Malls in East : Fast developing retail hub

It’s boom time for the retail business in the eastern region of the country. The eastern region states are likely to have at least 30 malls by the end of this year. These are expected to cover nearly six million square feet of space in several cities of West Bengal. Retail growth in West Bengal looks to be progressive. Besides Kolkata, malls are also planned in almost all the big cities of eastern region.

According to top West Bengal developers, the proposed malls are likely to attract an investment of around Rs 5,000 crore. On the average, a three-lakh square feet mall will require nearly Rs 250 crore investment, which includes cost of property, construction cost and cost of providing basic services like elevator facilities. Of the proposed 30 malls in the region, nearly one dozen malls would be developed in Kolkata and Rajarhat area.

Kolkata offers a variety of retail format to its citizens as it has a large middle and upper middle class population forming a huge pool of potential customers. At present, over a dozen malls such as City Centre, City Centre II Downtown, E-Mall, Fort Knox, Gariahat Mall, Homeland, Mani Square, Orbit Mall, Shagun Wedding Mall, Silver Spring Arcade, South City Mall, The Forum, The Metropolis and The Test Mall are operational while Acropolis Mall, Avani Europa, Avani Renaissance, Avani Riverside, Axis Mall, Block by Block, Diamond VIP Plaza, Downtown Mall, Haute Mall, La Vida Mall, Lake Mall, Oasis Galleria, Ozone Mall, Rainbow, Shop Out, The Terminus, The Trinity Arcade, The Trinity Glitz and Varna Parichay are in various stages of completion. Keeping pace with the trend, the Heritage Market and the New Market are also getting a facelift. This follows the renovation of The Town Hall.

Retail lease rates of key high street standalones in the CBD area like Park Street, Camac Street and Elgin Road were in the range of Rs 200 - 250 per sq. ft per month and lease rates in malls in those areas were in the range of Rs 200 - 300 per sq.ft per month. South City mall at Prince Anwar Shah Road is almost ready and likely to be open by January, 2008. 

The basic growth is likely to be driven by changing lifestyles and by strong surge in income and disposal income, which will be supported by favourable demographic patterns.

 

Retail sector in East

 

The retail industry of the country is going through a rapid transformation as consumers are rapidly accepting the modern formats overwhelmingly. And, retail space is expanding commensurately and brands worldwide are willing to partner with local investors to set foot in uncharted territories. Now, the middle class has more disposal income. Kolkattans are the second biggest spenders, after Delhiites, on consumer durable brands. The entire east region is well-aware of the power of branding.

Several cities of West Bengal and eastern region of the country are emerging as the new mecca of retail revolution.

The city of Kolkata has come a long way in attaining retail maturity with proliferation of brands and organised retail chains. Over the last few years, shopping trends in the city have witnessed a radical shift from the conventional-trader-run standalone shops to more organised and large retail formats. Evidently, the future of retailing in the city lies in new-age shopping malls, which provide variety, value and convenience in a more comfortable environment. This is also evident from the surge in consumer spending on branded goods seen in recent times. The city has also welcomed other retail chains such as Pantaloons, Westside and Shoppers Stop and many more.

Kolkata qualifies as the second-largest metro market in India and houses one out of every six shops located in the country's top 25 cities. Due to strategic geographical location (the centre of east and north-east region, and route to Bangladesh, Nepal and Bhutan), the city becomes an ideal location for both national and international customers.

Easy availability of mall space and increased space specifications by the new retail occupiers will heighten the intensity of competition in this sector. In such a scenario, success in retail business will be driven by the ability to create all encompassing retail destinations and backing the product offering by right tenant-mix and location.

Harshvardhan Neotia, Managing Director of Bengal Ambuja, says “There is big scope of mall development in other cities of eastern region. In my opinion, some malls may close down because of inadequate business. Regional brands have a strong understanding of the regional market and aspirations of people and these will always have a significance or following, even with the advent of national and international brands.

 

Retail business

The concept of a mall is indeed based upon the convenience of the consumer. Hence, in a mall, consumers do buy goods in the desired ambience and manner. Interestingly, revolution in this field and our lifestyle has a reciprocal relation: one influences the other. Shopping malls in East, not heard of until a few years ago, are visible today all around the region.

According to developers, around 30 malls will become operational in the region by 2008-end and 40 malls by next year and still another 45 by 2010. The region will have around 1.55 crore sq.ft space by 2010 against 94.63 lakh sq.ft at present. Mall developers, ‘manufacturers and big suppliers’ have realised that the system is of mutual benefit to both. Malls with their superior bargaining power can strike better deals, wider product ranges and more frequent, speedier deliveries. And, manufacturers can afford to have a separate team servicing these outlets, working full-time.  

 

Retail business of the country grew at 34.8 per cent from a mere three per cent (Rs 28,000 crore) in 2004 (on 2004 prices) to 4.6 per cent in 2006 (around Rs 48,000 crore). The retail industry grew by 5.7 per cent year-on-year in the same period - from Rs 930,000 crore in 2004 to Rs 1,036,000 crore in 2006.

The country’s east and north-east region is full of promise. Primarily in West Bengal, where there has been a sustained period of opposition to modern retailing. There is tremendous opportunity for modern retail formats for Kolkata has the second highest average annual expenditure per household (over Rs 64,000) on grocery after Delhi (Rs 72,000).

 

F&B restaurant in Kolkata

Kolkata would have around 40 new restaurants by the end of current year, fast food chains and coffee joints like Yum brands, Coffee Pai, Subway, Flurys, Oh! Calcutta, Mainland China and Marco Polo.  And, several first-time food chains will nearly treble their retail presence this year. Pizza Hut, which currently has two outlets, will set up three new outlets. KFC will open a restaurant and, soon, will open five more outlets by year-end.

