Quality retail real estate is really a challenge in India. The situation gets even more grim as soon as we move to tier 2 markets where there is a really dearth of quality retail space. However, the exponential growth of small towns has forced the retailers to expand in these markets. Though,
the absence of good quality malls in the smaller towns are attracting retailers towards high streets and standalone shopping complexes, viz. Westside has launched high street stores in cities like Allahabad and Kanpur. Pantaloons has opened up approximately 55-60 stores in high streets, whereas, Lifestyle plans to open its outlet in a standalone shopping complex in Jaipur. Let’s shed light on growth plans of other big retailers.
• Future Group’s hypermarket chain Big Bazaar is planning to launch around 100 stores across the country over the next 12 months to target value shoppers.
• Easy Day, a part of Future Group plans to operate 24*7 ‘neighbourhood grocery outlets’ (occupying spaces ranging between 1500-4000 sq. ft.) in Tier I, Tier II & Tier III locations to provide shopping convenience to its customers throughout the day and night, especially after the Govt. relaxed its norms on 24*7 retailing in India.
• Anchor retailers prefer to launch their outlets in Tier II & III cities via the FOCO (Franchisee Owned & Company Operated) & FOFO (Franchisee Owned Franchisee Operated) models to lower their input costs of real estate, since the markets are nascent and largely untested. Therefore, such models enable the retailers to have a lesser Investment exposure while still offering their products and merchandise to the untapped Middle Income Group in Tier II & III cities.
• ‘Trent’ is the retail arm of Tata Sons. Westside, a fashion anchor brand of Trent prefers BTS options in emreging Tier II & III cities. Such option give them the flexibility of better designing their store layouts.
• Trent’s value fashion brand ‘Zudio’ has launched in smaller (Tier II & III cities), other than Bengaluru. Due to its low merchandise price points and low margins, it opts for properties at low rentals which is mostly available in Tier II & III cities. For Tier I markets, they y prefer to work on below market rentals or revenue share, since it achieves higher sales volumes.
(A part of information in above mentioned article has been extracted from a report titled ‘Fuelling the Retail Revolution - The Paradigm of Emerging Cities’)