market intelligence

market intelligence

Off the Beaten Track

is there life beyond the metros for indian retailers? actually there is. here is a look at the most promising emerging retail destinations of india, from indore and jaipur to goa and raipur. excerpts from a jones lang lasalle meghraj report.

20 Indian retail destinations worth exploring

While India is one of the first nations to emerge from the global financial crisis of 2007, its property market is not emerging without scars. Across all property asset classes, none has felt the pain more than retail. Hardly a week went by in 2008 and early 2009 without some announcement of retailers scaling back operations, mall projects being cancelled or shelved, and investors pulling out of projects. Mid-2009 was a turning point for the Indian economy. As the retail sector returned to stability, the confidence level of retailers and investors was renewed. Mall developers and operators also took a wiser approach to new projects in terms of design, management and location. Offering quality, wellmanaged retail space to under-served markets was a recipe for success that the wise capitalized on early.

As a new decade begins, Indias retail sector moves beyond infancy, where organized retail was just beginning to get a foothold in major metros, to adolescence where organized retail has penetrated deeper into Indian markets. In order to understand the opportunities in the retail property market as the Indian retail sector progresses in its path of maturity, one needs to go off the path so often taken by developers, investors and retailers, both domestic and foreign. An exploration of markets off the beaten track will reveal where the new geography of opportunity lies in the Indian retail property market. For the purposes of our analysis, we have looked beyond Indias top 7 metros to focus on a selection of 20 markets that are in various stages of retail maturity. We examine the changing plot of the Indian retail story and assess the lessons learned and

TIER I Delhi Mumbai Bangalore

TIER II Chennai Hyderabad Pune Kolkata

TIER III Ludhiana Mohali Jaipur Udaipur Indore Ujjain Bhopal Jabalpur Nagpur Bhilai Raipur Vadodara Surat Nanded Goa Vijayawada Coimbatore Kochi Thiruvananthapuram Guwahati

InDIas CITy TIers Defining City Tiers Jones Lang LaSalles city tiering system is based on the combined current levels of real estate activity (supply and demand) in three key sectors offices, retail and hospitality. Tier I cities currently comprise of Delhi, Mumbai and Bangalore; Tier II cities comprise of Chennai, Hyderabad, Pune and Kolkata; Tier III cities comprise the balance of the cities in our analysis. Cities can move between tiers as market circumstances change. Kolkata, for example, moved from a Tier III to Tier II city in 2007 to reflect increasing levels of real estate activity. Similarly in Chennai, real estate activity is growing so rapidly that the city may be reclassified as a Tier I city in the near future.

38 . images retail . OCtOBer 2011

OCtOBer 2011 . images retail . 39

market intelligence

new trends as a result of the global economic downturn. Our examination of these 20 markets also goes into categorizing them into levels of maturity and places that information against current rental levels to assess which ones pose the greatest opportunities for developers, investors and occupiers. The resIlIenCy Of COnsumerIsm As in many nations, retail consumption in India was severely impacted as a result of the global

Indias middle-class is still growing as are per capita incomes and the availability of credit. The depth and breadth of organized retail penetration beyond Indias major metros is still continuing into markets which offer favourable opportunities for retailers and property developers. The Indian retail market stood at USD 330 bn in 2007 with little more than 4 percent of it being attributed to the organized retail sector. By the end of 2010 the organized segment is to grow to 10 percent of total retail within the country. This rapid economic downturn. Now that the nations economic recovery is well under way, it is becoming apparent that the underlying factors which propelled Indias high-octane consumerism in the past remain true today: Demographics are still favourable with two-thirds of the nations population below age 35 Urbanization is still rapidly occurring, and at a greater depth with many Tier III and Tier IV cities providing concentrations of retailing potential Indias economy seems unstoppable, suffering only a slowdown in the rate of growth during the global economic crisis while others contracting
40 . images retail . OCtOBer 2011

growth of organized retail is partially attributed to the phenomenal burst of new shopping malls built over the last three years, an increasing number of which are located in the nations smaller, under-served markets. However, organized retail is also being driven throughout India by resilient consumers who are typically young, urbanized and brand-conscious shoppers with changing preferences towards consumerism. reTaIl In nOn-meTrO markeTs The retailing landscape varies significantly across India as markets

