— FILE PHOTO

GAINING MOMENTUM: A customer clicks a picture of the products displayed at the Reliance Fresh store in Banjara Hills, Hyderabad.

CHENNAI: Organised retailing is spreading its wings. Having gained significant market share in tier I cities, prominent retailers are eager to cash in on the first mover advantage and are expanding into hitherto unexplored tier II cities for establishing broad-based visibility and brand loyalty. While doing so, they adopt fresh concepts and explore new structures for space acquisitions. More than anything else, competitively low real estate cost in tier II cities is proving a major attraction for retailers to enter these areas.

It is important to note that tier II and III cities have markedly varying characteristics at the current stage of retail evolution. The success of malls largely depended on the food retailing and entertainment. About 35 per cent of the total retail real estate under development is located in tier II and tier III cities, according to a study by Cushman & Wakefield.

In the southern markets, mall culture in tier I cities such as Bangalore, Chennnai, and Hyderabad has just begun to gain momentum.

The tier II cities are also expected to see a remarkable growth in the development of malls in the near future, with over a million sq. ft. of space being added in cities like Mysore and Kochi. By 2009, Coimbatore is expected to have five malls with a built-up area of 2.37 million sq. ft. and Kochi six malls with a built-up area of 1.59 million sq. ft. At present, there are no malls operating in these two cities.

By the end of 2006, India is expected to have about 120 malls. Further, Reliance has announced an investment of $3.4 billion to become the country's largest modern retailer by establishing a chain of 1,575 stores by March 2009. Hypercity Retail, a subsidiary of K Raheja Corp Group, too, plans to open 55 hypermarkets by 2015.

The opening up of foreign direct investment, the report says, will provide an access to the science of retailing. International players are expected to bring in design, visual merchandise and operational expertise. They will also bring in learning from developed markets and will cut the learning cycle of the Indian retail industry. The entry of retail shopping centre developers will enhance the infrastructure.

At present, 100 per cent FDI is already permitted in cash and carry wholesale trading.

The government is confident that permitting FDI in branded and luxury goods will not displace `mom and pop' stores since these cater to a completely different segment of the market.

Printer friendly page  
Send this article to Friends by E-Mail