PUNE: The city’s large-format retail is witnessing a shift as standalone locations are losing their appeal while presence in a big multi-channel mall seems to be making greater business sense for retailers.
Retail stores, not forming part of a large format malls, are under pressure as customers demonstrate an increasing preference for locations which combine shopping, entertainment and food – the three essential elements of ‘shopotainment.’
The city has also witnessed a strange trend of high vacancy in retail space and a fairly good occupancy in certain retail locations. This is indicative of a broader, long term direction the city’s retail is taking, experts say.
Mayank Sharan, associate director, retail services, Jones Lang LaSalle India, said, “Pune retail space has seen a dramatic shift in the last two years. From being a city housing only standalone stores or standalone cinemas, it has grown to include world-class quality malls and multiplexes. 2013 saw a fairly decent performance from malls and retailers, compared to the disaster of 2012. The city saw new and fresh brands coming and opening stores in the city. Despite the city being oversupplied, a few malls became operational. Seasons Mall (Magarpatta) and City One (Pimpri) opened up with a sizeable occupancy in 2013. Rentals did not see a hike – but interestingly, did not fall either.”
“Going forward, the viability of standalone stores in Pune will be restricted to some few formats such as electronics and home appliances stores. Not every category of retail will work in standalone formats anymore,” he added. Sharan pointed out that retail major Shoppers Stop closed its Nucleus Mall and also Koregaon Park Plaza stores which is part of a large decision based on these two stores being cannibalized by their Kumar Pacific and Inorbit (both large format malls) stores, respectively.
Rajiv Malla, centre director, Phoenix Marketcity, said, “Pune has seen an explosion of malls in the recent past but running a successful show is a combination of understanding the market and customer, attracting and retention of the right kind of retailers, the perfect marketing mix and of course giving yourself enough room to grow. The year has seen retail slowing down in general but fortunately for us, the figures have done the talking and we continue to grow in consumption by over 35% and with footfall over 75%.”
Sanjay Dutt, executive managing director, South Asia, at real estate advisory Cushman & Wakefield, said, “Retail markets have started to show signs of maturity with developers taking interest in creating value out of their projects for all stake holders. Developers are now consciously creating shopping malls that are more suited to the requirements of the retailers as well as consumers. As a result new malls have opened with high occupancy levels with exception of few. Many developers have also deferred their mall projects to align them to their customer requirements to ensure that their future projects are successful.” Pune saw a deferment of 1.1 million sq. ft., he added.
Vivek Kaul, head of retail services at realty consultants CBRE India said although Pune’s prime high street locations are its traditional retail destinations, the city’s mall scenario is robust too. “In fact, Pune is an emerging location, as far as organized retail in India is concerned,” he said.