Non-metros beckon

Consumer spending has taken off in a big way in B and C class cities. This is catching the attention of property developers who are planning to build shopping malls in these cities. Neha Sablok reviews the reason why B and C class cities are now the favourite building ground for developers India, in the past one decade, has advanced considerably on all fronts. What was not achieved in 50 years of independence has been accomplished within the last nine to ten years. With globalisation and coming of foreign brands, the Indian consumers have become more worldly wise, realising that there is more to the world than what Yash Chopra's movies fed them with. Visiting a shopping mall is no more a rich family's legacy, but a reality which India has woken up to. The genesis of this change lies in the open market policies adopted by the Indian government from time to time. Today, well positioned shopping malls have become profit generators for the retailers. With the kind of returns being made in the metros, some of these shopping malls have decided to move to B and C class cities in India. Gone are the days when consumers would have to go to the nearest metro to shop or get a taste of city life. Buying the favourite brands from a shopping mall in a consumer's own town without the hassle of that long drive, is no more a dream but a soon to be realised reality. After much reflection some of the world-renowned mall developers have already opened shopping malls in these B and C class cities, while some are working on their plans. Malls in B and C class cities Shopping malls in these cities have become a subject of celebrations. These cities are witnessing a high level of consumer spending owing to an upsurge in disposable income, and the retail boom that has taken off with much impetus. With the cost figures going up in metros like, Bangalore, Mumbai and Delhi, B and C class cities have become the new targets for mall developers, who are now creating retail real estate infrastructure at an aggressive pace in these cities. What, then, is the driving force behind these changes ? Be it metropolitan or a B or C class city, consumers anywhere and everywhere have similar shopping and entertainment needs, more specially, an international retail and entertainment facility in their own cities. Till recently, consumers in B and C class cities had been depending upon metropolitan cities to fulfill their shopping and entertainment needs. With the economy is booming and disposable income of the consumers in B and C class cities is on the rise, national real estate developers and retailers are aiming at making a significant presence in such cities. Most of the realtors and retailers are expanding in sync with the need of the local consumers. Shopping malls in these cities are not only about shopping, but are also extending services in the form of multiplexes, food courts and entertainment zones, thereby giving a perfect package for weekends hangouts. The retail activity that developed in metros sometime back, is now catching up in these small cities as well. These cities are witnessing a construction boom with shopping malls and large retail stores taking on ambitious project space. Besides, the behaviour of the consumer too has undergone a drastic change with a larger number of working women, nuclear families (children accompanying parents to malls) visiting the malls. Today's hectic lifestyle has also necessitated the need to bring all products under one roof. The local flavour It has become necessary that shopping mall developers understand the local consumer behaviour before taking the plunge of mall construction. The state of Punjab, as an example, has mainly fast moving consumer goods (FMCG) stores run by the modern retailers, big kiryana stores and mohalla shops. Unlike Gurgaon, in the state of Haryana, which is the most successful example of mall culture in India, Punjab has yet to come of age in the retailing scene. In an upcoming mini-metro like Chandigarh, modern retailers are recording the highest business sales in grocery and FMCG trade. Till today, it was the masses that decided on a business category turnover rather than the classes. The scenario is fast changing. The middle class is also taking to mall culture, if the sudden surge in mega mall projects is any indication. However, the retailing scene in these malls look buoyant as it will continue to be fuelled by consumer expectations. Environment of these cities B and C class cities are no longer non-players in the retail game. Markets in these cities are also no longer of hypothetical empirical value, but are on the way to being well-researched and accessed by most companies looking to tap India's vast and abundant bounty. As of now, India is at a stage where retailers control the market, being the closest link to the consumers in the supply chain. A heartening factor for the whole retail scenario in India is the changing face of the Indian consumer, and the rise of new consumers, hailing from the so-called class B and C of the socio-economic milieu. This has given rise to the walk-ins at restaurants, cafes, bars, malls and multiplexes. Much needed growth Modern retailing has grown in India due to an increase in consumption. Customer spending has been on the rise, and to a large extent, brand consciousness has also increased. Consumers have begun demanding a better shopping experience as global media exposes them to different lifestyles. Mr Kapil Arora, an entrepreneur, feels that his city should have enough multiplexes, shopping malls and branded outlets so that, in order to meet his needs, he does not have to go to a metropolitan for shopping or entertainment. When asked whether today's consumers of B and C class cities were brand conscious, pert came the reply, "Yes, of course," adding with a smile, "The media has made sure of it." Elaborating further, Ms Ritu Garg, a manager with a leading firm, says that such multiplexes and malls are today's requirement and need to be opened everywhere. "Coming up of such malls would not only be a development for the cities but would also provide employment to the young city lads," she adds. Benefits from these cities Even with costs of family sustenance going through the roof, the consumers in these cities are still ready to spend on their lifestyle. Agriculturists and small businessmen in these cities have a sizeable disposable income, with nowhere in particular to spend. These cities are beneficial to the consumers in many ways, like: the cost of setting up an enterprise here is low the consumer has more time on his hands as travelling time is much less since the aspiration for brands from cities exists, they can be cashed on. Interestingly, developers who have had an experience with a retailer in a metro try to bring him into the non-metro where the firms are developing their mall. Developers and retailers feel that large tracts of land are available at cheaper rates in these cities, which can be developed over a period of time. Lower operational costs in B and C class cities, along with increasing spending power, are making it possible for builders and retailers to give similar value propositions to consumers across the country. What consumers have to say Mall developers and retailers say that these shopping malls can offer a good alternative to high street retailers through expansive parking space, and exclusive food courts. However, feedback from the shoppers showed that not everyone was impressed by the malls in these cities. On being asked whether consumers shop in these malls, Ms Sonia Sharma, an employee with a government organisation, who does most of her shopping at high street, said "Loyalists of traditional food and apparel shops will still go to their old shops. Besides, food court in malls are very expensive." Mr Pankaj Chhabra, a student, says, "Nothing is really affordable except, of course, McDonald's. I wish a lot of affordable brands were stocked in malls." Mrs Uma Dawra, a housewife, says, "Malls are a good place to pass the time. People come here for entertainment and fun, but not for serious buying. They usually like to buy from the local market where the retailer is known to them." In terms of expectations, she says, "Yes, a consumer expects a lot, he wants the best quality in terms of food and clothing, he looks for the best brands and wants his money's worth." Mr Rajdeep Singh, an executive, feels that the consumer is not ready for malls in these cities. According to him there are not many serious buyers in the area. "People visit these places only for entertainment," chips in his friend who also wholly agrees that these cities are not ready for big brands. Rajdeep says that people are aware of the brands but are not ready to spend on it. The crux of the matter While challenges remain, B-class cities are poised to be the next top destination for the industry. The movement will be in two directions: one, which will be determined by the population, and the other by the proximity to the metro in the geographic zone, and more likely than not, a mix of both. In a few cases, native sentiment might prompt the promoter to implement projects in the hometown, though for the majority it is pure business sense that will drive the movement. The signs are loud and clear. Both retailers and developers are exploring options for expansion in these cities in a cautious manner, yet at an aggressive pace.