Retail in India is an incredible assortment of formats. Over the last decade, the concept of shopping has undergone a sea change in terms of format and consumer buying behavior, ushering in a new era of modern retail across the country. Today, Indian retail is at an interesting juncture. Newer avenues of retailing have evolved, leading the retailers to rejoice in the possibility of cracking new frontiers. With the development, augmentation, and modernisation of infrastructure taking place at most major Indian cities, the scope of retail has increased manifold. Taking into account such opportunities and challenges, we would like to share a comprehensive commentary on the emergence of shopping and leisure spaces in metro stations and at airports in India.
Metro station retail
All economic activities in a city depend on ease of access and public transport plays a vital role in connecting spaces and people. In this regard, metro projects are leading the way of the transport sector in India to meet the ever-growing demand caused by rapid urbanisation. Not only does a metro provide a cheap mode of transport but also takes care of factors like reliability, comfort, and security, which in today’s scenario holds more important because of the time spent in commuting from home to work and vice-versa.
India today is on the edge of an urban revolution, with its urban population increasing from 217 million in 2001 to 377 million in 2011. Increasing from a mere17.3% in 1951 to 31.16% in 2011, urbanisation in India is pegged to reach 600 million, or 40% of the population, by 2031. Aligned with the growth in urbanisation, the horizontal sprawl of cities to encompass the burgeoning millions has, on the one hand, put the urban infrastructure to the test, and on the other hand, has left us with little time for ourselves. Commute times are seen to be the highest in new areas or in booming peripheral housing areas and research suggests that the long-distance commute and long working hours are related to an increased sense of time pressure and stress for the upwardly mobile executives.
The metro rail in this regard has been a game changer, and where it has significantly helped in solving traffic problems, lack of time arising from long working hours and time spent in commute has still remained the same. This has necessitated the incorporation of retail elements in progressive transport planning. In 2006, the celebrated Delhi Metro Rail Corporation (DMRC) first started its retail operation in select stations in Delhi. The initial idea behind retail at metro stations was to only work out non-fare revenue streams for the DMRC. Since retail at metro stations was still a new concept in India, it led to unplanned design and unthoughtful leasing of the retail component of metro stations.
The DMRC has 173 stations (including six Airport Express stations) and has a constantly increasing ridership of more than 2.6 million commuters per day, but the same cannot be said about the growth of the retail component. It took almost five years for a large format Haryana Urban Development Authority (HUDA) City Centre metro station, in Gurgaon to be functioning at almost an optimum level. On the other hand, some metro stations are yet to welcome their tenants even though the banners announcing their arrivals have almost faded.
It has been over a decade now that the metro was introduced in India and from being a pilot project in Delhi the country today has six operational metro systems that includes the cities of Kolkata, Chennai, Delhi NCR, Bengaluru, Mumbai and Jaipur and another six are under construction. This presents a huge opportunity for retailers to capture the concept of transit-oriented retailing and a lot can be learnt from the successes and failures of the pilot project of the Delhi Metro.
One needs to understand that though figures of more than a million riders a year presents a huge target group, it is not the sole deciding factor to support and sustain retail. Not all form of retail is compatible with metro stations and factors like location, demographics, density, and commuter profile of the station play a major role in defining the kind of retail for that station.
Metro retailing is more time sensitive, unlike airport retailing, where there is a longer lounge period. Commuters use the metro to travel from point to point and only de-board to either interchange or exit the metro station, and are on the go. It was only recently that the DMRC has revised its maximum permissible time limit for stay within the metro system for commuters from 170 to 180 minutes, to avoid congestion. This means that every metro commuter is allowed to stay inside the metro premises for only 180 minutes, i.e. from the time he enters from one station and exits from another station, irrespective of the distance travelled, after which he is penalised. In December 2015, approximately108,513 passengers were booked for overstaying in the system.
This means that categories like fast food, convenience stores, coffee shops and pharmacies are more likely to be successful than categories involving a long lounge period like fine dining/restaurants, fashion-apparel, home and lifestyle, gift shops and supermarkets.
Metro stations are high traffic and quick movement areas and so the design and placement of the retail component in the overall metro station design can define and direct the footfalls to the stores. For instance, if a commuter has to exit the metro station compound to access the retail stores, he is more likely to not stop at the stores at all.
Also, the entry for the retail area has to be well accessible for customers outside the metro station, so that the stores not only cater to the in-house demand but can also benefit from the nearby office or residential catchment. This dual access ensures that the retail stores are not only getting footfalls during peak hours but also have trickling customers through the non-peak hours as well.
International learnings – Integration of technology with retail
One interesting example of the successful integration of retail with metro stations comes from South Korea, where the British supermarket giant Tesco revolutionised shopping at metro stations. South Koreans have amongst the longest working hours in the world and Tesco saw this as an opportunity rather than a disadvantage. The retailer introduced the concept of ‘virtual stores’ at metro stations to capture the tech-savvy commuters by displaying their products on walls of metro stations and bus stops.
The initial idea of the virtual store stemmed from the observation of sluggish sales at Homeplus, a brick-and-mortar supermarket format of Tesco near the Seoul Subway Station. One of the major reasons cited for this slow pace of sales was that due to long working hours, the neighbourhood did not have time to visit the store physically. With the help of technology, Tesco turned around this disadvantage and opened its first virtual store at Seoul Subway Station in 2011.
The virtual store was designed to resemble an actual Tesco supermarket with isles and shelves. The interface was made very user-friendly, where users only had to download a Homeplus application on their mobiles and scan the QR codes of the displayed product. Once the product was added to the user’s cart, he could schedule a delivery time and pay online for the products to reach by the time they got back home from work.
Tesco understood their customer base well and then integrated technology with retail to make the virtual stores of Homeplus a huge success in South Korea. The stores later were set up at 22 locations across high commuter traffic areas, which were frequently thronged by tech-savvy, and ultra-busy commuters.
The road ahead
Retailing at metro stations in India has come a long way since 2006, and now new upcoming developments like the Hyderabad Metro are incorporating newer concepts and detailing in the retail planning. The Hyderabad Metro Rail (HRM), the world’s largest public-private partnership project (PPP) in the metro sector, has already put forth their model retail offerings on their Nagole station to showcase their retail development plans. Branded as ‘Hyderabad Next’, the stations present an opportunity of 1.1 mn sqft of retail in its first phase and a total retail opportunity of 18.5 mn sqft in the next 8–10 years, which is to be developed in sync with the market trends. The authorities are carefully leasing the retail formats to cater to the daily requirements of commuters, making the metro their one-stop solution.
With so much potential and opportunity for retail real estate development on metro stations in India, it is only imperative to keep in mind that connectivity can only strengthen the retail component of the metro development, but it is not the sole deciding factor for its success.
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 Census of India, 2011
 Better Growth Better Climate, The Global Commission of the Economy and Climate; 2014
( The above mention is extracted from a report submitted by Knight Frank)