Online shopping – will it transform the retail real estate landscapein India?

November 6, 2012 / By

It is again the festive season in India, and shopping for the festival is high on the agenda of many Indians. High streets and malls are overflowing with offers, discounts and events to attract shoppers. However, there is a new trend that is catching on quickly in India – online shopping. Be it apparel, accessories, furniture or upholstery whatever one is looking for, it can all be found online. In addition shopping online not only saves time and provides a wide range of choices, it also comes with heavy discounts and promotional offers. As this trend of online shopping seems to be picking up this season, what impact could it have on the landscape of retail real estate? Will the growing number of online shoppers slowly dry out malls and high streets? What real estate requirements will this new retail format have?

As more internet users appear across India, the amount of online shopping in the country is quickly increasing. As more consumers become aware of how easy online shopping is, online retail companies, such as Jabong, Flipcart, Myntra and Ebay, etc, are becoming more popular every day. According to Google, there are about 100 million internet users in India. Of these users, about 50% prefer online shopping, and this figure is expected to grow significantly in the future. Retailers are actively using this online platform, because it allows them to have more reach, covering locations that range from metropolitan areas to small towns in India. In regard to real estate and infrastructure, online shopping saves shoppers from the hassle of finding parking spaces during peak shopping hours and high shopping seasons, and keeps retailers from having to pay high rents of good retail properties.

Online shopping is causing a slow and gradual change in the retail landscape of India. The demand of online retail companies for warehouses and commercial office space has increased. The warehouses are for the storage and distribution of products, while the commercial office space is for the development of software and to establish call centres to manage customers’ orders. Therefore, this growth of online companies will slowly reduce the real estate costs of retailers. This does not mean that the demand for malls and high street stores will vanish. These locations will slowly become places that consumers can experience a product along with sales as touch- and feel of the product is an important part of Indian shopping.

Online shopping firms are pouring large investments into India. Therefore, going forward, in the next three-to-five years, the demand for retail real estate will also include warehouses and offices along with malls and high streets. In such a scenario, India’s popular high streets and malls will continue operating. Meanwhile, online shopping is expected to gain popularity and survive in parallel to mall and high street shopping gradually creating a new retail landscape in Indian real estate.


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