Indian mall supply industry booming
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A three-fold jump in Indian mall supply from 3.2 million sqft last year to nearly 10 million sqft this year has been reported in India, following supply rollover from the previous year.
The figures were outlined in the research report Customer Experience (CX) – The Epicentre of Retailing by property consultant firm Anarock, released at the Retail Leadership Summit 2019 in Mumbai this week. The report finds that customer experience and ‘built environment’ are completely metamorphosing the retail business in the country, and that these trends have already started influencing and impacting both the online and the offline retail segments.
“With the new e-commerce policy in effect from early this month, online retail giants are realigning their business strategies and focussing to expand their offline presence,” said Anarock chairman Anuj Puri.
“Brick-and-mortar 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 colonisation 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.
“The new e-commerce policy will cause online retail entities to invest seriously in offline stores,” he continued. “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.”
“The new e-commerce policy will cause online retail entities to invest seriously in offline stores,”
Kumar Rajagopalan, Retailers Association of India CEO, added: “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.”
Historically dominated by unorganised mom-and-pop stores, the Indian retail sector’s dynamics are rapidly changing post liberalisation and subsequent e-commerce boom across the country. The rise in internet subscribers and active social media users, changing lifestyles and increasing disposable incomes have transformed the rural and urban consumer bases alike. This dynamic resulted in the increasing prominence of e-commerce across the country, leading to India’s emergence as a key global retail market.
Nearly $1.42 billion 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 the report. The Indian retail sector is expected to reach $1.750 trillion by 2026, due to changing demographics and increasing consumer expenditure, which is expected to rise to $3.6 trillion by 2020.
Questions & Answers
Q.What is driving the growth in Indian mall supply this year?
What is driving the growth in Indian mall supply this year?
The significant increase in Indian mall supply this year is a result of a supply rollover from the previous year. This has led to a three-fold jump in new mall space.
Q.How is the new e-commerce policy affecting online and offline retailers in India?
How is the new e-commerce policy affecting online and offline retailers in India?
The new e-commerce policy is causing online retailers to realign strategies and invest in offline stores, potentially through tie-ups or acquiring stakes. It also aims to create a more level playing field for brick-and-mortar stores by addressing data colonisation and reducing online competitive advantages like deep discounts.
Q.What factors are considered important for attracting customers to malls and ensuring their success?
What factors are considered important for attracting customers to malls and ensuring their success?
Essential and value-added services, combined with a sound marketing strategy, are key. F&B and entertainment are critical for footfall, while the overall style, variety, and quality of malls are crucial for customer satisfaction.
Q.What is the expected future growth of the Indian retail sector?
What is the expected future growth of the Indian retail sector?
The Indian retail sector is projected to reach $1.750 trillion by 2026. This growth is attributed to changing demographics and an expected increase in consumer expenditure to $3.6 trillion by 2020.