Latest Property News on 'Retail Market in India'

Poor Retail Demand may lead to Fewer Mall Construction in 2010

Mall supply this year fell short by 60%, as only 5.7 million sq. ft of space was delivered across major cities in India, according to the annual retail report by real estate consultant Cushman and Wakefield Inc.

Around 9 million sq. ft of expected mall supply for the year was deferred to the future, due to poor demand from retailers, says the report. Of the proposed 44 malls at the beginning of the first quarter (January-March), about 18 were delivered by the year-end. The overall vacancy rates for the major cities as of December was 17% compared with a 16.7% vacancy rate in December last year. Read More »

2010 can be brighter for Retail Sector

The year 2009 has been bad for the real estate sector, particularly for the retail sector. While residential real estate picked up in the last two quarters, retail has been seeing very low demand. According to a report by Cushman & Wakefield, of the 44 malls proposed at the beginning of the first quarter of 2009, just about 18 were delivered by the year end. A number of developers postponed mall projects in 2009 but with a revival of demand in the end of the year, 2010 is expected to see a number of mall projects getting back on track.

“The outlook for the retail sector in 2010 is looking brighter. The festive season has been good and has seen a lot more footfalls. As the market picks up, there will be a revival of demand for retail spaces again,” says Rajeev Talwar, executive director at DLF. Year 2009 saw fresh supply of 5.7 million sq ft of mall space. Approximately 9 million sq ft of mall space was deferred to the future, which is a reduction of 60%. Almost 80% of new mall space in Bangalore was postponed which meant the city saw a vacancy of only 3%. Read More »

India Organised Retail can Grow up to $ 450 bn by 2015

Organised or modern retail in India need not be apprehensive or bearish with the industry set to grow to $450 billion in 2015 from the present $350 billion. Speaking at a three-day International Conference on Retail Excellence - ICRE’09, organised by the SRM School of Management at the SRM University campus near Chennai today, Mr Atul Takle, Head, Corporate Communications, Pantaloon Retail India Ltd, said the retail trade market in India was poised for recalibrated growth as those in the business were well aware of the needs of the customers.

“There is no reason to be bearish. The industry should be optimistic as the opportunities are huge. The consumer space in modern retail is going to grow by 15 per cent, which means that there are huge opportunities still waiting,'’ he added. There were different categories within the retail industry space such as food, beverages, consumer durables, fashion and lifestyle, among others. “There is lot of opportunity for organised retail players in India. The propensity of the middle class to spend puts the organised retail industry in a bullish mode as people realise the value that modern retail offers,” Mr Takle said. Read More »

Rising Mall Culture in India

While the mall culture in India is surely rising, the moot question is, how many of them succeed in what they set out for. As organised retailing in India grows, tier II and tier III cities, especially, are seeing hectic activity in the mall space. The Indian retail market, which is the fifth largest retail destination globally, has been ranked as the most attractive emerging market for investment in the retail sector, by AT Kearney’s eighth annual Global Retail Development Index (GRDI), in 2009. The share of retail trade in the country’s gross domestic product (GDP) was between eight to 10 per cent, in 2007. It is currently around 12 per cent and is likely to reach 22 per cent, by 2010.

The organised retail sector, which currently accounts for around five per cent of the Indian retail market, is all set to witness a surge in large-format malls and branded retail stores, in south India, followed by the north, west and the east, in the next two years. According to the report, ‘Mall Realities India 2010′, by leading property consultants, Jones Lang LaSalle Meghraj and Cushman & Wakefield India, in association with Shopping Centres Association of India, over 100 malls with over 30 million sq ft of new shopping space, are projected to open in India, between 2009 and the end of 2010. Read More »

Mall Owners Experimenting Day to Day Rental with Retailers

While retailers are still working with the option of cutting costs and negotiating rentals to gear up for expansion, mall owners, who are vital for the organised retail sector, are experimenting with a new method - rent on a daily basis. Atul Ruia-owned Phoenix Mills Market City mall has already implemented the system at a few of its locations, while others such as Inorbit and Nirmal Lifestyle, are actively considering it as an innovative option for their forthcoming malls. Currently, the fixed rental or revenue share scheme is widely practiced with minimum gurantee money, depending on the brand, product and location of the space. Fixed rental was much preferred till the liquidity crisis spread and the global demand slump hit both retailers and mall owners.

