The year 2010 is likely to give new hopes for everyone. The same applies to the retail sector as well. Retailers are buoyant about their revival in the current year. Plausible revival signs for retail are on the horizon in big cities like Bangalore, Delhi, and Mumbai. Estimates state that the shopping fever would soon spread to the other cities revitalizing the retail sector. Industry analysts forecast a drastic retail expansion during 2010 with many retail giants expanding their presence in tier II and III cities. In tier-II cities, economy has sufficiently improved to stimulate the shopper’s interest, thereby boosting up the sales figures. Luxury segment holds much promise for the coming year.
Indian retail market is the fifth largest retail destination globally and owns the credit of being ranked as an attractive market for retail investment. Retail industry is the largest segment in India, employing about 8% of the workforce, and contributing more than 10% of the country’s GDP. During the past decade, retail industries have built up strong lifestyle brands positioning themselves to cater to the tastes and preferences of their consumers and utilising the increasing income of the end-users. With the economy recovering faster than anticipated, there is a drastic change in the consumer spending patterns. The first quarter of 2010 has witnessed a growth in the retail segment.
The year 2010 is the beginning of a deciding decade on how much India will develop in the next 10 years. It is expected that the country will accelerate its GDP growth like never before and will sustain a GDP growth of about 9.6% by 2020. India is housing about 1.30 billion people and the per capita income of every Indian will be at an average of 8%, which is double than the current.
The number of middle class households will increase from 120 million to 170 million with the addition of 50 million people earning Rs 75,000 to 10,00,000 a year. Taking all this statistics into consideration, out of an end-of decade population 1.30 billion plus, 800 million people will be middle class Indians. The fastest growing areas will be education, health, recreation, and the consumers buying television, air coolers and two wheelers will be about 80% of the total population in the country by the end of decade 2020. The population of urban India will be 40% of the total population of the country by that time.
Retail Industry
India’s overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10%, said a report. As a democratic country with high growth rates, consumer spending has risen sharply as the youth population (more than 33% of the country is below the age of 15) has seen a significant increase in its disposable income. Consumer spending rose an impressive 75% in the past four years alone. Organised retail, which accounts for nearly 5% of the overall retail market, is likely to touch $13 billion by 2010 end.
Retail sector income has grown by 22.7% and 30.2% in the fourth quarter of 2009-10. India’s retail market was moved up to the 39th most preferred retail destination in the world in 2009, up from 44 in 2008 and continues to be among the most attractive countries for global retailers.
Major expansion plans of retailers
Company Format/ Vertical No. of stores Deadline
Big Bazaar Hypermarket 350 -
KB’s Fair Price Discount Store 900 -
Shopper’s Stop Department Store 18 2012
Reliance Jewels Gems & Jewellery 15 2012
Gloria Jean’s Coffee Food and Beverage 41 2011
Maishaa Home improvement 50 March 2010
Major Brands Fashion Brands 62 2011
Vision Express Eyewear 700 2016-17
Sun Glass hut Eyewear 30 2012
- During 2010-12, 55 million sq ft of retail space will be ready in 7 major cities
- Between 2010 and 2012, the organised retail real estate stock will more than double from the existing 41 million sq ft to 95 million sq ft
- About 20% or 8 million of mall space is vacant
- During 2009-12, the Organised Retail Market will grow at a rate of 31 per cent per annum
- Between 2010-12, a higher pace of real estate development in comparison to the pace of organised retail market growth, will create an oversupply situation to the magnitude of 21 million sq ft in 2012
The organized retail sector, which currently accounts for around 5% of the Indian retail market, is all set to witness maximum number of large format malls and branded retail stores in South India, followed by North, West and the East. Further, this sector is expected to invest around US$ 503.2 million in retail technology service solutions in the current financial year. This could go further up to US$ 1.26 billion in the next four to five years, at a CAGR of 40%.
Retail consumption trends remained upbeat in both rural and urban households in the last quarter of 2009-10. All the top retailers, such as Pantaloon, Shoppers Stop, More and Reliance Retail have chalked out expansion plans. It is estimated that by December 2010, a 2.5 crore sq ft (approx) of new retail space will be developed countrywide, mainly in big cities and lucrative tier II cities, which is 50% more than what was developed in the last year. The last couple of quarters have seen some increase in rentals, but they are still 25-30% lower than the peak rates during the boom period of 2007-08.
Punjab
A number of changes have taken place on the Punjab’s retail front such as exponentially increased availability of international brands, increasing number of malls and hypermarkets as a result of easy availability of retail space. Food and grocery are the two categories in the retail sector which offer the most promising opportunities.