Net Domestic Product & Monthly Per Capita Consumption in India

Source: Ministry of Statistics and Programme Implementation, Government of India *: Non-food includes clothing & footware, durable goods, education, fuel & light, rent, taxes and misc. goods & services

market intelligence
in Indore is one such example of a new transport corridor around which clusters of new residential and retail settlements have developed as the population has grown. keys TO suCCess: plannIng, DesIgn, OperaTIng & fIrsT-mOver aDvanTages The first shopping centres developed in Indias emerging cities witnessed an unprecedented level of interest from consumers and became the primary destination for shopping, eating and entertainment. A lack of entertainment options and an inconvenient retail environment caused by lack of parking, crowded lanes and uncomfortable weather, made the first such developments in differ greatly in size, maturity and purchasing power. Developers and operators of retail property in smaller Indian markets need to be cognizant of the variations that exist between metros and non-metros as they plan, build and operate shopping malls. TypOlOgy anD fOrm The retail activities in Indias smaller cities are typically known by their traditional markets bazaars and fairs which have over eons served as crossroads for retail and wholesale trade, barter and entertainment, much like souks in the Middle East. Historically, these stretches of urban patch provided shopping entertainment for traders and consumers. Indeed, the traditional markets, which contained the bazaars and fairs, have played a pivotal role in the origin and growth of these cities. In present-day emerging cities, shopping areas display some common trends that can be discerned and discretely classified into non-exclusive categories of CBD-Linked Street, Arterial Street, Affluent Market or Landmark Adjacent Market. Shopping areas in emerging cities have historically been formed along important transport corridors or trade routes. As these cities evolve, new routes and neighborhoods provide fertile ground to develop new age, organized retail destinations. MR-10
44 . images retail . OCtOBer 2011

The TraDITIOnal markeTs InCluDIng The Bazaars anD faIrs have hIsTOrICally playeD a pIvOTal rOle In The OrIgIn anD grOwTh Of CITIes aCrOss InDIa.

each city very successful. First movers into cities such as Indore (Treasure Island, 2005), Surat (Iscon Mall, 2008) and Vadodara (Central Mall, 2008) witnessed healthy footfalls and sales volumes. These pioneering developments provided the means for national and international brands including Pantaloon, Westside, Levis Strauss, Big Bazaar, Nike and PVR to penetrate into Indias untapped markets.

market intelligence
A first-mover advantage, while critically important, is not sufficient to guarantee the success of mall projects in emerging cities. Another essential factor is the ability to provide cost-effective space solutions for retailers. Effective utilization of FSI is crucial in containing capital expenditure. Shopping activities diminish significantly at upper levels as shoppers tend to avoid climbing extra floors and vertical transportation adds to project development costs. An ideal configuration is one in which malls restrict retail and entertainment activities within the first three levels of the property and utilizes the remaining FSI for hospitality, healthcare and lifestyle activities such as gyms and salons, thus making the location a centre of multipurpose activities and enhancing critical footfalls for retailers. Operational issues, while not different from malls found in Indias metro cities, take on an even greater importance in emerging cities. A judicious tenant mix, carefully controlled operational costs (CAM), revenue sharing models, and store-instore concepts to allow smaller, local brands to have a presence in malls are some of the issues that mall operators must address to ensure a projects long-term viability. The number and size of malls that a given market can absorb will vary from city to city. As with larger metros, retail market dynamics of non-metro cities can differ significantly. Smaller, nascent cities dont offer adequate trade volumes to experiment with a single, large mega-mall. Rather, a greater number of smaller-sized malls, ranging from 200,000 to 400,000 sq.ft. and strategically dispersed throughout the city would be more suitable. Other non-metros, such as Indore, can accommodate significantly larger projects such as Treasure Island, an integrated development with 700,000 sq.ft. of retail space. In planning the appropriate size and location for mall projects within non-metros, developers need to take into consideration numerous factors that will impact the success of their project, including the following:

46 . images retail . OCtOBer 2011

market intelligence
Demographics and income levels Connectivity and proximity to local destinations such as tourist attractions, education and health hubs, and commercial developments Presence of competing retail centres and high streets Consumer behavior patterns including share of wallet across product categories and frequency of shopping Expected geographic growth patterns of their city Changing consumer profiles and increasing levels of affluence. strategies in the wake of the global economic downturn, we felt a fresh look at our analysis was appropriate. While the methodology employed and factors considered for classification remained the same in our most recent analysis, we expanded the set of cities that we considered. Our results reveal that the set of cities in our top two categories, Mature and Transitional, have not changed from our original analysis. Retail in these top eight markets is fairly well understood and documented, and these cities no longer represent the frontier of retail in India. Conversely, the next three categories of retail classification High Growth, Emerging and Nascent is where the action will be as retailers and developers endeavour to deepen their understanding of these markets and capitalize on the opportunities that they present. While a large number of Tier III cities in India can be placed in one of these three categories, we have limited our discussion to 20 markets which we feel best illustrate the characteristics of the category based upon consumer profiles, market characteristics and developer activity. hIgh-grOwTh CITIes InDOre Indore, the commercial capital of Madhya Pradesh, is the centre of business and trading activities in Central India. While the city is also known for its textile industry, Indore is undergoing fast-paced infrastructure development to match the future demand from other industrial sectors. The state and local government are undertaking several initiatives to promote Indore as a premier destination for investment. Being a historic city, Indore has a distinct core (old city) with newer developments spread spatially around in a concentric manner. Residential, retail and institutional areas dominate the city core in which wholesale markets are prevalent and traditional high streets dominate the retail landscape. Khajuri Bazaar and Kothari Market are located on M.G. Road, which, along with Jawaharlal Nehru Road, defined the retail hub of the city before the emergence of markets adjacent to Palasia Chauraha and Bombay Hospital. Presently, a significant amount of retail activity is