“We are receiving quite positive response and have planned to implement it (the daily rental model) across the country,” says Phoenix Market City managing director Atul Ruia. “It is a viable option in an industry that is just recovering from a period of uncertainity.” India’s organised retail market, roughly estimated at Rs 20,000 crore, and which is closely connected with malls, was among the first sectors in India to be affected by the crisis as consumers postponed purchases. As a result, many retailers and mall owners started looking at various options including revenue sharing and a minimum guarantee amount. Read More »

Retailers post Healthy Increase in Operation Profit Margins

Powered by aggressive cost cutting and favourable terms from real estate developers, retailers have posted a healthy increase in operating profit margins (OPM).The growing margins suggest that the belt tightening is paying off. For example, the margins of Pantaloon Retail, the country’s largest listed retailer, have gone up from 9.2 per cent in June last year to 10.6 per cent in June 2009 (the latest numbers available). Others such as the Raheja-owned Shoppers Stop and Tata Group’s Trent, Reliance Retail and Spencer’s Retail aren’t far behind.

Operating margin is the percentage of sales left after subtracting production, marketing and other expenses. A healthy operating margin is required for a company to be able to pay for its fixed costs such as interest on debt. Shoppers Stop’s OPM went up to 5 per cent in the first quarter (April-June) of this financial year from 0.2 per cent in the year-ago period. The company’s OPM now hovers around 7.5 per cent. In fact, Shoppers turned around handsomely in the first quarter after losses in the preceding quarters. Read More »

Cucine Lube to Strengthen Retail Presence in India

Italian modular kitchen company Cucine Lube today said it plans to strengthen its retail presence in India by opening nine more outlets across the country by 2011. The company, which currently has four outlets in India, also introduced range of modular kitchens at its store located in the capital.

“To expand its retail presence in the country the company is planning to add nine more new stores by 2011 in the metros and mini-metros,” Cucine Lube said in a statement. Cucine Lube, however declined to divulge investment details for the purpose of expansion. The new range “is available in various themes, colours, textures and designs to suit all tastes and budgets. Customers can also create their own look and design, ranging from the modern to the classic”. Cucine Lube is one of Italy’s leading kitchen manufacturer, which constructs 434 modular kitchens per day, it added.

British Retailer Mothercare Plans to expand Operations in India

British mother and baby products retailer Mothercare is accelerating its expansion in India with plans for 200 stores, double its original target. The firm, which currently has 23 franchise stores in India, said on Friday it had formed a new joint venture with real estate company DLF Brands to open standalone stores.

Mothercare will own 30 percent of the joint venture and DLF will own the remaining 70 percent but Mothercare will have an option to increase its stake to 51 percent in the future. It said the new venture will complement its existing deal with department store retailer Shopper’s Stop to roll out shop-in-shops. Read More »

Relax Norms on Foreign Direct Investment to Ease Fresh Infusion into Retail

Real estate consultant CB Richard Ellis has stated that the government needs to relax norms on Foreign Direct Investment (FDI) in retail to ease fresh infusion of funds and also promote competition in the sector that has been hit by the economic slowdown. “The existing FDI rules are a constraint. There is need to open up the sector a bit more as it will facilitate fresh infusion of funds and also promote competition,” said CB Richard Ellis, Chairman, CBRE and Managing Director, South Asia, Anshuman Magazine.

At present, about 100 percent FDI is allowed in wholesale cash and carry business, while in single brand retailing 51 percent FDI is allowed but none in multi brand retailing. The Parliamentary Committee on Commerce had submitted a report opposing further opening up of the retail sector for FDI earlier this year. A report by the Indian Council of Research in International Economic Relation (ICRIER) in 2008 had considered liberal FDI norms in the sector stating that the sector would grow to $590 billion by 2011-12, of which organized retail would share 16 percent. Read More »

Reliance Retail plans expansion in West Bengal

Reliance Retail Limited that runs around 590 stores across 57 cities in India is planning to expand its business in the country especially in West Bengal. “We are currently working on how best we can come back to the state in a major way. It’s all currently on the drawing board,” Mr. Tarun Jhunjhunwala, President, Reliance Industries told reporters in West Bengal state capital Kolkata this week.

“We have exhausted the space for our Reliance Fresh format and so if we plan to expand this format, we have to buy real estate,” Mr. Jhunjhunwala added. In July this year, Reliance Retail began to sell a number of food and grocery products in a market in Mumbai. Last year, Reliance Retail managed to achieve a near break-even by posting a loss of less than INR 1 crore in its first full year of operations, just 17 months after opening its first store. Read More »