Retail Brands to Bet Big on High-Streets for Expansion

The top cities where leading brands expanded in this period include Bengaluru, Pune, Hyderabad, Delhi, Chennai, Mumbai, and Gurugram.
Retail Brands to Bet Big on High-Streets for Expansion

Leading retail brands across categories are zeroing in on high-street markets for expansion across India in a calibrated post-pandemic move. 

Between April 2020 and May 2021, some of these brands closed over 120 lease deals at prominent high-street markets across Indian cities and towns. The deal sizes ranged for areas as low as 400 sq. ft. and went all the way up to 35,000 sq. ft, says a report for ANAROCK Retail.

Some Quick Service Restaurants (QSRs) within the F&B category (Starbucks, Pizza Hut, KFC, etc.), apparel brands, and even large-format stores like Pantaloons, Westside, Zudio, Reliance Trends, and Max (typically anchor tenants in malls) are now getting more serious about their high-street presence.

Of the categories which closed high street leases, apparel had the largest share of deals with an over 23 percent share, followed by F&B with a 15 percent share, and jewelry with 12 percent. Hypermarkets and supermarkets mostly leased large high-street spaces in smaller towns and cities.

The top cities where leading brands expanded in this period include Bengaluru, Pune, Hyderabad, Delhi, Chennai, Mumbai, and Gurugram. The prominent Tier II & III cities include Lucknow, Ahmedabad, Chandigarh, Patiala, and smaller towns in Uttar Pradesh and Madhya Pradesh (Indore, Bhopal, Gwalior).

Pankaj Renjhen, COO & joint MD, Anarock Retail, says, “High-street markets have been doing very well in these post-pandemic times and we are seeing many retail brands eye these locations as part of their expansion strategy. Well-capitalized retailers with established business models are using their competitive advantage to negotiate good deals to expand their footprint and gain a larger market share.”

“High-streets offer a good opportunity with attractively low start-up time, lower cost of operations, and less dependency on immediate adjacencies. High streets already have a considerable base of footfall traffic.”

Some retailers are also willing to take well-located, road-facing spaces within good catchments rather than sign up at expensive high streets in metro cities.

In another major post-pandemic trend, prominent hypermarket and supermarket brands are penetrating deeper into Tier II, III, and IV cities. Many of these smaller towns and cities offer high revenue-growth potential for these brands. Previously, most of the smaller towns and cities depended on mom-and-pop stores for their daily grocery needs.

There is aggressive demand from retailers - particularly large corporate retail chains - particularly in high streets of Tier II, III, and select Tier IV cities. This demand is backed by the increased resilience of non-metro customers. With a lack of quality retail centers in most of these cities, demand has focused on high-streets. Additionally, the cost of operations in Tier II and III city high-streets is more competitive for retailers while for consumers, the familiarity and location convenience of high street retail adds up well.

During the period, brands such as MORE Retail mostly leased large areas in smaller cities like Agra, Faizabad, Muzaffarnagar, and Sitapur in Uttar Pradesh and Bhubaneshwar in Orissa – spaces ranging between 14,000 sq. ft. to 30,000 sq. ft. in area.

"Going forward, with limited quality retail stock coming up and in smaller cities' convenience as a key parameter, high streets are a viable solution for retailers to bridge the gap,” says Pankaj Renjhen. 

"Except in a few large cities, large-sized retail centers will be difficult to sustain as the pandemic has shrunk the retailer category - both in terms of the number of players and store size," he adds.
 

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