The state is occupying only 1.54% of the country’s total geographical area with 28 million population but contributes 60.9% to the national food pool for wheat and 27.8% for rice. Cropping intensity of the state is the highest in the country as almost 98% of the gross cropped area in Punjab is irrigated, as compared to only 41.2% for all India. The government has given approval to 37 agri mega projects at a cost of Rs 30,000 million. However, agro-based industries contribute nearly 20% to the manufacturing output and about 14% to the employment in the state. The state accounts for 54% marketable surplus of wheat and 38% of rice. Services held the largest share of 39% in Punjab’s GSDP.
The people of Punjab are open to advancement. Changes are mostly seen in a positive light among the people of Punjab. The decision makers are predominantly male for shopping with average MHI Rs 12000 -13000 and average monthly spend is Rs 4500-5000. Among both primary and secondary catchment areas, more than 3/4th profile is largely married with at least 1 kid in household and most of them own all basic durables in their household and a vehicle.
The people of Punjab have an eye for style - be it stylish clothes or accessories that are out of ordinary. The people are aware of brands that they have seen in malls while visiting metros and foreign countries. For a good destination point, basic expectations while shopping are accessibility and hygiene. Desirable expectations while shopping are diverse range of products, quality, reasonable price, comfortable place, entertainment, F&B, security, etc. Leasing as a concept is not common in retail in Punjab among the retailers. Lack of proper theatres in Punjab is bringing the crowd to multiplexes at the malls.
The economy of the state is very impressive and the state GDP is growing at CAGR 13 per cent between 1999-2000 and 2008-09 to reach US$ 30.93 billion. The state is fifth highest per capita income in the country growing from Rs 31,182 in 2003-04 to Rs 44,411 in 2007-08, higher than the national per capita income of Rs 33,283. Secondary and tertiary sectors have been growing steadily with a growth rate of 6.5 per cent and 5.4 per cent in 2007-08 respectively, driven by growth in sub sectors like transport, storage and communication and financial services. In 2007-08, the state GDP was to the tune of Rs 138,467 crore (US$ 30.62 billion) and share 3.49 percentage of the total GDP of the country. In 2008-09, it went up to Rs 158,972 crore (US$ 34.22 billion) with 5.21 percentage of total GDP of the country.
Growth factors
The major factors fuelling the growth in retail in the state are increased disposable income of people, improving lifestyles, increasing international exposure, growing aspirations among customers, large middle class that is considered to be major potential customer groups. Punjab’s youth is perceived as trend-setters and decision makers, and also large contributors to the retail phenomenon and tourist spending in Punjab is increasing, which also contributes to the retail boom. The GDP of Chandigarh was Rs 14,176 crore (US$ 3.13 billion) with 0.36 per cent GDP share in 2007-08 and went up to Rs 16,431 crore (US$ 3.54 billion) having 0.54 per cent of the total GDP of the country.
Emerging cities in Punjab
Major cities of Punjab witnessing rapid growth in real estate include Amritsar, Jalandhar, Ludhiana and Patiala. Chandigarh is a city that is making growth in both commercial and residential sector as compared to its sister cities like Patiala, Rajpura, Bhatinda, Pathankot in Punjab. There is also fundamental and growing demand for office and retail space because of the sustained economic activity driven by software companies establishing their presence in Chandigarh.
Best infrastructure for investment
Punjab has enduring strong economy and has all qualities and requirements for starting any business in the state such as having robust physical infrastructure, stready support and social infrastructure, strong educated workforce, thriving industrial estate, a leading investment destination, vibrant entrepreneurship and pragmatic governance.
A leading investment destination
Ludhiana has been adjudged the best place for doing business. According to the Assocham Investment Meter (AIM), 2008, Punjab is ranked third in north India with investments in private sector worth Rs 19,418 crore. According to estimates by the Centre for Monitoring Indian Economy (CMIE), outstanding investments in Punjab as of 2007-2008 were Rs 67000 crore of which almost 50% is under implementation
Consumers with high purchasing power
Punjab accounts for 3.3% of the country’s total private consumption expenditure at Rs 66,000 crore in 2007-08 and has the higher propensity to consume than most other states, and is significantly higher than the national average in almost every retailing category. Tier II and III cities and rural towns represent a goldmine of opportunity for the retailers since their purchasing power is much higher than the national average of Rs 635.72 per person per month. The state also leads with the highest number of vehicles per thousand population. Further, estimated percentage of population of those who are living below poverty line in Punjab is 2%, as compared to 25% for all-India in 2007-08.
