‘As Premiumisation Reshapes Retail Landscape, Superior Grade Malls to drive 70% of New Supply’

Gurugram, April 15, 2025: India’s retail real estate sector is undergoing a structural transformation, driven by a new wave of premiumisation. With rising consumer aspirations, increased discretionary spending, and a significant shift in brand and developer strategies, the country is witnessing the emergence of a more sophisticated, experience-driven retail ecosystem.

According to Cushman & Wakefield’s latest research report, ‘Premiumisation of India’s Retail Sector – Upscaling, Upgrading and Evolving’, launched at MAPIC India Shopping Centre Summit & Awards 2025, over 70 per cent of the 12.3 million square feet (msf) of new Grade A mall supply expected over the next two years will be Superior Grade (Grade A+). This marks a significant upgrade in quality and experience across India’s upcoming retail infrastructure.

Of the 12.3 msf of new Grade A mall supply projected across 2025 and 2026, 8.6 msf will be Superior Grade—underscoring the sector’s shift from scale to quality. The superior-grade malls typically owned and operated by reputed developers or institutional investors are characterized by their high occupancy rates (more than 85 per cent), upscale tenant mix, and service-rich environments.

India’s total Grade A mall stock stood at 61.5 msf in 2024, with Superior Grade malls already comprising 63 per cent (38.9 million sq. ft.) of the total. These malls are outperforming their peers, with stock-weighted average rents rising by 29 per cent since 2019, currently averaging INR 315 per sq. ft. per month.

Metro cities like Delhi NCR, Mumbai, Bengaluru and Pune lead the Grade-A mall stock, with Delhi NCR alone accounting for 21.75 MSF. Superior grade assets within these metros are witnessing strong investor and retailer interest, driving rental growth and low vacancy rates of around 3-4 per cent.

The report attributes this shift to the rise of India’s affluent and aspirational middle class. With the country’s median age under 30, younger consumers are embracing lifestyle upgrades and experiential consumption. As digital-first premium brands transition to offline formats, they are increasingly choosing Grade-A malls or prominent high streets to establish physical footprints. This premiumisation has also impacted the mall leasing landscape as value brands are gradually losing share in superior malls, while lifestyle, premium, and luxury categories are gaining prominence.

Premiumisation is also reshaping the brand mix and category spread within malls. The share of traditional anchors such as hypermarkets and cinemas is declining, while fashion, beauty, wellness, and experiential dining are emerging as key drivers of footfall and spend. Beauty & wellness, food & beverage (F&B), and athleisure have seen significant growth in mall footprints, driven by high trading densities and increased consumer engagement.

The beauty and wellness segment has caught up well with premiumisation trend, having attracted immense patronage from consumers in the last 5-6 years. Today, it commands an average trading density in the range of INR 8,000 to 12,000 per month, making it a discerning segment for most mall managers. F&B, in particular, has evolved into the new anchor category, often driving footfall more effectively than traditional departmental stores. The report also notes a modest yet promising rise in jewellery and Consumer Durables Information Technology (CDIT) categories, reflecting India’s expanding appetite for premium experiences. Meanwhile, traditional anchors like hypermarkets and cinemas are witnessing reduced footprints as their value proposition evolves.

The report also outlines how large, listed retailers such as Aditya Birla Fashion, Reliance Retail, Shoppers Stop, and Tata Trent are adapting to this wave of premiumisation. Initiatives include the launch of premium private labels, omnichannel retailing strategies, digital-first store formats, and targeted expansion into Tier-II and Tier-III cities where rising incomes are fuelling lifestyle upgrades.

As the premiumisation trend matures, the role of mall management is expected to evolve significantly. Future-ready malls will not only focus on tenant curation but also integrate digital infrastructure, community engagement, sustainability, and design flexibility to stay relevant. The report underscores the need for developers and brands to align their strategies to tap into India’s evolving consumer landscape.

Owing to limited space availability in superior grade malls, many brands choose to locate their stores in prominent highstreets across the top 8 cities over the last few years. Prominent highstreets include locations such as the Linking Road in Mumbai, Khan Market and Connaught Place in Delhi, M.G. Road in Bengaluru among others. Though these are considered unorganized supply in many ways, the prominent highstreets offer brands the benefit of direct visibility to passing shoppers. Over the years, prominent highstreets have seen their rentals surpass pre-COVID peak of 2019 and have been moving upwards gradually ever since, acting as testimony to the high demand for such spaces from premium retail brands.

Saurabh Shatdal, Executive Managing Director, Capital Markets & Head, Retail India, Cushman & Wakefield, said at the launch, “India’s retail landscape is evolving rapidly, and so are consumer aspirations. The rise of Superior Grade malls reflects a clear pivot from just scale to quality and experience. Today’s consumers are seeking curated, design-led environments where the brand experience is as important as the product itself. Categories like beauty, wellness, F&B, and athleisure—known for high engagement and trading density—are shaping this next phase of retail. The response from developers and brands shows a deep shift in strategy: toward sophisticated, digitally integrated, and future-ready retail formats that truly resonate with the country’s aspirational consumers.”