According to the CBRE South Asia Pvt. Ltd., India’s report, Mumbai recorded a 14.6% year-on-year increase in retail leasing across investment-grade malls, high streets and standalone developmentsin January-June 2023. Total leasing during January-June 2023 stood at 0.21 million sq. ft., compared to 0.18 million sq. ft. in the corresponding period last year.
During the Jan-Jun’23 period, among the industry segments in Mumbai, homeware & department store drove leasing with a share of about 20%, followed by consumer electronics (17%) and fashion & apparel (17%)
On a pan-India basis, retail leasing witnessed a 24% Y-o-Y growth in the Jan-June’23 period, and a 15% increase compared to Jul-Dec’22 period. Total leasing during Jan-Jun’23 stood at 2.9 mn. sq. ft. compared to 2.31 mn. sq. ft. (Y-o-Y). Bangalore, Delhi-NCR, and Ahmedabad collectively accounted for a cumulative share of 65% in leasing activity during the first six months this year. The Jan-Jun’23 period also recorded a 148% Y-o-Y increase in supply. Total supply in Jan-June’23 stood at 1.09 mn. sq. ft. compared to 0.44 mn. sq. ft.(Y-o-Y). Further, boosted by the increased appetite of shoppers, the top eight cities saw an 8% growth in mall completions on a half-yearly basis. Ahmedabad led the growth in supply addition with a 73% share, followed by Delhi-NCR at 20%.
Recognizing the immense potential of the consumer market in India, international brands continued to reinforce their presence in the country. Apple launched its first two new stores in Mumbai & Delhi-NCR and UK based coffee and sandwich chain Pret A Manger also opened stores in Mumbai and Delhi-NCR. Canadian coffee brand Tim Hortons which debuted in India last year, strengthened its presence in Delhi-NCR and Punjab and entered the Mumbai market this year. European luxury brand Balenciaga is set to open its first brick-and-mortar store in Delhi-NCR through its partnership with Reliance Brands. Additionally, Galeries Lafayette, a leading shopping centre based in Paris, is also set to establish its presence in India by opening two stores in Mumbai and Delhi-NCR in collaboration with Aditya Birla Fashion and Retail Ltd.
Prime assets will continue to gain traction: Strong flight-to-quality demand will continue to prompt retailers to seek high-quality retail spaces in city centres and along prime high streets. While decentralised properties will also continue to attract interest, we expect assets in prime locations to outperform in 2023. Cost-sensitive retailers are likely to seek opportunities to add new stores in secondary locations.
Experience to remain at the helm of retailer strategies: The retail equation is more evolved than ever, with the elements of experience, leisure and customer-centric strategies gaining greater significance. Experiential retail has emerged as a compelling response to the prevalent accessibility of e-commerce, offering a strategic avenue for brands to optimize their physical presence and yield substantial returns by prioritizing immersive and engaging in-store experiences.
Retail supply chain optimization to become a new normal: As the final 50 feet remains one of the most expensive legs of the logistics journey, retailers can thus hedge against rising transportation costs by assigning a more active supply chain role to their brick-and-mortar stores. As consumers increasingly expect to be able to shop for any product, any time, retailers will not only look to manage their expectations in-store but also upstream throughout the supply chain.
Retailers will continue to explore tier II, III and IV markets: Population with increased spending potential, smart city recognition by the government, developing infrastructure and airport connectivity, availability of land and successful brand launches in tier II, III and IV markets are some of the factors that are elevating preference for these markets. The surge in online shopping during the pandemic led stakeholders to move operations closer to the end-user markets. India’s transition into an organized retail market will be driven by the continued growth in these cities and it will become vital for retail stakeholders to harness their economic and development potential.