As India’s economy expands, organised retail sales volumes in India are also expected to grow at a rapid clip, aided by new shopping centres and expansion of retail chain stores.
According to consulting firm Knight Frank, organised retail sales volumes in India’s top eight cities were $52 billion in 2021-22. By financial year 2028, they are likely to touch $136 billion, it estimates.
“With economic growth, organised retail sales will also witness tremendous growth and move up the growth curve at a compounded annual growth rate of 17 per cent during financial 2022-2028 period. Evolving consumer spending patterns and increasing disposable income levels are redefining India’s retail landscape,” said the consulting firm.
Addition of new shopping malls is expected to add to the growth in organised retail sales.
The Covid-19 pandemic had a huge impact on shopping malls as they were shut for months together in 2020 in the first wave and business was also hit hard in the second wave in 2021. Despite this disruption, there has been addition of 15.5 million square feet of incremental mall supply in the past 30 months, across the top eight cities.
In December 2019, there was 77.4 million square feet of gross leasable area across 255 malls. The total mall stock in the eight cities is estimated to have increased to 92.9 million square feet of gross leasable area across 271 operational malls in the first half of 2022.
“The retail real estate sector has reached a new level of maturity where smaller sized and lower grade developments are giving way to Grade A malls. The existing Grade A malls have over 95 per cent occupancy which is indicative of the demand for quality real estate in this segment,” said Shishir Baijal, chairman and MD of Knight Frank.
Apparels and accessories are two categories that have expanded footprint in malls. The share of apparels in malls has gone up to 29 per cent from 26 per cent, while share of space taken up by accessories outlets like books, watches, jewellery and eyewear among others has risen to 12 per cent from 8 per cent.
Knight Frank estimates that between financial year 2022 and 2028, potential retail sales in malls will grow at a compounded annual rate of 29 per cent to touch $39 billion by 2027-28.
Retail sales in malls in the top eight cities were at $8 billion in the last financial year and are expected to touch $11 billion, surpassing the pre-COVID levels, in the current financial year ending March 2023, according to its research.
