The report- ‘Think India. Think Retail’ maps the Indian modern Retail market across the top 7 metropolitan region s and an analysis of modern retail’s impact on real estate.
Kumar Rajgopalan, CEO, Retailers Association of India said, “Knight Frank ‘Think India. Think Retail’ is one of its kind report, as it gives an accurate idea of the total retail spending and penetration of modern retail in 2014-an industry first. The findings of the report give encouraging signs of mordernisation of retail in India. We at RAI hope that players from the entire retail value chain will find them useful in making informed decisions when it regards retail real estate or space- which has been and will remain the final frontier.”
Added Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “Over the last decade, the concept of shopping has also undergone a sea change in terms of format and consumer buying behavior, ushering in a revolution across the country. With an ever expanding domestic market and a forecast growth rate of 15 % a year, the Indian retailing scene seems extremely attractive for stakeholders and investors alike. The e-commerce industry is booming like never before and this coupled with high disposable incomes have led to a spurt in the internet culture that aims to change the dynamics of the brick & mortar modern retail segment.”
Dr. Samantak Das, Chief Economist & Director of Research, Knight Frank India said, “The overall retail spending across top seven cities in India will more than double over the next 5 years. This given an immense opportunity for the retail sector to adopt a higher growth trajectory. With the middle class group becoming significantly large coupled with the exposure of Indian consumers to global retail markets will together fuel demand for sophisticated products and better customer services. As a consequence, the retail shop formats in India have changed over the years, from non-modern mom & pop stores to modern structures in shopping streets and malls. While modern retail is expected to grow its share from the current 19% to 24% over the next 5 years, E-tailing as a component to modern retail is likely to see a substantial jump in its share and has the potential to challenge the prospects of brick & mortar modern retail outlets.”
Aditya Sachdeva, Director-Retail, Knight Frank India was of the view that, “We need more retail real estate to come up. Even though e-commerce will excel in the country, retailers will always require additional footprint to increase business turnovers. Despite the spurt in online retailing, there still exist a significant number of reputed retailers who believe in the latent strengths of the brick & mortar retailing methods and going forward, will continue to invest in this segment. With reference to our understanding of the current market, there is an additional requirement of 4.3 mn sqft of retail space per annum across the top 7 cities; however there is no reason why this number can’t be breached in the years to come.”
KEY HIGHLIGHTS FROM THE REPORT
- Retail spending across top 7 cities to more than double in the next 5 years
- E-commerce on the driving seat; e-tail spending to touch INR 839 bn by 2019
- Malls and High streets feel that the heat as buyers log in to the online club
- Developers see the silver line; top 7 cities to create 4.3 mn sq ft of additional retail space
- USA accounts for 35% of all foreign brands in India; will FDI bring in more.
REPORT TAKEAWAYS
- Retail spends on the rise:
- Currently, the total retail spending in the top seven cities of India amounts to Rs 3,586 bn (US$ 59.8 bn)
- Mumbai accounts for the lion’s share, at 29%. This is followed by NCR and Bengaluru, at 25% and 15% respectively.
The rise of e-commerce:
- Modern retail penetration in the top seven cities of India stood at 19 % in 2014, of which brick & mortar modern retail was at 17% and e-tail, at miniscule 2%.
- The current penetration of e-tail in India is low with NCR being the highest at 3% followed by Mumbai at 1%.
- E-tail market spending to grow 10 times from INR 72 bn to INR 839 bn resulting in 64 % annual growth.
Size matters:
- Bengaluru has the highest per capita penetration of modern retail in India, at 1,323 sq ft per 1,000 population, followed by Pune and Chennai, at 1,002 and 1,001 sq ft per 1,000 populations respectively with Kolkata at the bottom of the list.
- Hyderabad has the maximum share of stores below 500 sqft as compared to Bengaluru and NCR as they have the lowest share among the top cities.
- Mumbai presents the highest proportion of mall space at 59% followed by NCR and Pune, while Hyderabad slots the highest position with 70% in shopping streets.
Apparel leads the way:
- Apparel occupies 22% share in modern retail in top 7 cities where NCR contributes to 27 % share followed by Bengaluru.
- Food and beverages has the highest share in Mumbai at 15 % followed by Begaluru and Pune at 14% and Chennai at 11% while Electronics hold 9 % of Hyderabad’s Retail space.
- Mumbai hold 15% share in entertainment while NCR is lowest at 4 % and department stores represents maximum share of 15% in Pune.
Opportunity:
- Hyderabad has the highest share of foreign and national brand stores at 90 % followed by Chennai at 68%.
- The national brand stores for Pune and Bengaluru is significantly higher at 64% and 62% respectively.
- Kolkata’s shopping streets have the highest proportion of local brand stores, amounting to 63% in the modern retail space.