The nexT Three CaTegOrIes Of reTaIl ClassIfICaTIOn hIgh grOwTh, emergIng anD nasCenT Is where The aCTIOn wIll Be as reTaIlers anD DevelOpers enDeavOur TO Deepen TheIr unDersTanDIng Of These markeTs anD CapITalIze On The OppOrTunITIes ThaT They presenT.

20 reTaIl DesTInaTIOns TO waTCh In 2007, Jones Lang LaSalles World Winning Cities Research Programme published a landmark study on the Indian retail sector entitled The Geography of Opportunity The India 50. In that report, 50 Indian cities were classified into 5 categories based upon the socio-economic fundamentals, retail demand and retail supply found within those markets. As the retail industry in India matures and looks for new growth
48 . images retail . OCtOBer 2011

market intelligence
occurring in the central and eastern parts of the city close to the high-end residential locations such as Palasia, Race Course, Saket, Gulmohar as well as the upcoming locations such as Vijay Nagar, MR 10 and Indore Bypass. A high number of affluent entrepreneurs who reside in Indore are driving the demand for local brands along with national and international retailers. Older, unorganized high street markets are slowly giving way to organized retail with the arrival of new malls and shopping centres in the city. Approximately 1.7 mn sq.ft. of retail space currently exists in Indore with another 2.5 mn sq.ft. expected in the next few years as 3-4 mall projects have been announced. With several prominent retailers considering venture in the city, organized retail has a bright future in Indore. JaIpur Jaipur, the capital of Rajasthan, is a major international and domestic tourist destination as part of Indias Golden Triangle tourism circuit. Proximity to Delhi and Gurgaon is helping to fuel both tourism and retail activity in Jaipur. Economic growth, rising disposable incomes and a changing socio-economic environment have led to the expansion of urban

JaIpur Is The fIrsT CITy In raJasThan TO experIenCe mODern shOppIng plazas anD mulTIplexes. arOunD 10 shOppIng mallsCum-mulTIplexes are OperaTIOnal aT varIOus lOCaTIOns

spaces around the city with suburban and peripheral locations becoming the focus of development. Arterial roads, such as M.I. Road and Sansar Chander Road have become fully commercialized for retail and wholesale trade. Jaipur is the first city in Rajasthan to have experienced modern shopping plazas and multiplexes. Approximately 10 shopping mallcum-multiplexes, totalling 800,000 sq.ft, are operational at various locations in the city, with another 15 in the developing or planning stages. Upcoming integrated townships within Jaipurs suburbs and along its growth corridors also have a retail component as a part of their product mix. Major malls currently operational in the city include Crystal Court, Mile Stone, Mall 21, Silver Square, Crystal Palm, City Flex, MGF Metropolitan and Silver Square. Retail spaces have a high rate of absorption in Jaipur with major brands and anchors such as Shoppers Stop, Blackberry, McDonalds and Big Bazaar taking up space. There may be a temporary oversupply condition, but it is likely to get absorbed by organized retail spaces offering
50 . images retail . OCtOBer 2011

market intelligence
unique shopping experiences and an increasing population as Jaipur continues to mature as a commercial destination. kOChI Kochi, also known as Cochin, is the commercial capital of Kerala and has historically been an important port city in India. As a major tourist destination and the gateway to Keralas backwaters, Kochi has witnessed growth in medical tourism and eco-tourism, along with a boom in its local IT/ITES sector, elevating the city into an important investment destination in South India. As with other emerging cities in India, retail activity in Kochi has traditionally been concentrated on a central high street, with M.G. Road being the dominant retail corridor of merchants dealing in gold, textiles and various other items. Marine Drive, a more recent retail destination, is challenging M.G. Road as the preferred high street in Kochi, as standards, specialities and use formats. luDhIana Ludhiana, known for its hosiery and sporting goods industries, is the most populated city of Punjab. The service sector, which includes of Ludhiana) are located along this major artery. Over the past couple of years, Ferozpur Road has witnessed major developments in the organized retail sector with Ansal Plaza, Flamez Mall and Westend Mall becoming operational. This is mainly a result of its proximity to the city centre and posh residential colonies, presence of prominent hotels, and the declining popularity of Mall Road (the citys first organized retail corridor) among the retailers and consumers for its scarce parking facilities. Arterial development together with improving infrastructure has facilitated the growth of the real estate market in Ludhiana. The entry of established players has