The establishment of Bharti-Walmart outlet in Amritsar and Zirakpur, proposed development of Metro Cash & Carry at Zirakpur, Ludhiana and Jalandhar with an investment of Rs 900 crore, proposed development of retail malls, shopping centres by DLF Group, Ansal Group and Spirit Global Constructions have made the state the central focus for commercial activities.
Retail Industry of punjab
The state provides best opportunities to all the retailers at large to exploit its huge consumption potential. With high consumption trends of the population, Punjab’s per capita income at Rs 44,411 is higher than the national per capita income of Rs 33,283 in 2007-08. In January this year, overall 35 small and big shopping malls with total space of approx 165 lakh sq ft was available in the state and almost equal number of malls are expected to be completed in the state by 2012, which are at various stages, from planning to on hold and under construction.
The DLF and the premier developers of the country have plans to construct retail malls, SEZ and shopping centres in Amritsar, Jalandhar and Ludhiana in the near future. The Ansal Group too has several plans to develop luxury malls in Jalandhar, Ludhiana and Mohali. A Delhi based company, Spirit Global has proposed the development of 60 malls and multiplexes in Punjab with an investment of Rs 2200 crore.
The growth of consumption in Punjab gets equal support from the urban as well as rural consumers, which indicates an immense potential for organised retail as the choice of location is not a constraint. The state’s tier II and semi urban and rural towns represent a good opportunity for the retailers. The national and international retail giants, who wants to enter the food and beverage retailing business are making big investments in logistics, processing, cold chains and contract farming. The country’s leading retail chains, like Reliance, Piramals, Tata, Rahejas, ITC, Godrej, S Kumar, RPG Enterprises, Future Group and other international brands and retailers, have announced major plans for the state’s retail sector.
Contract Farming
The state is fast turning into a hot choice for contract farming in the categories of tomato, basmati, cotton, etc. Pepsi, had a successful tomato contract farming, Basmati rice, which had almost vanished from the state due to un-remunerative prices, is now being grown abundantly in the state, mostly due to contract farming. Corporate such as Hindustan Lever, UB Group, PepsiCo, Escorts are becoming active in the contract farming of agri-products. A few years back, Arvind Mills was identifying locations to start a contract farming project to grow cotton in the state.
Telecommunication
The state has the highest telephone density of 47% compared to national average of 20% in 2007-08 and highest per capita cellular connectivity with more than 12 million cellular phone subscribers in 2007-08, extensive optic fibre cable network of 25,000 route km in all towns and villages with more than 5000 population, and establishment of dedicated STPI satellite, each station operational at Mohali and Jalandhar by VSNL and one proposed in Patiala. In 2009-10, the mobile subscribers are estimated close to 15 million.
Hospitality Sector
Punjab is renowned for its native hospitality and has about 60 hotels from 5 star to 2 star. These hotels are mostly located in Chandigarh, Jalandhar, Amritsar, Ludhiana like the one of the Radisson Group in Jalandhar. Amongst the most prominent upcoming hotels in the state is a seven star hotel in Amritsar by the Hampshire Hotels and Resorts with plans of converting Gobind Fort into a heritage museum and a cultural centre and proposed spend of over Rs 1,500-2,000 crore in the booming hospitality sector of Punjab. Emaar MGF has tied up with JW Marriot group of hotels for a luxury hotel to come up in Amritsar by next year. Further, Vipul group is planning to build a chain of five star hotels in Mohali, Amritsar and Ludhiana.
High demand for luxury cars in Punjab
In Punjab, people are inclined to buy new and luxury cars frequently and is being viewed as the hot market for all cars. The large industrial growth coupled with the partiality to spending on machines, has given a push to the premium car segment in Punjab. Punjab and Haryana are capturing the 15% of the luxury car such as Audi, Porsche and BMW market of the country. Jalandhar and Ludhiana have the largest number of Mercedes in India. Punjab has plenty of NRI money and they spent them on luxury items like cars. Luxury cars are a status symbol for the people in Punjab along with Chandigarh.
The people here are having enough money to buy cars. They like to have the latest models and technologies available in the market. Most of the luxury cars are sold in Punjab. Despite the crisis, the small car segment has achieved 15% growth in Ludhiana city alone. Maruti, which sold 3,950 cars in 2007, has sold 4,544 cars 2008, which is up by 20%.
Mercedes Benz is also expecting to achieve its target of 490 in comparison to the sales of 455 cars in 2007. Ludhiana holds the tag of highest number of Mercedes and the number is growing. Other premium models, like Skoda and Toyota Corolla, are also very popular brands. Mercedez Benz has sold 3625 cars in 2008, out of these 275 were sold in Punjab. The BMW has sold 90 cars in the first six months of the same period. In 2007, only 175 Mercedez cars were sold in the state.
