Retail sector expected to adjoin 39m sq ft space in four years, 71% in big cities

The organised retail sector of India is likely to adjoin nearly 39 million sq ft of space in four years to the end of 2022, out of which 71% will be in metros and tier-I cities, as per Anarock Property Consultants.

According to Anuj Kejriwal, managing director of Anarock Retail, a retail advisory service, Ahmedabad, Bhubaneswar, Ranchi, Kochi, Lucknow, Surat and Amritsar are among the metros and tier-I cities where the subsequent chapter of development is probably to open up.

“The arrival of foreign brands forces domestic brands to up their game as well. This is what is happening in Indian retail, and what ‘getting organised’ is all about,” said Kejriwal. “Global retailers are now also eyeing cities like Chandigarh, Lucknow and Jaipur, to name a few.”

Kejriwal in an earlier interaction had said, the country’s retail market is anticipated to grow to nearly $1.1 trillion by 2020, up from about $672 billion in 2017, with organised retail growing at a CAGR of 20-25%. The market size of tier-II and tier-III cities is expected to grow to $80 billion by 2026, up from $5.7 billion at present.

The organised retail segment is proposed to grow to 19% of the whole retail market by 2020, up from 4% 10 years back, improved by rapid urbanisation, digitisation, rising replaceable incomes and lifestyle changes.

More than the past two decades, the Indian retail market has transformed from conventional shops to large multi-arrangement stores in malls providing a global experience and on to the extremely tech-driven e-commerce model.

Organised retailing means any trading action performed by authorized retailers from current retail formats, for example, hypermarkets, supermarkets and departmental stores. Organised retail arrangements can exist either as separate shops or possess a space in a mall.

Between 2015 and 2018, this sector has attracted collective investments of more than 5,500 crores, out of which around 1,300 crores were in 2018, according to a report by Anarock. It made 2018 as one of the best years for the Indian retail sector.

Kejriwal said, “The increasing involvement of foreign and private players in India’s retail infrastructure indicates long-term growth potential for organised retail in the country.”

The reduction of restrictive foreign direct investment (FDI) policies, and the decision to let 51% FDI in multi-brand retail and 100% FDI in single-brand retail under the automatic way was followed by the entry of retail giants like Walmart and IKEA.

“There is huge demand of retail space from across segments and we are very bullish on retail. Prestige has six malls under construction, with most of it coming up in south India,” said Venkat K Narayan, chief executive of Prestige Group, one of the biggest mall operators in the country.

In spite of the positive numbers, the organised retail in India is nowhere near to the level in more developed countries. For example, in the US, 85% of the whole retail market is organised, whereas in the UK it is 80%.