India Retail: Evolving to a new dawn
The sector is manifesting winds of change as it looks to reinvent and reimagine itself
- Rohan Sharma
- Shweta Kakkar
- Abhishek Vohra
JLL India’s latest report titled India Retail: Evolving to a new dawn, states that India continues to be a preferred market for international brands. Increased consumption, rising institutional participation, strategic partnerships of Indian retail chains, and a supportive regulatory environment are making India a lucrative destination for global brands. 24 New International brands have entered India since 2021, making a beeline for superior-quality mall developments in the gateway cities of Delhi NCR, Mumbai, and Bengaluru. Nearly a quarter of these new entrants were in the F&B category.
The report finds that while omnichannel retail is increasingly becoming important, physical stores still play a vital role in providing experiential shopping and social connect experiences to consumers. The operational retail stock as of H1 2023 in the top seven cities (Delhi NCR, Mumbai, Pune, Bengaluru, Kolkata, Chennai, and Hyderabad) stands at 89 million sq ft. More than 50% of the current operational mall stock lies in Delhi NCR (28 million sq ft) and Mumbai (17 million sq ft). Mall completions of around 1.1 million sq ft were recorded in H1 2023, with additions in Hyderabad and Delhi NCR.
Gross leasing across the top seven cities (in shopping malls and leading high streets) stood at 3.16 million sq ft in H1 2023, indicative of consumer confidence translating into expansion by retailers. Bengaluru led with a 34% share followed by Delhi NCR (23%) and Hyderabad (19%). Fashion & Apparel and F&B brands have dominated the H1 leasing activity.
The physical retail space segment has an expected supply pipeline of over 38 million sq ft of retail developments between H2 2023 and 2027, across the top seven cities. Delhi NCR is expected to lead in contribution towards upcoming mall supply with a 31% share, followed by Chennai (16%) and Hyderabad (14%). Around 18% of this upcoming supply (6.7 million sq ft approx.) has institutional participation.
Key themes defining the future of retail in India
Premium outlet centres - Although at a nascent stage in India, the emergence of premium outlet centers is cashing on the changing lifestyle and aspirational choices of young, affluent, and well-traveled Indians. Premium outlets could be a good alternative for landowners/developers looking to create a differentiated product, however optimal brand mix and mall size remain the most crucial parameters.
Highway retailing: Evolving with times - With infrastructure augmentation and an uptick in leisure travel, highway retail is expected to be a big growth driver for the retail sector. With the government promoting Electric Vehicles, many EV charging stations along highways are slated to be set up as part of the overall EV charging infrastructure in the country. Consequently, support retail comprising QSRs, and convenience stores are expected to come up at these EV stations. Entertainment is a fast-moving retail category in highway retail as travel is usually undertaken with family or groups. With an uptick in demand for global brands, more such retailers with an international pedigree are expected to venture toward highway retail.
For more insights, download the report.