NEW DELHI: India is making waves in the international
circuit and has been touted as the fourth largest economy in the world
in Purchasing Power Parity (PPP) terms after USA, China and Japan.
India's PPP has been on a steady rise since the initiation
of the economic reforms in the early 1990s. One of the key developments
during India's growth path has been a favorable shift towards the
service sector, which now accounts for almost 50 per cent of the total
gross domestic product (GDP).
In the light of this, the Indian retail industry is currently estimated
at Rs 8750 billion and is expected to grow at five per cent per annum.
On the other hand, organised retailing market stands at Rs 280 billion
, and is projected to grow at 25 - 30 per cent per annum to become
Rs 350 billion by 2005 and Rs 1000 billion by 2010 as was projected
by research paper developed jointly by ICICI Property Services and
KSA Techopak.
Over the last few years, Indian consumers have evolved
at a fast pace, retailers are beginning to establish scalable and
profitable business models and a host of foreign brands have entered
the market. On the strength of these growth drivers, property developers
are aggressively building shopping malls across the country, the White
Paper said.
In the next two years, 93 malls are planned across the top 14 Indian
cities. Of these, 39 will be launched in 2005 and the remaining 54
in 2006. Mall culture in India is growing at a steady pace similar
to that growth patters seen in USA, China and the Middle East, especially
Dubai.
India entered the 'infancy' stage of mall development
in the 1990s when the first wave of malls sprung up in the form of
Spencer Plaza in Chennai, Crossroads in Mumbai, and Ansal Plaza in
New Delhi. At present, the country is in the 'development' phase marked
by rapid pace of creation of retail infrastructure.
South East Asia and the Middle East are in the 'maturity' stage as
mall developers in these nations adopt innovative practices to differentiate
their product offering from the ever-increasing competition.
On the other hand, the UK and the US are in the 'decline' phase involving
a period of consolidation wherein the relatively stronger malls with
a sustainable trade mix continue to survive and begin to control a
larger share of the total market, the Paper said.
Since India is witnessing an evolution of its retail sector and mall
development activity at a relatively later stage as compared to major
countries across the globe, it has the potential to integrate learnings
from those nations and leapfrog into a higher stage of development
in a relatively shorter time span.
Modern malls are being developed in a way that embraces, or at least
acknowledges, their surroundings. 'Hybrid malls', attempting to conjoin
large enclosed malls with outdoor urban streetscape retail / entertainment
component is one of the hottest concept in the industry today.
To add to that, entertainment is also becoming increasingly popular
for malls as they place a greater emphasis on 'Shoppertainment' -
a concept that includes interactive retailing, state-of-the-art movie
theater complexes, mini motor speedways, natural rock climbing walls,
ice rinks, themed restaurants and more.
In the Indian context, multiplexes have already emerged as the most
significant entertainment option considering that movie watching is
a favorite pastime.
The survey revealed that location was the single-most important factor
determining the success of a retail development. Mall developers should
do an analysis of the catchment population including assessment of
demographic and psychographic profile, disposable income and spending
patterns of residents in neighbouring areas.
Keeping in view the consumer demand for a one-stop shop for all shopping
and recreation needs, malls should be developed with an 'all-under-one-roof'
positioning. Components such as residential apartments, offices, hotels,
entertainment, civic and cultural activities may also be included.
In addition, every aspect of the mall's design should encourage consumerism
in order to maximize time spent per visit, number of stores entered
per visit as well as average transaction value.
Also interesting is the fact that leasing has emerged as the most
favorable pricing arrangement in India as developers have realised
that it gave them flexibility to constantly optimize the tenant mix
in a dynamic retail market.
The White Paper predicted that in the context of the dynamic environment
that the retail sector in India operated in, future strategies for
mall developers would entail devising market-specific solutions for
different demographics, psychographics, regions and locations.
Developers should also attempt to reduce their over-reliance on traditional
anchor tenants like department stores and multiplexes and should target
newer categories including food and groceries, 'home' including furniture,
consumer appliances, furnishings and bed-and-bath.
Learning from the experiences of malls in developed markets such as
USA, developers in India should build and design malls allowing for
flexibility for innovation, re-leasing, re-configuration, expansion
and sometimes - even contraction. Further, malls should be made a
preferred destination for marketers for advertisement, product launches
and product testing.
Thus, a re-engineering of approach is required to ensure that retail
malls attain a competitive advantage that can be leveraged to achieve
long-term sustainability, the White Paper concluded.