Total Vehicle in Punjab (31.3.2009) 48,31,531
Passenger Cars 4,44,465
All two wheelers 35,81,837
Source: Transport Department, Chandigarh, Punjab as on March 31, 2009
Liquor Consumption
Liquor consumption in Punjab has touched an all time high, with its denizens guzzling roughly 29 crore bottles of Punjab Made Liquor (PML), Indian Made Foreign Liquor (IMFL) and beer in 2009-2010. This is a whopping increase of 10 crore bottles over the consumption of 19 crore bottles in the preceding year, suggesting that the tipplers have given a major leg-up to the revenue earnings of the state. In other words, Punjab with a population of 2.7 crore has one of the highest per capita consumption in the country — roughly 10 bottles (750 ml each) per head in a year. The state has collected record revenue of Rs 2,150 crore in 2009-2010 — Rs 200 crore more than the preceding year.
Textile Industry
Textile accounts for 29% of fixed investment, 17% of manufacturing output, 21% of industrial employment and 40% of the total exports from the state. Punjab is the 2nd largest producer of cotton and blended yarn and the 3rd largest producer of mill-made fabrics in India. Industrial output from the sector is more than Rs 11,000 crore, having a contribution of over 21% to the manufacturing output of the state and 24% contribution to industrial employment.
IT & Electronic Industry
Mohali has been developed as an IT and ITeS hub. Software exports from the state were to the tune of
Rs 800 crore in 2008-09. Over 1,200 SSI units have been set up in the electronics hardware segment. These SSI units manufacture personal computers, industrial electronic equipments, electronic instruments, and components. The state has launched an IT-dedicated venture capital fund, with a corpus of Rs 20 crore, funded jointly by PSIDC, Punjab Infotech, PFC and SIDBI. The strategy intends to create an IT/Knowledge industry with exports worth US$ 4.6 billion and 0.6 million direct and indirect jobs by 2018.
Pharma
Guardian Lifecare set up base in the state in late 2009; another player, Surya Pharmaceuticals, is set to enter the market soon. The Rs 2,000-crore Punjab pharma market has approximately 30,000 chemist shops. The major players in the sector that are changing the look of neighbourhood chemist stores are Fortis Healthworld along with Aadhaar Pharmacies and Apollo stores. Apollo Pharmacy has 10 stores in the state and has plans to further expand in Punjab. The 1,000-crore Chandigarh-based Surya Pharmaceutical Limited has plans to set up over 500 healthcare and pharma retail stores under the brand Viva.
Strong Educational infrastructure
Punjab emerges as a leading State in school infrastructure category for providing best infrastructure and facilities to primary and upper primary schools based on Educational Development Index for the year 2009. There are 12 universities, 46 engineering colleges, 355 undergraduate and 75 postgraduate colleges with about 360,000 students. Punjab is home to various leading higher education and technical institutions such as: Prominent engineering colleges including IIT and Dhirubhai Ambani IT University in Roopnagar, National Institute of Technology (NIT), Jalandhar and Thapar Engineering College, Patiala, International standard science centre-Pushpa Gujral Science City established in Jalandhar.
Human Resources
Human resource is one of the most important pillars supporting the growth of the IT/ITeS industry specifically since it is the largest employer in the organised private sector, employing over 2 million professionals with a net addition of over 3,75,000 professionals to the Indian industry in 2008. The IT industry in Punjab provides net employment to over 10,000 including both direct and indirect workforce. There are 4265156 number of households in the state.
CHANDIGARH
Chandigarh covers 114.59 sq km and has a population of 1.5 million (2010 estimated) with density of approx 8000 per sq km. The gross domestic product of Chandigarh reached at US$ 2.4 billion (Rs 97,053.9 million) in 2007-08 with growth rate of 12.94%. Chandigarh has the highest per capita income level in the country i.e. US$ 2750. In 2007-08, there are 3 lakh households with 4.2 family size and have 10 cars and 55 mobiles per 100 persons. Chandigarh offers world class education but is not considered to be a major employment generating city because of the lack of multinational corporations.
Consumer
Chandigarh has a large Punjabi population and Punjabis are known for their lavish spending lifestyle. The people of Chandigarh are brand conscious because of travelling widely or having relatives abroad. About 60% of the Chandigarh’s population is employed in the public sector or in government run organisations.
