DELHI: Retail is presently the most booming sector of the Indian economy. The sector as a whole already contributes 14-15% of the GDP. Although the organized retail market is a small part of it at present, it is expected to grow manifold in the coming 3-5 years. Even as I write this, there are over 300 new malls, 1500 supermarkets and 325 departmental stores currently being built in cities across India.
Some of the biggest players of the world are already present in the Indian market while others are looking to enter soon. India’s retail market is expected to be worth about US$ 410 billion by 2020, with 5% of that gigantic amount coming through organized retail. At the centre of all this anticipated growth is the demand for quality retail space since location is a prime factor in quality retail development, be it in the metros and larger cities or in tier 2 & 3 cities and towns.
Escalating real estate prices in urban areas and short supply of land in major Indian metros has led first to vertical growth and subsequently to the inclusion of suburbs in the development process. After that, as a natural progression the focus is also shifting to Tier 2 & 3 cities and towns where demand from middle class buyers is strongly prevalent. The cost effectiveness or affordability factor contributes to the increased attraction of suburban areas while quality, timely delivery and high standards of construction, along with add-on facilities effectively cater to this expanding market. With the advent of single families even in non-metro cities, people are spending more on premium quality products after consistent exposure to products and services of international quality and standards.
The abundance of products and enhanced general awareness has led to ever increasing demand for retail centres that are making shopping a pleasurable experience, interspersed with entertainment and the feeling of gratification for entire families. Modern retail centres cater to this demand by offering constantly evolving ambience and mass interactions and promotions to complete the experience. It is this comprehensive concept of shopping along with entertainment that has helped in exponentially expanding in size and scope the entire format of city centres and malls.
Furthermore, foreign direct investment (FDI) in retail has put India on the global map and made investors upbeat about India’s retail real estate market, which is directly related to the advent of mega malls with built-up areas entailing over 1 million square feet in many cases.
To give an external perspective, for many consecutive years of late, India has been ranked by the US-based global management consulting firm, A T Kearney as one of the most attractive destinations for retail investment among 30 emerging markets.
To summarize, I am confident that India’s booming retail market will continue to grow and develop. This will mean economic prosperity, attractive investment opportunities on a global scale as well as employment for local communities and an overall positive social impact. The days when organized retail in India was a dormant sector due to lack of infrastructure, absence of product variety, scarcity of top-of-the-line national and international brands and a conservative Indian consumer are well and truly over. Fresh retail geographies are emerging, innovative and expanding formats are being introduced. Strong underlying economic growth, further expansion of the middle class, and growth of organized retail developments and infrastructure are key factors that will lead to the fruition of this healthy growth potential.