Are shopping malls the new hot cake? Why big realtors are shifting focus and what is fuelling this realty engine
Due to rise in e-commerce growth, Indian mall area which is currently at 3.2 million square feet is expected to touch 10 million square feet by 2019.
On account of burgeoning consumerism in India, e-commerce pegged to grow at 27 per cent CAGR (Cumulative Annual Growth Rate), offline retail expected to register around 16 per cent growth in 2017-2021 time period and ease of FDI, mall developers are rapidly infusing new retail developments across the top 7 cities — Delhi-NCR, Mumbai, Pune, Kolkata, Bengaluru, Chennai and Hyderabad — with nearly 10 million square feet new mall supply in 2019. Factoring in the rollover of some supply from 2018, there will be a three-fold jump in 2019 against the preceding year.
Speaking on the development Anuj Puri, Chairman - ANAROCK Property Consultants told Zee Business Online, "With the new e-commerce policy in effect from early this month, online retail giants are re-aligning their business strategies and focussing to expand their offline presence. Offline retailers, who were earlier under threat from e-commerce can now look forward to a more level playing field and tap into the rapidly growing Indian consumer market with renewed confidence and business prospects. The new e-commerce policy will bring parity between the online and offline retailers and address the concern of data colonization, as well. Even as online players may lose many of their competitive advantages - such as high price discounts on their private labels - brick-and-mortar stores will focus on offering superior customer experience to enhance customer loyalty.”
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"The new e-commerce policy will cause online retail entities to invest seriously in offline stores," said Puri adding, "They will consider tie-ups with offline retailers or buy stakes in them. However, as competition stiffens, customer experience will be the key differentiator to the success and sustenance of any new retail venture.”
Standing in sync with ANAROCK views, Kumar Rajagopalan, CEO - Retailers Association of India (RAI) said, “A combination of essential and value-added services, along with sound marketing strategy, is now the key to customer attraction and therefore successful mall performance. F&B and entertainment are critical ingredients for attracting footfalls into retail developments. Simultaneously, style, variety, and overall quality of malls also play crucial roles in ensuring customer satisfaction.”
Elaborating on the reason such a three-fold expansion of the mall supply in India Rakesh Yadav, CMD, Antriksh India Group told, "Expansion of the e-commerce business and offline retailers chipping into the online domain is one of the major reasons for such a scale in mall supply in India." He said that e-commerce pegged to register CAGR growth of 27 per cent while offline retail is expected to grow at 16 per cent between 2017 to 2021 time period.
Rakesh Yadav of the Antriksh Group said that ease of FDI flow in the Indian retail is also a reason for such shift among the Indian developers. "Nearly $1.42 bn FDI has already been infused in the Indian markets between April 2000 to June 2018 - and global investments into Indian retail are all set to increase further, states various reports. The Indian retail sector is expected to reach $1,750 bn by 2026 due to changing demographics and increasing consumer expenditure, which is expected to rise to $3,600 billion by 2020," conclude Rakesh Yadav.