Among coffee joints, Café Coffee Day plans to open about 15 outlets in the city and at other locations at an average investment of Rs 25-30 lakh per outlet. Coffee Pai, the vegetarian restaurant, will open two more outlets. Subway, which opened its first restaurant in 2005, plans to open around seven more restaurants. Flurys, the popular restaurant on Park Street, opened their first outlet in South City Mall and plans another outlet in Rashbehari Market.

South City mall will see four specialty restaurants offering Indian, Chinese, Spanish and Thai delicacies. It will house a 4,640 sq.ft Thai eatery Benjarong, Zara and The Spanish Tavern’ among others. Blue Foods will host the food court with 13 different cuisines from India and abroad. Spread over 30,000 sq.ft, Foodtalk will host brands like Café Coffee Day, Kookie Jar and Subway. Mainland China has opened shop in South City spread over some 10,000 sq.ft. Sigree, an Indian restaurant, will open a 5,165 sq.ft outlet in South City. The Silver Arcade on the Eastern Metropolitan Bypass too will see a 100-cover Oh! Calcutta and a 180-cover Mainland China. The Marco Polo will open a new Marco Polo Pot House, a high-end lounge bar in Salt Lake’s City Centre.

 

Local retail segment

Kolkata has several popular brands (both Indian and international), which have standalone showrooms or are housed in Forum, the shopping mall at City Centre. Shoppers Stop, Pantaloons, Westside, Metropolis and the new Gariahat Mall are some of the popular shopping destinations. The Music World outlet in Park Street is its most profitable centre in India. Pantaloons at Gariahat and Sony World at Ultadanga have emerged as the highest revenue earners per sq.ft for their brands on a national level.

Kolkata has emerged as a very prospective destination in the expansion plans of retailers. The city is now perceived as a latent but highly potential market. Prominent retail chains like Music World, Westside, Dominos, Pizza Hut, Shopper’s Stop, WillsSport, Barista and Pantaloons have already established their presence in the market. In the city, there is a large number of traditional, specialised markets like the Bowbazar market, Bagri market, China bazaar, Lake market, Burrabazar market and Chandni market. There are also high-street markets at Park Street, Esplanade area, Camac Street, Shakespeare Sarani, Gariahat, which offer a wide variety of items. Besides these markets, there are small-format, non-branded shopping complexes and malls like the A/C Market, Vardaan Market, New Market, and the Shreeram Arcade, which offer a wide variety of items - from garments, watches and footwear to consumer durables like household electronic gadgets.

 Mr Aayush Rungta, Marketing Director of Hoffmen, says, “We are looking forward for both high street store and malls. In Kolkata, we are paying Rs 90 to 100 per sq.ft in malls like South City. The rates basically depend on the place and locations.”

Atanu Datta, National Sales Manager, Khadims India Ltd, says, “We have already tie-ups with forthcoming malls of Haldia, Kharagpur and Asansol. For the time being, we are not targeting very high profile malls because our products may not match the up-marketed products of those malls. Rent is not an issue for us for we can pay the rent according to location preference and area requirement.” Two most important things we do before opening a showroom is the site selection and the ROI calculation of the store.

Encouraged by the success of its ‘chicken’ brand, Arambagh, dealing in poultry products, took the initiative for starting ‘convenience stores’ named ‘Arambagh’s Food Mart’ in 2000. An aggressive expansion strategy has seen the company’s physical strength grow to around two dozens outlets in Kolkata. In floor area, each of these stores is between 500 and 800 sq. ft. Good quality, right quantity, use of correct weights and low MRP are the main factors, which have contributed to an impressive growth of this chain.

Sree Leathers entered the Kolkata market in 1987 with its first outlet in the city at Lindsay Street, which became a big success. The company’s second mega outlet at Free School Street, which has floor area of over 7,500 sq.ft, provides a great shopping experience to its customers. Today, the company has a number of outlets scattered over West Bengal, Orissa and Bihar, and has ventured into international markets.

Pantaloon, having a turnover of over Rs 2,000 crore with over 200 outlets across India, is proving to be a major retailer in the eastern part of the country, followed by 350 outlets of RPG’s Spencer with a countrywide turnover of Rs 700 crore. Brands like Westside, Landmark, Steel Junction, Titan, Tanishq, Tommy Hilfiger, Body Shop, Reebok, Marks and Spencer and Guess have their outlets in Kolkata and are spreading to other cities of the eastern region. The Future Group is spending around Rs 800 crore for opening Pantaloons and Big Bazaar stores in Kharagpur, Siliguri, Burdwan, Asansol, Darjeeling, Guwahati, Agartala, Chattisgarh, Jharkhand and Ranchi.

Eastern popular brands include Mustache available at around 300 MBOs and exports to UK, USA, UAE, Sri Lanka and Pakistan.  NikNish retails over 55,000 gift items at its 50,000 sq.ft flagship store in Kolkata. Some of the regional brands are not of pan-India presence, but they are still extremely popular. So are Sumangal and Tiberworld, who have a stronghold in the independent retailers’ segment in the East.

 

Wrapping up

 

The eastern region of India is witnessing a period of boom in retail trade, mainly due to a gradual increase in the disposable incomes of the middle and upper-middle class households. The retail revolution, apart from bringing in sweeping and positive changes in the quality of life in the metros and bigger towns, is also bringing in slow changes in lifestyle in the smaller towns of eastern states.

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