Indian retail – a new growth story beginsSeptember 13, 2018 / By
The Indian retail industry is undergoing a fast paced revolution. Brick-and-mortar and online retailers are opening up unlimited possibilities with physical retail at the epicenter of this change. The unfolding growth story of the Indian retail scene is unique in terms of all forces at play – demographic, technology, real estate and challenging traditional formats.
The retail scene in India went through a phase of high growth during 2008-2012, adding 34 million sq ft of mall space. Many developers ventured into retail space without precise understanding of the dynamics of the sector. As a result, only 46% of the mall space was of superior grade quality. The retail scene then followed a phase of slow growth during 2013-2017 with the addition of 21 million sq ft. Since then, developers have matured from past experience and are expected to add superior grade malls in the future. It is expected that another 34 million sq ft of retail space will be added during 2018-2022. What is most notable, is that around 62% of future retail space is expected to be of superior grade.
The India retail market is witnessing an evolution towards seamless integration of brick-and-mortar and online retail. This is creating a new shopping experience – omni-channel retailing. The disruption created by online retail has helped increase the overall demand for organised retail, both for online and offline. Retail stores have responded to this online retail challenge by enhancing customer experience through better designed stores, maintaining a good tenant mix as well as by adding leisure and entertainment spaces. Today, we see different models playing important roles in shaping the retail space. Omni-channel strategy has now expanded its breadth to include other consumer segments like food and grocery, furniture and pharmaceuticals.
Experience is core to shopping, entertainment, leisure and social interaction. Retailers are discovering innovative ways of providing unique customer experience by clubbing various activities viz. sports and gaming parlours, movie theatres and children’s play area within their premise. Malls are currently striving to enhance customer experience by providing sufficient parking, good store design, security and ensuring the right mix of tenants take up space at their premise. Retailers on the other hand are also attempting to enhance customer experience by adding novelty factor at frequent intervals taking into account the local customs and traditional arts, festivals, sporting events etc.
Upcoming malls will allocate more than 30-35% of the space for F&B, new-era entertainment and leisure activities as compared to existing malls that use 15-20% of their space for such. There are plan for new malls to have sustainable features through the use of natural light and spaces along with a waste recycling facility.
The Indian demography boasts a young generation of technologically suave individuals who provide tremendous scope for growth of modern organised retail. We find that omni-channel retailing is here to stay with its reach and scope of offerings increasing over the coming years.
 The Malls have been Graded on the following criteria- Rental values, vacancy levels, tenant mix, design, level of mall management, choice of location and rental/Strata sale model.
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