With the advent of e-commerce in India, shopping converged into mobile devices in the form of websites and/or apps. At the click of a button, one could buy groceries, apparel, electronics and almost everything else. For a while, it appeared that ‘couch potato shopping’ was a real threat to physical retail, and that shopping malls will run out of business.
That has not happened – in fact, shopping malls are witnessing a visible resurgence in India. A clear measure of increasing focus on the retail sector is that private equity (PE) players invested more than $700 million into Indian retail in Q1-Q3 2017 itself – around 90% of the investments that came in during the past two years (2015 and 2016).
Shopping malls in India have come a long way indeed, from less than 5 malls in 2001-02 to more than 500 in 2017. Over the last few years as the overall economy struggled, there was a drift of negativity about Indian shopping malls being able to sustain and were ‘going to be out of fashion’. As it was, quite a few badly-conceived and executed malls did fail. The overall impression was that this was a larger trend and a sign of the times indicating that bad days were ahead for the physical retail sector. That said, one lesson learned is that there is a distinct need for developing multichannel retailing rather than just relying on the traditional methods.
Considering that the fundamental growth drivers of the retail sector remain intact, global investors and shopping mall developers remain bullish on the sector. In addition to rising disposable income, rapid urbanization, increasing purchasing power and other related factors, the notable indicators of a fairly bright future for Indian shopping malls include:
The changing business environment, favourable policy shifts and the entry of numerous global players indicates that a resurgence of shopping malls in India is definite. Also, with diminishing open spaces in the city, shopping malls are increasingly treated as a place to meet, greet and have fun with friends and family. The need of the hour now is to develop good quality malls that can attract occupiers for the long-term so that the entire value chain of the retail sector benefits.
Authored By: Anuj Puri, Chairman – ANAROCK Property Consultants
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