kOChI has wITnesseD grOwTh In meDICal TOurIsm anD eCO-TOurIsm, alOng wITh a BOOm In ITs lOCal IT/ITes seCTOr, elevaTIng The CITy InTO an ImpOrTanT InvesTmenT DesTInaTIOn In sOuTh InDIa.

are the areas of Vytilla Junction, Palarivattam and Edapally. High street dominance is about to change in Kochi with a variety of new retail formats being developed throughout the city. The North-South National Highway 47 bypass is being transformed into a mall corridor. Presently the city has one functional mall and six malls are under various stages of construction including a 1mn sq.ft. project by the Lulu Group. Other builders such as Prestige Group, Aerens Group, Abad Builders and Emkay Group are working on mall projects that will be of various
52 . images retail . OCtOBer 2011

financial, banking and public services, also plays an important role in the citys economy. Good connectivity with major cities and an encouraging business environment has made the city the favourite investment destination of the state. Ferozpur Road is the main growth corridor for retail and commercial development in Ludhiana, in addition to being a well-known, high-end residential destination. Punjab Agricultural University, Hotel Majestic Park Plaza (the only 5-star hotel in the city) and the Feroze Gandhi Market (the only organized commercial centre

induced competition into the market, thereby leading to a renewed focus on quality real estate projects. Numerous national and local developers including Ansal API, DLF, MBD Group, Omaxe and Chadha Group have proposed further retail developments along Ferozpur Road. mOhalI Mohali can be regarded as a planned extension of the city of Chandigarh. Residents of this town are compelled to travel to Chandigarh to shop due to a shortage of quality local retail destinations. The main markets of

market intelligence
Mohali have been developed as sector markets, as the cities of Chandigarh and Mohali are collectively divided into 74 sectors. Many of Mohalis sector markets are located on a straight road from Sector 58 to 65. Most of the ground floor space in this retail corridor has been occupied by local merchants including restaurants, grocery shops, departmental stores, jewellers, white good showrooms and banks. The Punjab Urban Planning & Development Authority (PUDA) is developing the Sector 70 market to entice Mohali residents to shop locally. Underlying factors including could add an additional 5.5 mn sq.ft. of new retail space. suraT Surat, renowned for its textile manufacturing and diamond cutting/polishing industries, is a major industrial hub in Gujarat. Industrialization has not only boosted the local real-estate market but has also drawn an influx of migrants from neighbouring cities. Rising population and income, along with an optimistic employment outlook, will continue to boost retail development in Surat which is flush with affluent consumers.

InDusTrIalIsaTIOn In suraT has nOT Only BOOsTeD lOCal real esTaTe markeT BuT has alsO Drawn mIgranTs frOm neIghBOurIng CITIes.
Existing retail space in Surat totals to approximately 600,000 sq.ft. With three to four malls in the planning stage, another 560,000 sq.ft. of new retail space is expected to enter the market. vaDODara Vadodara lies along Gujarats golden corridor which extends from Ahmedabad to Vapi. The city is one of Indias foremost industrial centres with dominant groups of chemicals and pharmaceuticals manufacturers. The centre of Vadodara is dominated by residential, commercial and institutional districts. Wholesale markets and high-street retail areas dominate the retail typology in this core area of the old city and adjacent areas. Here, Vadodaras traditional, established markets can be found along the prominent shopping corridors of Mahatma Gandhi Road

a large segment of population in the higher socio-economic profiles seeking residential options in the region, proximity to Chandigarh, and initiatives taken by the Government of Punjab to promote industrial and IT/ ITES development are likely to have a positive impact on Mohalis retail development. Shalimar Mall and Mall Matrix, with a combined area of 300,000 sq.ft., are the first malls proposed in Mohali. Six additional malls are in various stages of construction. These projects, along with others that have been planned,
56 . images retail . OCtOBer 2011

