Organised retail in India has been a fairly modern concept, with shopping malls emerging not before the late ‘90s. As malls gradually climbed up the development curve and provided facilities such as dedicated parking, food courts and a good ambience; footfalls began to rise. Mall developers also caught the pulse of the market fairly quickly and began providing shoppers with added attractions too—integrating amusement parks, gaming zones, and even hotels in some cases, to provide a holistic shopping and entertainment experience. While malls caught the fancy of the Indian shopper, high street markets declined in popularity among shoppers and retailers alike; especially as global retailers were indifferent about expanding in these locations. The poor quality of retail stock and high rentals were also some of the key deterrents for global retail brands to expand across high streets.
From a handful of malls in 2000, India now has more than 300 shopping malls across its leading cities of Delhi NCR, Mumbai Metropolitan Region, Bangalore and Chennai. In spite of this tremendous growth in organised retail space, particularly over the last decade, organised retail still accounts for just 5% of total retail sales across the country. However, the retail sector of India is at an inflexion point where the growth of organized retailing and consumption growth is going to take it to a higher growth trajectory in the coming decade. The retail sector is expected to grow from ~US$ 490 billion in 2013 to ~US$ 865 billion by 2023, with organized retail expected to contribute almost 24% to the total retail pie by 2020.
Challenges of Quality Space
There is approximately 54 million sq. ft. of retail stock in India, spread across its leading metropolitan cities and their surrounding regions. Even after the steady growth in supply of organised retail space over the last decade, retailers often find it challenging to secure space in a prime mall in any of these cities. Out of the more than 300 malls in the country, only a few can be described as successful retail projects. These include Select CITYWALK, DLF Emporio and DLF Promenade in South Delhi, Ambience Mall in Gurgaon, InOrbit and High Street Phoenix in Mumbai, and the Brigade Orion and The Forum in Bangalore. The total size of these successful malls is just about 4–5 million sq. ft. Demand polarization in the retail landscape in India has been common, with select malls finding favor with retailers due to higher footfalls, zoning, design and effective mall management; while others lag behind due to the lack of them. In the coming years, this polarization is expected to remain, which will ensure that certain malls have higher vacancy levels than others.
About 31% of the upcoming supply addition is expected to be centered in the smaller cities of Pune, Chennai, Hyderabad and Kolkata over 2014, with approximately 10–11 million sq. ft. of organized retail supply lined up across leading cities. To attract more international retailers to the local market, India would need to develop and provide more quality retail spaces at commercially viable costs.
Due to the lack of clarity on titles of shops across numerous high streets in India, international retailers prefer to lease/occupy properties that have clear titles. Going forward, the major focus area for the retail sector, hence, will remain on improving the quality of retail spaces across all leading cities in the country. With single-brand FDI norms remaining status quo, the market is likely to see large format players continuing to enter the market, which is likely to further change the quality, size and design of retail developments in India.
In Conclusion
The advent of the shopping malls in India has emerged from the dynamic shift in consumer behavior over the last decade or so, when need-based shopping gradually made way for experiential shopping. At a time when India’s aspirational millions came of age in terms of consumer behavior and brand expectations, it was mall developers who kept pace with the times, and evolved along with their end-customers’ preferences. From fashion and food to multiplexes and gaming zones, malls in India’s leading cities have come a long way. Ten years down the line—given a marked improvement in the country’s overall economic climate and inflationary conditions—it is possible for this success recipe to percolate down to second and third tier destinations as well.
In the last count, however, marque high streets will always continue to co-exist with malls, complementing each other in India’s organized retail landscape—since the position of a product and the strength of a location ultimately lie at the heart of all successful retail destinations the world over.
