Tier-II cities to usher in second phase of retail revolution

The retail sector in tier-II and-III cities has witnessed a much higher investment of US$ 6,192 million between 2006 and 2017 as against US$ 1,295 million that came to tier I metro cities during the same period, according to a report titled, ‘Fuelling the Retail Revolution — The Paradigm of Emerging Cities’. The report has been published by real estate consultants JLL India in association with the CII National Retail Summit, 2017. Highlighting the withdrawal of malls across tier 1 cities, the report identifies 20 cities including tier 2 cities such as Lucknow, Jaipur, Chandigarh, Kochi, Patna, Bhubaneshwar, Indore and Nagpur among the leading cities, as the next retail destinations in the country. The study bases its findings on key parameters such as total retail stock, upcoming supply, retailer presence, retailer expansion plans and investments. It gives details on various formats of developments that tier 2 and 3 cities are currently witnessing. Factors like lack of available space in retail malls in metro cities, increasing lease rentals in metro malls, and high land prices in tier 1 cities have made it difficult for retailers to own real estate in these cities. These factors, the report adds, have become a deterrent for expansion and growth of malls in big cities. Making a strong case for tier 2 cities, the report says that factors like international airport connectivity across cities such as Lucknow, Kochi, Bhubaneswar, Nagpur to name a few, rising levels of disposable income have prompted various global and local brands to plan their expansion plans in these cities. Pankaj Renjhen, managing director — Retail, JLL India said, “The retail sector is among the top three employers in the country and its growth will drive the economy of our future cities. Emerging destinations like Lucknow, Jaipur, Chandigarh, Kochi, Indore, Nagpur and Bhubaneshwar are going to be the next big retail hubs. It is for this reason, retailers and private equity firms have started taking an increased interest in Indian retail sector through investments in high-end retail malls in tier 2 and 3 cities.”