Excellent road connectivity has encouraged retail mall development in outlying areas such as Piplod, Vesu, Varachha Road and near Udhana Navasi Road. The most preferred retail destinations in the city are Dumas Road, Parle Point, Ghoddod Road, Piplod and Ring Road. Well-known brands have not only entered Surat but have also expanded with multiple outlets in the city. Surat has several retail investments from major domestic brands such as Croma, @ Home, Reliance Fresh, Big Bazar and Shoppers Stop.

market intelligence
(Nyay Mandir Gate to Mandavi Gate), Raopura Road, Rajmahal Road, Mangal Bazaar and Dandiya Bazaar. Vadodaras emerging commercial and retail districts are principally located on the western side of the citys railway line. R.C. Dutt Road, Race Course Road and Old Padra Road have emerged as the prime retail and commercial destinations within the city. A majority of national and international brands operating in Vadodara are primarily located along these roads. The predominant typology of retail developments found here are commercial complexes with retail space on the lower ground and upper ground floors with office space above. Approximately 4.6 mn sq.ft. of retail space is operational in Vadodara with another 1 mn sq.ft. of new retail space expected to enter the market in the next few years as additional projects are in various stages of planning and development. COImBaTOre Coimbatore, a key industrial city in South India, is regarded as the preferred IT destination in Tamil Nadu after Chennai. Several private sector initiatives in the city have contributed to an increase in real estate activity in the region. Since commercial establishments already have their presence in the CBD of the city, located at the high density areas of RS Puram and Race Course Road, new commercial locations have been encouraged to set up along major corridors towards the outskirts of the city. Coimbatore has its traditional retail markets on Oppankara Street and Cross Cut Road where both wholesale and retail businesses are conducted. Other retail markets can be found in and around the residential locations of Avinashi Road, Race Course Road and 100 Feet Road. High streets such as Bharathiyar Road, Avinashi Road, Mettupalayam Road and Cross Cut Road are currently the main retail hubs of the city. Brands including Ford, Nokia, Philips, Hyundai, Sony, Bajaj,and Hero Honda presently have their showrooms scattered across these markets while the likes of Zodiac, Lee, Nike, Reebok and United Colors of Benetton are found in RS Puram. gOa The state of Goa, located along Indias Western coast, is the nations foremost tourist destination. A steady growth of tourist arrivals, both foreign and domestic, has resulted in the state achieving rapid economic growth. The northern part of the state has seen greater relative prosperity, infrastructure development and early commercialisation. South Goa has provided the region with a dynamic hospitality industry including a number of five-star deluxe hotels

vaDODaras emergIng COmmerCIal anD reTaIl DIsTrICTs are prInCIpally lOCaTeD On The wesTern sIDe Of The CITy. rC DuTT rOaD, raCe COurse rOaD anD OlD paDra rOaD have emergeD as famOus COmmerCIal DesTInaTIOns wIThIn The CITy.

58 . images retail . OCtOBer 2011

market intelligence
along its coast-line. Panaji, the CBD of Goa, comprises a significant part of Goas retail market. With its year-round flow of international and domestic tourists, Goa is a small but significant retail destination. Retail real estate development is concentrated along three of the citys major arteries: A. B. Road, M.G. Road and 18th June Road. International and domestic brands are located along M.G. Road, while local retailers are concentrated on 18th June Road. The predominant retail typology found in Goa is high street shopping with major clusters located near Main Avenue, Dr. A.B. Road, 18th June Road, and M.G. Road. Being a tourism hub, the retail markets in Goa are largely unorganized and are located at the beach towns of Baga, Candolim and Calangute, with the latter two having well-developed high streets that are home to high-end brands. While mall developments are yet to come up, a number of multi-storied shopping centres are underway in Goa. A where residents belonging to Nagpurs trading class possessed a high propensity to spend. The citys established prime retail areas include Dharampeth, Ramdaspeth, Gokulpeth, Central Avenue, Gandhibagh, Sadar, and Sitabuldi, with locales such as Wardhaman Nagar, Wardha Road, and Khamla having been identified as high potential areas. Six malls are currently operational in Nagpur. The citys planning authority is working with private developers to ensure balanced retail development in Nagpur. Large scale projects such as MIHAN (Multimodal International Hub Airport at Nagpur), a proposed IT SEZ, and Butibori Industrial Estate have lead to an increased demand in the residential sector, which in turn has generated demand for retail and commercial spaces in the city. An ongoing IT/ ITES boom has also led to the influx of young migrants who demand organized retail outlets and have a willingness to pay. The past few years have seen an emphatic transformation in the number of retail brands that have come into Nagpur. Retailing itself has undergone a considerable shift, and more can be expected in the near future as traditional markets slowly give way to organized retail formats. The existing 1.5 mn sq.ft. of existing retail space in Nagpur is expected to

