What the fu­ture of re­tail holds for the malls of to­mor­row

While the de­mon­eti­sa­tion wave put a damp­ener on res­i­den­tial sales across In­dia, the re­tail mar­ket was com­par­a­tively un­af­fected and showed good ćex­i­bil­ity in terms of a steady con­sumer spend­ing pat­tern. Pune’s re­tail mar­ket is re­ceiv­ing con­sid­er­able in­vest

Shopping Center News - - CONTENTS - By Mayank Sha­ran

IRF 2017 ses­sions fo­cus on how shop­ping cen­tre dy­nam­ics are chang­ing in In­dia, and how mall cul­ture is evolv­ing to em­brace tech­nol­ogy, per­son­al­i­sa­tion and pre­mi­u­mi­sa­tion

Many in­ter­na­tional brands that pre­ferred to be present only in the big­ger metros have rec­og­nized the po­ten­tial of Pune as a model city to ex­pand their foot­print and study con­sumers’ be­hav­iour pat­terns. This has led to a re­in­force­ment of the mall cul­ture in Pune.

There has been some im­por­tant sup­ply aug­men­ta­tion on Pune’s re­tail real es­tate mar­ket re­cently, par­tic­u­larly Wes­tend Mall in Aundh and The Pav­il­ion Mall on S.B Road, which is slated to be­come op­er­a­tional in 2017.

Rental Growth

The rental land­scape has changed quite a lot in 2017, with qual­ity malls see­ing con­sid­er­able with rental in­cre­ments while others dis­played slower or no growth. While re­tail rental growth in Pune as a whole has been 1per­cent at a city level in 1Q17 when com­pared to 1Q16, the growth in com­pa­ra­ble mar­kets like Ban­ga­lore and Hy­der­abad was flat. How­ever, when we look at Pune’s most pop­u­lar Grade A malls where sup­ply is short and de­mand is high, rentals have moved up­ward by as much as 10-15 per­cent re­cently. Cap­i­tal val­ues in high­de­mand malls have also seen sig­nif­i­cant in­crease in 2Q17 over 1Q17, go­ing as high as 10 per­cent in some cases. This has led to a re­newed in­ter­est by mall de­vel­op­ers to in­vest in rel­e­vant Grade A re­tail sup­ply.

Catch­ment Dy­nam­ics

Driven by sec­tors like au­to­mo­biles, IT/ITeS, agro and food pro­cess­ing, Pune has a good mix of young and high-in­come de­mo­graph­ics, which has en­cour­aged re­tail­ers to ex­pand their foot­print and con­sis­tently drive or­ga­nized re­tail growth over the last few years.

How­ever, the city’s re­tail mar­ket sce­nario was un­favourable in 2016 and a few malls were scrapped and pro­posed to be con­verted into of­fice spa­ces. Inor­bit Mall will soon be conve rted into a com­mer­cial space and has been taken over by Ama­zon to set up its IT/ITeS ser­vice arm

Kakade Cen­ter­port and Pulse Mall have been re­fur­bished into of­fice spa­ces

Suc­cess Drivers

It is a known fact that the suc­cess of any re­tail es­tab­lish­ment de­pends on ba­sic pa­ram­e­ters that mall de­vel­op­ers must con­sider. These vari­ables are: Ap­pro­pri­ate lo­ca­tion, in­clud­ing prox­im­ity to key cen­tres of the city

Ap­proach and ac­ces­si­bil­ity, and ad­e­quate or­gan­ised park­ing spa­ces Catch­ment-spe­cific ten­ant mix Proper brand po­si­tion­ing At­trac­tive mall façade Pro­mo­tional ac­tiv­i­ties to at­tract foot­falls, jus­ti­fi­able of­fers and dis­counts

Open spa­ces for cus­tomers to so­cialise

On these fronts, many mall own­ers in Pune recog­nise that the odds were against them and had to take suit­able mea­sures to stay rel­e­vant, drive foot­fall growth and boost ef­fi­ciency. This has ev­i­dently in­cluded re-think­ing on how they per­ceive their prop­er­ties and re­ex­e­cut­ing busi­ness plans to make their real es­tate in­vest­ments ef­fi­cient. In the malls that have stayed op­er­a­tional in Pune, the de­vel­op­ers have had to go well be­yond tra­di­tional shop­ping to con­sis­tently in­crease foot­falls.