Hotel, Restaurant and Institutions
Chandigarh has three five-star (Hotel Park View, The Taj and Hotel Mountview) and four four-star hotels. Also, there are around 36 hotels, 10 guest houses, and 16 budget accommodations in the city. The wholesale & retail trade and restaurant & hotel trade reached an investment of US$ 1.6 million in 2005-06. However, industry sources report that many leading hotel chains are planning to launch five star hotels (Radisson, Marriot, Intercontinental and Oberoi) in and around Chandigarh in the next two-three years. Around 10-15 per cent of total food and alcoholic beverage procurement in these high-end hotels is comprised of imported foods and this share is expected to increase in the future.
The Union Territory has several leading fast food restaurants (McDonald’s, Pizza Hut, Dominos, KFC, etc.), hotels and restaurant chains like Copper Chimney, Gopalji, Sindhi Sweets, Sai Sweets, Hot Millions, Sagar Ratna, Shangrilla Plus, Yellow Chilli, Ambassador, Chop Stick, Ruby Tuesday, etc.
Retail
Chandigarh is constructed in such a manner that every sector has its own full-fledged commercial market. The markets in sector 22 and sector 17 are very popular in terms of the largest number of branded organised retail stores, central location, ingenuity, etc. The majority of organised retail stores are convenience stores with a floor size ranging between 900 and 4500 sq ft. Nonetheless, new retail space is being developed by the DLF, Parsvnath Group, Ansal Group and Emaar MGF in and around the city. Organised players are enhancing their present business strategy for expanding the customer base. Only a few organised stores have an exclusive imported food section with limited product lines. Some of the major retailers having their presence in the city are Reliance Retail, Spencer’s Retail, Aditya Birla Retail, Pantaloon Retail, Kewal Stores, Punjab Stores, Bhatia’s International and Empire Stores.
LUDHIANA
Ludhiana’s geographical area is 3767 kms and the population as per 2001 census is 3,030,352 with 804 population density per sq km Ludhiana is the city with the most extravagant bungalows and largest number of vehicles. Ludhiana, the industrial and financial hub, is also one of the most important education and health centres of the Northern India. The saga of lavish lifestyles of its residents have travelled far and wide, thus making sure that all new lifestyle products, be it the latest brand of Rado, Omega or Tag Haeur watches, the Mont Blanc or Gucci sunglasses, the newest offering from the houses of Polo Sports, Marks and Spencer or Hugo Boss, or our very own designers like Ritu Kumar and Ritu Beri are concurrently initiated in the mega city. Showing off wealth is a norm and snobbishness finds expression through designer clothes, designer jewellery, including Cartier and Tiffany, cars and cell phones.
The lifestyle of the Ludhianvis is as lavish as their routine meals as well. Four decades ago, there were hardly any cars, and tongas and scooters were the mode of transportation. And now almost every household in Ludhiana has luxury mode of transportation. Socialising takes place mainly in clubs-Satluj Club, Ludhiana Club, Model Town Club, Lodhi Club, and for the fairer sex, there is Lakshmi Ladies Club. These clubs remain open well past 9 pm on week nights, and the Saturday Night Syndrome in the city sees the parties carry on till the wee hours of the morning. In fact, it is a city that never goes to sleep. The people work hard all day, and unwind at night in the clubs over Scotch and a game of rummy. Winds of change are definitely visible in this vibrant city. Women’s education and employment are being accepted in the otherwise conservative city. Higher education is considered a must for everybody. Youngsters are getting ambitious, and are moulding their business ventures from the old routine culture to more professionally managed set-ups. Spas and health clubs are in, just as getting buttocks treatments for anti-ageing is.
Present Business Environment
Ludhiana is the industrial support of Punjab and is one of the leading business centres in the whole northern India. The textiles and hosiery are the main industries, which the major part of the Ludhiana’s population depend upon. The other key industries are however, cycle manufacture, manufacturing of the cycle parts, sewing machine manufacture, auto parts manufacture, machine tools manufacture, manufacturing of electronic goods, tyres and tube industries. Among the other major industries there are industries of vanaspati, beer, sugar, flour, rice, rice bran oil, and even cattle foods making. Hero Group, Avon Group, Oswal Group, Nahar Group, Ralson are some of the major industrial groups of Ludhiana.
Malls & Multiplexes in Ludhiana
Ludhiana city is going to have not less than six multiplexes, coming up in various parts of the city. And Ludhianvis will no longer have to complain about lack of entertainment here. By the end of 2010, they can look forward to a good number of malls and multiplexes, five hotels of five-star status, pubs, eating joints, discotheques and much more, to give a new face to this industrial capital of Punjab.
Flamez multiplex is coming up in place of Malhar Theatre. Another one is being planned near the rai
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