The exIsTIng 1.5 mn sq.fT. Of exIsTIng reTaIl spaCe In nagpur Is expeCTeD TO DOuBle as Three TO fOur malls are BeIng planneD Or DevelOpeD
further two retail developments (Osia Mall and Profit Centre) are proposed in Margao and will total 100,000 sq.ft. retail space. nagpur Nagpur, the largest city in central India, is also the third most populous city of Maharashtra. The citys retail market has existed in an unorganized form in areas such as Itwari and Sitabuldi, and in a semi-organized form in the western part of the city. These markets typically developed near high-end residential settlements
60 . images retail . OCtOBer 2011

double as three to four malls are being planned or developed. raIpur Raipur, a major trading and business hub for the entire Chhattisgarh region, has a large number of specialized markets for various commodities. A majority of these traditional markets are located in the centre of the city with newly emerging retail areas along the Grand Eastern Road (NH-6). The stretch on NH-6 between Tati Bandh to Teli Bandha has emerged as the most active retail destination in the

market intelligence
recent years whereas Sharda Chowk and Jaistambh Chowk are noteworthy markets in the city centre. A few small, unorganized shopping centres have been completed over the past few years with Raipur getting its first shopping mall, City Mall 36, followed by two or three more in recent years. TrIvanDrum Trivandrum, the capital of Kerala, is the second largest city in the state and home to a large population of urban professionals. Technopark, a 340 acre IT park located in Trivandrum, is one of the largest IT parks in India with 150 marquee IT firms and over 20,000 employees. Large-scale employment opportunities such as this are a major part of the reason that Trivandrum witnessed a 42 percent increase in population during 1991-2001 and why it is ranked second in the state of Kerala in terms of market potential and affluence. Trivandrums central business district is also the heart of the citys Shopping Complex are some of the noteworthy shopping destinations within the city. The suburbs, which are residential in nature, currently only have neighbourhood format retail stores. While retailers have land banks in the suburban areas (in close proximity to Technopark), no major development has taken place yet to explore the potential of this area. Only 58,000 sq.ft. of retail space exists in Trivandrum. arteries developed into retail corridors. Retail high streets continue to be fixture along Bapu Bazaar, Chetak Circle, Suraj Pole, Ashwini Bazaar, Nehru Bazaar, Bada Bazaar, Shastri Circle, Delhi Gate, Sindhi Bazaar, Town Hall and Chand Pole. These are complimented by specialized high streets at Ghantaghar Market Udaipur (jewellery), Malda Estate (apparel) and Hathi Pole (antiques). Organized retail is widespread

OrganIzeD reTaIl Is wIDespreaD ThrOughOuT uDaIpur wITh Durga nursery rOaD, shakTI nagar anD suDkhaDIa CIrCle havIng The largesT COnCenTraTIOn Of new enTranTs. a seleCTIOn Of TOp BranDs Is presenT In The CITy

traditional retail district with Palayam, Chala and East Fort being the 3 most prominent markets. M.G. Road and the area between Pattom and Kesavadasapuram are the growth corridors of retail in the city. Kedaram, Karimpanal Arcade and Attukal
62 . images retail . OCtOBer 2011

uDaIpur The lake city of Udaipur is a popular tourist destination in India. Historically, retail markets in Udaipur have been an integral part of the city. As Udaipur grew beyond the banks of its lakes, major transportation

throughout Udaipur with Durga Nursery Road, Shakti Nagar and Sudkhadia Circle having the largest concentration of new entrants. A wide selection of international and domestic brands is present in Udaipur across numerous categories of retail with Nokia, Adidas, John Players, Levi Strauss and Pizza Hut already having a presence in the city. Domestic supermarkets such as Big Bazaar and Reliance Fresh have also established themselves in prominent locations within Udaipur. Movie theatres, both new (Fun Cinemas) and reconstructed (Paras Cinema) are also well represented in the city.

