Guest Column
Indian retail real estate – Future-proofing the revolution
Pankaj Renjhen, Managing Director – Retail Services, JLL India
Indian retail real estate has undergone a tremendous metamorphosis since the advent of organized retail in the early ’90s. Major transitions have happened in terms of design, size, provision of facilities, tenant mixes and business models. From the initial years of organized retail formats in India to the massive malls and their international and domestic brands today, it’s indeed been a fascinating ride. The entry of online retailers over the last couple of years has spurred the progress even more, resulting in an unprecedented rate of change.
With rising disposable incomes, growing urbanization and changing aspirations, there has been surge in consumption. Today, shopping is not limited to just buying products – shoppers are seeking a differentiated experience, and expect innovations. For this reason, leisure and entertainment have become imperative factors in the success of shopping malls today.
Developers today are making their retail spaces more vibrant; the focus is now on providing a 360-degree experience to their clients that transcends mere shopping and delves into the realm of multi-sensory input communication. Mall and shop designs, along with upgraded ambience, obviously play an important role in offering a shopping experience of international standards.
In the metros, the average size of malls has increased over the years in order to provide a wholesome shopping experience to consumers. These malls now offer a comprehensive tenant mix – which, more than ever before, now tends to take into account the catchment, consumer demand and other socio-economic factors. Special emphasis is laid on zoning, smooth circulation and adequate parking.
The entry of international brands has led to a serious jostle for prime spaces within quality shopping malls, further driving the development of avant-garde retail spaces with the requisite support infrastructure. In their quest to offer a real value proposition to consumers, many malls are now providing services such as concierge, valet, tailoring, foreign exchange, car wash, travel desk, gift wrapping, rent-a-stroller facilities and infant feeding rooms.
We are also witnessing a major sea-change in the business models that drive organized retail in India. In contrast to the strata-titled malls developed earlier, the ‘lease only’ model has gained prominence today. This model has been proven to lead to better accountability and mall management. Within the lease-based model, there have been further innovations such as the introduction of minimum guarantee and revenue share models.
E-tailing, which was earlier seen as a dark horse at best, has now in fact taken centre-stage and is playing a major role in reshaping retail real estate spaces and shifting the purpose of brick-and-mortar retailing toward providing innovative and entertaining customer experiences. Owing to the rising competition from e-tailers, categories such as F&B and entertainment have gained increasing importance as these cannot be provided by online retailers.
There is no doubt that e-tailing is offering sharp competition to traditional retail formats, and that it has in fact changed the entire retail market dynamics in India. That said, e-tailing has not – as was previously predicted – eroded the importance of brick-and-mortar stores. The experience and the touch points provided by physical stores cannot be matched by online retailing. Likewise, some categories like F&B, entertainment and leisure cannot be provided by e-retailers. Meanwhile, brick-and-mortar retailers are combating the competition from online retailing by right-sizing their stores and restructuring their expansion plans through proper research. These measures are now leading to better sales and profits for these retailers.
Although organized retailing has been growing in every city in India, the maturity in retail markets across different cities varies drastically. The large metropolitan cities have witnessed a transition from the emergence of small-sized malls in the mid-2000s to currently housing many malls with millions of square feet space, offering not just fashion and accessories but also emphasizing on entertainment and F&B. On the other hand, there are tier 2 and 3 cities which are still experimenting with the conventional big-box retailing formats. The markets in many of these cities are different from the metros in terms of demographics, culture and shopping behaviour and inclination of consumers.
Both malls and high streets are in demand today, as both have their own unique selling proposition. A brand’s visibility is generally higher on a high street than in a mall; high streets also generate higher casual footfalls. On the other hand, malls offer a climate-controlled environment with value-added facilities for consumers. The success of any retail destination depends upon the amalgamation of factors that include accessibility, convenience, variety in tenant mix and good infrastructure. Malls offer better conveniences and facilities, but the charm – and importance – of high streets has definitely not faded away.
Meanwhile, transit-oriented shopping destinations such as airports, metro and railway stations have become increasingly popular owing to the convenience they provide to shoppers. Categories such as F&B, books, gifts, electronics, footwear and jewelry can and do perform really well in such destinations. This trend not only benefits shoppers by the reduced travel time to shopping destinations, but also leads to more efficient utilization of the spaces in these prime areas. Since the footfalls in these areas are generally very high, retail brands will always benefit from opening their stores there.
Indian retail – and the real estate that forms its base – has certainly come a long way. And in terms of scope for future innovations, the sky is literally the limit.
-
News2 weeks ago
GRAP 4 curbs in Delhi-NCR: Real Estate Sector Reacts to Construction Ban
-
News2 weeks ago
Mahindra Lifespaces announces continuing partnership with Sumitomo Corporation for its Industrial Clusters business
-
News2 weeks ago
Supreme Court Intervenes in NCR Housing Project Delays, Seeks Details
-
News2 weeks ago
Noida, Greater Noida Residential Market Soars; Sales Up 34%, Transaction Volume Up 6% in July-September 2024: Square Yards Report
-
News4 weeks ago
Sector 36 Greater Noida: What Makes it Ideal for Real Estate Investment?
-
News2 weeks ago
Suraj Estate Developers’ PAT Surges by 88% in Q2 FY25 & 97% in H1FY25
-
News3 days ago
Faridabad Real Estate Market On the Upswing
-
News2 weeks ago
Sushma Group Partners with Bayside Corporations (BCS) to Boost Sales of Premium Kasauli Projects