India has witnessed frenetic pace of retail development over the past five years. While local shopping centers have always existed in India, their structure ambience and method of doing business served the needs of the local population. The pace of change in retail developments has triggered a frantic pace in the development of malls. A number of factors such as income growth, changing demographic profile and socio- economic environment have driven this have driven this transformation in retail in India.
Goldman Sachs has estimated that the Indian economic growth could actually exceed that of China by the year 2015, It is believed that the country has the potential to deliver the fastest growth over the next 50 years. Keeping in mind the rates of growth predicted for India and China, the balance of economic power is poised to tip in favor of two of the world’s largest populations over the next fifty years. The Global Retail Development Index developed by AT Kearney has ranked India first, among the top 30 emerging markets in the world.
Formats new to the Indian marketplace have emerged rapidly over the past five years. There is a little doubt that retail in India is revving up for an exciting phase ahead. Development in retail formats and patterns of shopping have always been influenced by mobility and the lifestyles of the consumer. Typically, the development of shopping centers has followed a pattern, which has always synchronized with the development of the retail sector in that economy and the needs and the wants of the consumers.
This case study examines the rapid growth of malls in India and the challenges faced by the mall developers. This primary aim is to examine the feasibility and sustainability.
Mall development in India
It would be perhaps incorrect to say that shopping malls have come into existence in India in the recent pass. While they have always existed in the local and regional markets, the manner in which they now present themselves to the end consumers has changed. Spencer Plaza is Chennai and Crossroads in Mumbai are considered to have pioneered the shopping mall and shopertainment revolution in India. From three malls in the year 2000 to almost 300 malls by the year 2010. The pace of developments is rapid. It is estimated that mall development would spread across 60 cities in he country by the end of the decade.
The West and North of India are estimated to witness the highest rate of mall development in India. While the NCR has witnessed rapid developments in retail developments all developments have not necessarily been successful. In many cases the supply of retail space has far exceeded the demand of retail space. The tenants in malls in India are also faced with high lease rentals and the payment of high costs towards Common Area Maintenance which eventually affect the retailer’s profitability.
Characteristics of a shopping mall
The development of shopping center has to synchronize with retail development in the country. In India while the retail sector may have crossed the initial phase and moved into the second phase of development mall development has moved faster. In most parts of the world entertainment as key components of malls emerged after the decline of department stores, India department stores are skill evolving. Players are still entering the market and that total numbers of players are limited. The keys are also experimenting with the products and services being provided by them. In such a scenario mall developers need to focus to focus on certain key elements of strategy and on where they apprise to be over a period of time.