consultants and designers associated with the project, government policies, development control rules and overall town planning guidelines play an important role as well.
There are challenges in this Industry which act as a deterrent to evolution of innovative Ideas.
Starting with site selection, it is known fact that location of mall is critical in context to the overall city/town development for the success of the centre. Our cities and metros are not planned cities and have expanded over the period of 50 years. The town centres are very crowded and there is hardly any organised development possible to map these upcoming retail centres. The local body should identify the future locations of these developments which are sustainable and have little or no overlap of catchments. Once this mapping of different formats of retail like convenience centre, regional centre or a super-regional centre is done, we get a definite pattern language throughout the city. If the malls complemented each other, it would be easier to plan traffic movement, infrastructure required for the development and tenant mix. This I believe would be the first innovative step the authorities should take to smoothen the real estate development in the retail scenario.
Second important factor in retail development is identifying the positioning or deciding mall format suitable for the surrounding catchments. This topic is well debated and discussed over years but there are very few developers who are mindful about mix/format and eventually all the formats look alike. True innovation is coming up with product that the customer didn’t even know they needed.
We should look at economical and social behavioural pattern of the surrounding catchment. In India street shopping is still popular and there is a perception that organized retail is only luxury and hence expensive. Malls are still destinations rather than necessity. In order to change this perception we should attempt to provide surrounding catchments requirement rather than just copying formats which are not relevant. To achieve this goal we need well trained organizations whose focus is not just leasing and filling the mall with tenants but to creatively formulate tenant mix suitable for the location.
In our country the property prices are very high and the feasibility of any project is governed by the FSI/FAR. Many times developers do unusual things like building multilevel retail or building excess retail which is difficult to sustain and thus compromise on the quality. Innovation is required in dealing with the overall development size. We should explore possibility of Mixed Use development which is getting more popular or phasing development in case of regional/super- regional centres to accommodate future retail requirements are key innovative considerations to make the overall development sustainable.
“Most people make the mistake of thinking design is what it looks like. That’s not what we think design is. It’s not just what it looks like and feels like. Design is how it works.” Steve Jobs article on the birth of the iPod.
Any retail centre is a part of urban environment designed for a specific trade. Mall building is very dynamic as the tenants constantly undergo changes. Changes happen not just during the construction but also continuous revamping happens every year to absorb new business trends. To keep the shoppers constantly engaged and satisfied, mall management team works on mix, promotions, activities and the building should be able to absorb the gap in demand and supply. Innovations in retail building planning is about adopting the time tested format creatively with the context of site in order to achieve good visibility, flexibility and smooth customer flow throughout the centre. Beyond this use of diffused natural light, concept of indoor-outdoor spaces, designing open centres are few innovative ways to make energy efficient buildings.
Though the mall building is trade focused, it is also a social gathering point for the community. In Indian context where retail is still considered as destination, innovative design should be able to convert these visitors to loyal customers and organised retail should become a part of their lifestyle.
The figures and future of retail looks very profitable and that’s the reason many traditional developers who were primarily into residential and office development are now looking at expanding their wings to organised retail.
The Indian retail market is expected to touch US $1.3 trillion by 2020 from its existing level of around US $500 billion. Indian retail industry is considered as one of the world’s top five markets in terms of economic value. The industry is experiencing tremendous growth, with retail development not just limited to major cities and metros but also developing in tier-II and tier-III cities. The young, well educated professionals with double income are the core customers and organised retail is becoming a lucrative business.
Traditionally India’s retailing industry was essentially individually owned small shops by specific communities. The unorganised retail across India is still managed by a network of these communities. Organised retail is comparatively a new phenomenon of the past 10 – 15 years but is fast spreading across the country. Like any other developing country the individually owned street shopping will be extinct and competitive organised retail will become the future of this country.  Currently organised retail penetration in India is 7% lower than any other developing country.  The vast population, rising income and scope of growth in per capita retail space present a strong case for long term retail development in the country.
Like any business there is a rule book for success and since retail is a comparatively new chapter, there are very few lines written. Modern retailers are facing problems like non availability of land, suitable location, infrastructure management, high rentals etc. There is no doubt that this sector is going to expand rapidly by 2020. We have to be innovative in order to have a sustainable, profitable and successful story of modern retailing in India.
We have been working with our South African counterpart in the last decade, on planning of retail and mixed use centres across India and have came across very unique challenges specific to the political, economic and social behaviour of India. Innovations in retail real estate is not just the responsibility of developer, development consultants and designers associated with the project, government policies, development control rules and overall town planning guidelines play an important role as well.
There are challenges in this Industry which act as a deterrent to evolution of innovative Ideas.
Starting with site selection, it is known fact that location of mall is critical in context to the overall city/town development for the success of the centre. Our cities and metros are not planned cities and have expanded over the period of 50 years. The town centres are very crowded and there is hardly any organised development possible to map these upcoming retail centres. The local body should identify the future locations of these developments which are sustainable and have little or no overlap of catchments. Once this mapping of different formats of retail like convenience centre, regional centre or a super-regional centre is done, we get a definite pattern language throughout the city. If the malls complemented each other, it would be easier to plan traffic movement, infrastructure required for the development and tenant mix. This I believe would be the first innovative step the authorities should take to smoothen the real estate development in the retail scenario.
Second important factor in retail development is identifying the positioning or deciding mall format suitable for the surrounding catchments. This topic is well debated and discussed over years but there are very few developers who are mindful about mix/format and eventually all the formats look alike. True innovation is coming up with product that the customer didn’t even know they needed.
We should look at economical and social behavioural pattern of the surrounding catchment. In India street shopping is still popular and there is a perception that organized retail is only luxury and hence expensive. Malls are still destinations rather than necessity. In order to change this perception we should attempt to provide surrounding catchments requirement rather than just copying formats which are not relevant. To achieve this goal we need well trained organizations whose focus is not just leasing and filling the mall with tenants but to creatively formulate tenant mix suitable for the location.
In our country the property prices are very high and the feasibility of any project is governed by the FSI/FAR. Many times developers do unusual things like building multilevel retail or building excess retail which is difficult to sustain and thus compromise on the quality. Innovation is required in dealing with the overall development size. We should explore possibility of Mixed Use development which is getting more popular or phasing development in case of regional/super- regional centres to accommodate future retail requirements are key innovative considerations to make the overall development sustainable.
“Most people make the mistake of thinking design is what it looks like. That’s not what we think design is. It’s not just what it looks like and feels like. Design is how it works.” Steve Jobs article on the birth of the iPod.
Any retail centre is a part of urban environment designed for a specific trade. Mall building is very dynamic as the tenants constantly undergo changes. Changes happen not just during the construction but also continuous revamping happens every year to absorb new business trends. To keep the shoppers constantly engaged and satisfied, mall management team works on mix, promotions, activities and the building should be able to absorb the gap in demand and supply. Innovations in retail building planning is about adopting the time tested format creatively with the context of site in order to achieve good visibility, flexibility and smooth customer flow throughout the centre. Beyond this use of diffused natural light, concept of indoor-outdoor spaces, designing open centres are few innovative ways to make energy efficient buildings.
Though the mall building is trade focused, it is also a social gathering point for the community. In Indian context where retail is still considered as destination, innovative design should be able to convert these visitors to loyal customers and organised retail should become a part of their lifestyle.
About the Company
This article has been contributed by Bentel Associates. Bentel Associates Realty Design Consultants is a Joint Venture between Bentel Associates, South Africa and ICS Group, India.