Organised retail needs to expand

Rapid urbanisation in the country has led to the growth of organised retail.
Organised retail needs to expand

 

In India, there is one kirana store for every 100 people and given that there are nearly 12 million such stores, the total unorganized retail space is nearly 3.6 billion sq ft. In contrast, organised retail has about 130 million sq feet or about 3-4 per cent of the total retail space in the country. Apart from that, organised retail contributes about seven per cent of the sector’s revenues, but is twice as efficient as its unorganised counterpart.

And, as per the Census of 2011, our country with a population of 1.2 billion and it translated into about three sq ft of retail space per capita. Also, our population is growing at nearly 1.75 per cent each year and that would entail an additional retail space requirement of 63 million sq ft.

And, growth of organised mall space growth in the seven metro cities between 2008 and 2011 was broadly in the range of 20-30 per cent each year during this period, except for 2012 which saw a drop.

The country’s urban population is nearly 380 million and also growing by nearly 1.8 per cent each year, which would translate into an additional retail space requirement of about 20 million sq ft annually. Nevertheless, which ever technique we utilize, per capita retail space, growth of population or impact of retail FDI, the requirement  for retail space is very large and  modern retail will need to add substantial capacity over the next few years.

In 2012, only about 3.5 million sq ft has been added in mall space across the leading seven metro cities (Greater Mumbai, NCR, Bengaluru, Hyderabad, Chennai, Kolkata & Pune) and at the end of that year, and the total mall space stock in these metros was estimated at 65 million sq ft.  It is estimated that in 2013 there would be an addition of 10 million sq ft of mall space, subject to timely completion of the projects.

So what happens when a retailer does not get space in malls and existing high streets? New high streets are created, existing high streets are expanded, stand-alone store locations come up, commercial premises convert ground and first floors into retail, and large residential projects develop retail space. This trend can be seen in cities where new mall space is not coming up.

In the last 12 years, the average addition of mall space in these seven metro cities was in the range of 5 million sq ft each year, with a total population of around 75 million. And, considering the average population growth, an additional five million sq ft may appear sufficient at first glance, but considering the rapid urbanization in the country, it may not be sufficient and that could drive mall rentals higher.

Bird’s-eye view

·         Organised retail small fraction of sector, but twice as efficient

·         Rapid urbanisation and need for additional modern mall space

 

Publish Date
Not Sponsored
Live: People Reading Now
 
 
 
 
TRENDING ARTICLE
RECOMMENDED FOR YOU