Among the malls which have man­aged to crack the code and stay highly rel­e­vant are: Phoenix Mar­ket City on Na­gar Road

Amanora Mall in Hadap­sar Sea­sons mall next to Ma­garpatta City and Kumar Pa­cific Mall on Swar­gate

On the con­trary to over­sup­ply mall sit­u­a­tion in Eastern cor­ri­dor, Global High Street Mall, a newly launched cen­tre in Hin­je­w­adi Phase 2, has at­tracted con­sid­er­able in­ter­est amongst re­tail­ers due to the ready avail­able catch­ment, lack of a des­ti­na­tion sup­ply with the right in­gre­di­ents. The cen­tre which houses the largest PVR in Pune is due in Q42019.

Nitesh Hub (for­merly known as Kore­gaon Park Plaza) which is now op­er­a­tional on four floors and is wit­ness­ing con­sid­er­able foot­falls, has plans of adding more in­ter­na­tional mar­quee brands and also in­crease their food of­fer­ing in the cen­tre to in­crease the over­all con­sump­tion from the cen­tre. These malls have worked con­sis­tently on their branding and pro­mo­tion strate­gies.

In­ter­na­tional Brand Ex­pan­sion

Pune has seen a vis­i­ble growth in the luxury re­tail seg­ment in cer­tain catch­ment ar­eas. The Pav­il­ion on S.B Road and Wes­tend Mall in Aundh, which ac­count for of 4.5 lakh sq. ft. and 4 lakh sq. ft. re­spec­tively, plan to up their game with ma­jor in­ter­na­tional brands like H&M, Zara, Gant, Ken­neth Cole, Brooks Brother , MAC Cos­met­ics and Su­perdry.

Many global re­tail­ers are ex­pand­ing their re­tail foot­print in Pune to dis­play their ex­clu­sive col­lec­tions with mul­ti­ple stores. Some of the lead­ing in­ter­na­tional and do­mes­tic play­ers in Pune who are dic­tat­ing qual­ity or­ga­nized re­tail spa­ces dy­namic in up­com­ing re­tail es­tab­lish­ments are H&M, Marks & Spencers, De­cathlon, MAX etc.

In­ter­na­tional re­tail giants like Wal­mart and IKEA are also con­sid­er­ing Pune. IKEA plans to ac­quire land parcels to ex­e­cute en­try into Pune in 2018-19, and Wal­mart is con­sid­er­ing a suit­able lo­ca­tion to ac­ti­vate its stores. Both these re­tail giants will fo­cus pri­mar­ily on the brick-and-mor­tar model, but use e-com­merce to sup­ple­ment sales in the city.

Pri­mar­ily, they will fo­cus on es­tab­lish­ing op­er­a­tions and grow­ing in the tra­di­tional way. IKEA is not con­sid­er­ing e-com­merce as a ma­jor chan­nel; it plans to rely on a ‘touch-and­feel’ strat­egy and utilise the on­line route to im­prove cus­tomer con­ve­nience and for back-end sup­port ser­vices.

The Fu­ture

With the in­tro­duc­tion of re­tail re­forms like Re­tail REIT (im­mi­nent in In­dia) and GST (ef­fec­tive from July 1, 2017) Pune’s re­tail real es­tate mar­ket will see better qual­ity malls, a re­duc­tion in strata sold spa­ces and sig­nif­i­cantly im­proved ef­fi­ciency and ease of re­tail goods move­ment.

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