Magazines Archives - 2008 September

What India faces after initiall euphoria over malls
Story 8 - Focus

A decade after malls invaded India with high hopes of raking in big bucks, some things are not what they seem. What appears to be the problem? Shirish Nadkarni delves in to find out.

India is a country with a predominantly young working population. Per capita income has been climbing steadily from US$460 in 2002 to US$620 in 2005 and US$730 in 2007. Disposable incomes are expected to increase at an average of 8.5% per annum until 2015.

Little wonder that global retailers are betting on the country, the world’s second most populous nation, with Tesco having revealed plans to set up a wholesale cash-and-carry business in the country. As foreign investors explore the potential in the sector, organised retailing, currently at 3% of the domestic retail pie, is projected to touch US$30 billion by 2010, or approximately 10% of the total.

Consequently, the subcontinent’s current 2sqf per capita retail space will rise by 15%-20% in 2010. Accounting for over 10% of the country’s gross domestic product and 8% of employment, retail is among the Indian economy’s top five growth drivers.

Giants like Bharti, Mahindra, Aditya Birla, Tata, Reliance and Godrej, and multinational ITC are expected to pump Rs1 trillion (US$22.8 billion) into retailing over the next five years.

Mukesh Ambani-led Reliance Industries, for one, has announced its partnership with US-based real-estate investment trust Vornado to erect a US$500-million shopping mall. The two will also acquire, develop and operate shopping centres across key cities.

“With new shopping malls ... [now] operational in many cities, it is interesting to observe how the shopping behaviour of consumers in the vicinity of these malls has changed,” notes Arvind Singhal, chief of retail consultant KSA Technopak. “We can then draw some lessons that could be of use to the developers of hundreds of new malls currently under planning or construction.”

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