market intelligence

The purChasIng pOwer anD affluenCe Of InDIas emergIng CITIes

the opportunity for retailers in indias smaller cities is often underestimated as these emerging markets are often dwarfed by the nations seven large metros. While the size of non-metros is relatively smaller, they should not be written off by retailers. nor should all emerging cities be painted with the same brush as there exists a great deal of variation in the purchasing power and affluence levels of these markets. in an analysis conducted by r. k. swamy bbdo, 24 parameters were used to assess the market potential and affluence levels of cities across india. amongst the parameters used were per capita income, per capita bank deposit, proportionate affluent households, home, automobile and consumer durable ownership, and consumption of fmcg goods. the results of this study, printed in the guide, reveal that a significant variance exists in aggregate potential (purchasing power) and affluence levels, not just between metros and non-metros, but also amongst emerging cities. two indicators were used to quantify these variations with market potential Value (mpV) representing the aggregate purchasing power of a city and market intensity index (mii) representing the quality and affluence of consumers and markets. a graphical analysis of the 20 emerging cities considered for this report illustrates that while all cities score well below the maximum mpV index value of 1000 for greater mumbai, the cities of surat, nagpur, jaipur, Vadodara, coimbatore and indore emerge from the pack in terms of purchasing power. over half of our 20 cities scored above the all-india mii average of 100 with goa, mohali, ludhiana, Vadodara, coimbatore, kochi and nagpur showing the highest levels of affluence within the group.

64 . images retail . OCtOBer 2011

market intelligence
A few brands such as Raymond, Reebok, Titan, Koutons , Gini & Jony and Peter England can be found in markets along NH-6 such as Supela Chowk and Akash Ganga. Retail projects in the upcoming areas of Bhilai typically do not have an independent existence but can be located in the ground and first floors of residential apartments. These are mostly full service departmental stores. Although there are no multiplexes in Bhilai, some traditional cinema halls including Venkatesh, Maurya and Chandra have upgraded themselves to cater to the citys present needs. Presently, the city of Bhilai does not have any shopping mall although a 690,000 sq.ft. project is being developed by Entertainment World Developers. BhOpal A few malls are under construction or planned in prominent areas of the capital city of Madhya Pradesh. Various mixed-use commercial complexes in the city currently showcase a few brands. Organized retail exists to a limited extent in scattered areas of Bhopal in the form of some supermarket chains. The area around Hoshangabad Road is also fast developing into a commercial sector. Approximately 240,000 sq.ft. of retail space exists in Bhopal.

nasCenT CITIes BhIlaI Bhilai, the second largest city in the state of Chattisgarh, is known as the steel capital of India. Home to Indias largest steel plant, SAIL, Bhilai is one of the most industrialized sectors of the state. The influx of professionals working at SAIL has added a cosmopolitan flavour to the local culture of the city and spurred demand for organized retail. Bhilai is ranked as the top city of Chhattisgarh state in terms of market potential and affluency. NH-6 is the central retail corridor in Bhilai with major developments located around the main junctions of the highway. Among the citys sectoral markets, the City Centre and Sector-6 markets are the most popular. The format of retail developments in Bhilai is mostly high street in nature with some mixed-use retail-and-office complexes found in projects such as Chauhan Estate and Dhillon Complex.

whIle The sIze Of nOnmeTrOs Is relaTIvely smaller, They shOulD nOT Be wrITTen Off By reTaIlers. nOr shOulD all emergIng CITIes Be paInTeD wITh The same Brush as There exIsTs a greaT Deal Of varIaTIOn In The purChasIng pOwer anD affluenCe levels Of These markeTs.

66 . images retail . OCtOBer 2011

market intelligence
guwahaTI Guwahati, the capital city of the state of Assam, is the gateway to the north-eastern states of India. The petroleum and tea industries dominate the Guwahati economy which is the centre of culture, politics, and commerce for the entire region. An influx of migrants over the past decade has caused the citys population to swell by more than 40 percent and provided a boost to the development of the region. Retail markets were traditionally confined to the city centre in Guwahati with areas such as Pan Bazaar, Paltan Bazaar and Fancy Bazaar being the most popular markets. Arterial thoroughfares eventually developed into retail corridors, with the G.S. Road becoming the most prominent. Departmental stores, supermarkets and large format stand-alone stores are the most popular retail formats in Guwahati. With the development of the shopping malls and plazas, national and international brands have started to migrate from high streets into malls. Big Bazaar (stand-alone), The Hub, Cube Mall, Dona Planet and Sohum are some of the existing brands and organized shopping areas in the city of Guwahati. An additional 600,000 sq.ft. of retail property development has been proposed for development in Guwahati, most of it along G.S. Road. JaBalpur Jabalpur, with 1.2 million residents, is one of the wealthier cities in the state of Madhya Pradesh. It is the headquarter of many important Central and State departments which employ thousands of government workers. Jabalpur serves as a

