Retail Boom In India

With rise in prosperity and disposable income of the middle class people in cities due to high economic growth, India is witnessing a retail boom.

This has led to the growth of organized retailing, which is changing the way shopping is done, particularly in big cities like Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad among others.

The most visible symbols of organized retailing are the swanky malls, which have mushroomed in most of the large and medium size cities across the country. In cities like Delhi, with extreme weather conditions, malls have become a runaway success.

Even at the height of summer season, when temperature soars up to 42 degree Celsius, shopping is no more an unpleasant exercise. Instead, these malls in various part of the city have made it a pleasurable exercise, in fact, it has become a way to relax and chill out in an air-conditioned environment!

This mall phenomenon had given rise to apprehensions that high street shops were heading for an ignominious death. But, a recent survey done by Jones Lang LaSalle Megharaj, a global real estate consultancy firm, found that despite rise in number of malls in a city, high street shops continue to flourish.
The survey suggests that the presence of new malls within an established high street increase the retail appeal and attractiveness of the entire stretch. It allows malls and high streets to equally benefit from a growing footfall base of consumers flocking to such a street where they can find a combination of both high street retailing and climate controlled shopping in new malls.

The report says, “Though it is early days, the initial evidence does suggest the fact that departmental stores as well as malls and high streets can indeed play to each others strength.”

The report said that the anecdotal evidence of the complementarity of high streets and malls comes from the few instances that were found in Bangalore, Chennai, Hyderabad, Kolkata and Pune where informal feedback from retailers along the shopping high street as well those in the operational malls suggested that both of them are benefiting from the presence of the other.

A senior consultant with the firm Tanaji Chakraborty says that the high street shops, which were facing tough times some time back, have come back with a vengeance. Particularly, in the fully developed area, where further expansion of retail outlets is not possible, the existing high street shops have regained their charm.

In the last couple of years, since consumerism is on the rise, these high street shopping areas are getting revitalized either by the association of shopkeepers or by municipal corporations to enhance the consumer experience.

This results into augmentation of retail attractiveness. The report said that revitalization of streets globally is a very serious issue and often this is linked to the issue of regeneration of entire region. Typically stakeholders of streets, retailers, property owners, mall developers, development authorities, local council, all collaborate to map out a regeneration strategy with a view to improve the economic and image impact of the street.

Report said that this movement is at a very nascent stage, though undoubtedly as economic interest refocuses on prime inner city areas, which typically have superb locations but suffer from run down image , there would in future initiatives regenerate to unlock value.

Connaught Place in Delhi has been regenerated by NDMC. The process to beautify its Central Park has already been completed by the municipal authority. The walk-way and the main building are now also being done up by the concerned authority.

Similarly, Khan Market has been revitalized by the association of shopkeepers. The report said that with the possibility of shopping street revitalization becoming an increasing reality across markets in coming years, the retail pitch of high streets is expected to be enhanced in future, thereby allowing for inclusive growth of retail along these prime corridors in Indian cities.

This is also evident from the fact that rentals of high street shops have doubled in the last couple of years. The rentals in Khan Market, which was quoting at around Rs 650 per square feet per month in 2006, has gone up to Rs 1,300 per square feet per month in the first quarter of 2008.

The report said that the increase in prime shopping street rents have almost doubled across the board, with the rise in rentals ranging between 30% and 100% over the last few years. Rental value growth over the years in other leading cities has been no less impressive.

At such levels, the report said, some of the top-rung Indian shopping streets, especially the likes of Khan Market and Connaught Place in New Delhi, and Linking Road in Mumbai are slowly but steadily creeping into the league of expensive high streets of the world. However, Chakraborty said that this is not a very healthy sign as it suggests the lack of availability of good infrastructure and quality retail space in the country.

Chakraborty said that the development of high street mall takes time as it evolves with the growth in the population in the area. On the other hand, malls are developed on standalone basis. They attract customers from far-flung areas also.

Therefore, in most of the new townships, developers raise malls to provide shopping infrastructure to the inhabitants of the township, while at the same time they attract customers in the nearby catchments to survive in the initial years.

But, over a period of time, the high street shop will also come up and flourish in the same township. Therefore, he said that it is not either mall or high street shopping center but it will be both that will flourish as the economy will grow in the country.

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