DeparTmenTal sTOres, supermarkeTs anD large fOrmaT sTanDalOne sTOres are mOsT pOpular reTaIl fOrmaTs In guwahaTI. wITh The DevelOpmenT Of shOppIng malls anD plazas, BranDs have sTarTeD TO mIgraTe frOm hIgh sTreeTs InTO malls.
distribution centre for a wide variety of products and natural resources from all over. Its relative prosperity has caused it to be ranked third in the state in terms of market potential and affluence. Residents of Jabalpur, who have relatively higher disposable incomes, are limited to shopping at the traditional markets of Soni Bazaar, Madhital and Sadar Market. Treasure Island (Jabalpur), a 680,000 sq. ft. retail project, has added a new dynamic to the local retail landscape. nanDeD Nanded, a religious hub to Indias Sikh community, has one of most prominent Gurudwaras in the country.
68 . images retail . OCtOBer 2011

market intelligence

70 . images retail . OCtOBer 2011

market intelligence
It draws more than 1 million tourists annually and is the agricultural, educational and healthcare hub of the region. As a trading and business centre for nearby towns and rural hinterland, the city of Nanded has wellestablished retail markets. Station Road, Vazirabad, Shivaji Nagar and Doctors Lane are the prominent retail and commercial hubs of the city. vIJayawaDa Vijayawada, the third largest city in Andhra Pradesh, is a hub of commercial activity with a strong educational infrastructure and IT industrial base. Retail districts in Vijayawada have traditionally been concentrated along Shivalayam Street and Samarangam Chowk, which form the older part of the city. Alternative, modern forms of retail business have started appearing along Mahatma Gandhi Road (erstwhile Bandar Road), Besant Road and, to an extent, along Karl Marx Road (erstwhile Eluru Road). Vijayawadas retail landscape is expected to undergo further transformation as organized retail projects are already under construction along Mahatma Gandhi Road, Old Bus Stand area and Gandhinagar, with additional projects being proposed, potentially propelling these areas to the prime retail districts of the city.

eCOnOmIC aCTIvITy In uJJaIn Is DrIven By The agrICulTural InDusTry fOr whICh The CITy serves as a regIOnal whOlesale markeT. The CITy reCeIves a large numBer Of TOurIsTs ThrOughOuT The year. ThIs Is supplemenTeD By famOus relIgIOus faIrs ThaT Draw up TO half a mIllIOn pIlgrIms.
uJJaIn As a city of great cultural and religious importance, Ujjain receives a large number of tourists throughout the year. This is supplemented by famous religious fairs that draw up to half a million pilgrims. Economic activity in Ujjain is driven by the agricultural industry for which the city serves as a regional wholesale market. Small, traditional shops dominate the retail landscape in Ujjain. The main market area of the city, adjacent to Free Ganj Tower, is home to domestic apparel brands such as Peter England, John Players, Charlie Outlaw and Raymond. Gopal Mandir and Satigate are two other prominent shopping districts within the city. Treasure Island (Ujjain), a 400,000 sq.ft. shopping mall on Dhanwantri Chikisa Kendra, is a star attraction of the citys landscape.
72 . images retail . OCtOBer 2011

market intelligence

74 . images retail . OCtOBer 2011

market intelligence

OuTlOOk While the performance of economies around the world will certainly have an impact on Indias retail sector, the stable footing it is on as a result of strong underlying fundamentals in demographics, urbanization and a growing middle class should provide reason for optimism. Success is far from guaranteed for retail property developers, however. For them it is critical to take the lessons learned from the recent downturn and go forward with a cunning eye for the right market and the right project.

The right market may not be the obvious or safe choice. Property developers must look beyond Indias 7 large metros and identify locations with the right mix of market maturity, retail momentum and space affordable for brands. Finding markets with sufficient retail potential (purchasing power) where a first mover advantage may yet be realized is a recipe that has worked well for developers such as Entertainment World Developers and may be imitated by others going forward. Unlike the right market, the right project is made, not discovered. Operators of organized retail need to be vigilant in containing costs in nonmetro cities by employing innovative
76 . images retail . OCtOBer 2011

The rIghT markeT may nOT Be The OBvIOus Or safe ChOICe. prOperTy DevelOpers musT lOOk BeyOnD InDIas 7 large meTrOs anD IDenTIfy lOCaTIOns wITh The rIghT mIx Of markeT maTurITy, reTaIl mOmenTum anD spaCe affOrDaBle fOr BranDs. unlIke The rIghT markeT, The rIghT prOJeCT Is maDe, nOT DIsCOvereD.

techniques to maximize FSI through mixed-use projects and keeping a lid on CAM charges. Tenant mix, an issue with any shopping mall project, needs to take into account local preferences for value versus premium retailers and brands that represent a good combination of international, national and local merchants. Modestly-sized malls which are strategically located within a city and compliment, rather than compete with, existing high streets are the most likely to achieve long term prosperity for developers, operators and retailers.