“Going forward, shopping malls will be an area of important focus for DLF. This will help us to make the maximum leverage of the retail boom in India,” DLF Retail managing director Arvind Nair said.

He, however, did not divulge investment to be made in development of 22 million sq ft of shopping mall space. According to a company source, DLF is planning to develop around 20 large shopping malls in the next three-four years, which would entail an investment of Rs 16,000 crore.

However, the face of the Indian retail industry is changing. India is passing through a retail boom today. A number of changes have taken place on the Indian retail front such as increasing availability of international brands, increasing number of malls and hypermarkets and easy availability of retail space. With the Indian government having opened up the doors for FDI, the entry of foreign retailers into the country has become easier. India has come a long way from the traditional Kirana stores and is on its way to becoming a ‘mall country’. The emphasis has shifted from reasonable pricing to convenience, efficiency and ambience.

The major factors fuelling this change are the increase in disposable income of the people, improving lifestyles, increasing international exposure and increasing awareness among the customers. India has a large middle class as well as youth population, which has contributed greatly to the retail phenomenon. The middle class is considered to be a major potential customer group. The youth are perceived as trend setters and decision makers. Tourist spending in India is increasing, which has also prompted the retail boom.

Food and grocery are the two categories in the Indian retail sector which offer the most promising opportunities. Apart from this, the other areas where there are vast possibilities for Indian retailers are jewellery, apparel and consumer durables. Indian retailers are also trying to create a niche for themselves in areas such as books, gifts and music.

The Indian retail industry is going through a period of golden sunshine.

Fibre2fashion discusses on certain issues concerning the Indian retail industry with Mr. Andreas Gellner, Managing Director, Adidas India:

Mr. Gellner, expressing his view on the present scenario in the Indian retail sector, states that by now, it is fair to assess that the outlook is very bright, but currently, the potential and dynamics are somehow overhyped. Undersupply of suitable spaces and manpower have driven both critical cost components to levels where it is very difficult for many retailers to make profits (not to talk about generating funds for further expansion). The service tax on rentals, of course, was the final blow to many profitability models.

He went on to further state that the long-term future is very promising, but the next few years will remain extremely challenging. While speaking about the current mall culture in India, he believed that the malls as places to congregate and spend time for shopping and other activities have been well accepted. This concept will certainly even grow stronger once new generations of malls are offering consumers/visitors an atmosphere of international standards (including trouble-free parking!).

He also strongly supports the liberalisation of FDI norms in any form of retail, because they won’t hurt traditional business at all, or at least not more than the other Indian business houses who are rolling out their various category killer formats.

What they bring to the table is additional funds, cutting edge supply chain solutions and process know how. The latter is dearly needed to professionalise the retail sector, thereby creating efficiencies (retailer profits) as well as best services and best prices for the Indian consumer.

There are changes in the buyer behaviour of late with the mall culture. The Indian consumer has always been very discerning. Mr. Gellner is of the view that he does not see that changing. Of course, the shopping behavior is changing with malls coming into play, as conversion rates in malls are dramatically lower than in high street. The Indian consumer has more options than ever before, and he/she exerts their power of knowledge very well.

Lastly, he discussed about the plans for meeting the changing trends. He is concentrating on creating a retail-focused organization that recognizes trends and has the ability to adapt swiftly.

Adidas has been the leading producer of sports apparel, footwear and other accessories for more than 8 decades. Adidas has more than 100 stores all over the world. The company started its operations in India in the year 1996. According to experts, Adidas India has been growing at the rate of 50% per annum. The success of Adidas can be attributed to its core values, such as:

• Being consumer focused
• Being innovation and design leaders
• Being socially and environmentally responsible
• Being dedicated to constantly delivering outstanding financial performance
• Being constantly focused on product improvement

Adidas aims at leading the sporting goods industry with products that have been developed with a passion for sports.

Mr. Andreas Gellner has been the Managing Director of Adidas India since the year 2004. He joined Adidas in the year 1995 in Germany and has worked at managerial levels in the organization in different countries.

With so much of buzz around the malls today, it is no surprise that the best of malls will also command the dearest of rentals. So, SundayET comissioned global real estate consultancy Cushman and Wakefield (C&W) to find out the malls that are on the top of the charts in 11 large cities of the country, namely Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore, Pune, Chandigarh, Ahmedabad, Kochi and Lucknow.

The most expensive mall was determined by the ground floor rental values on carpet area for a standard vanilla store among operational and upcoming malls. This methodology takes into consideration retail malls in a given area that may vary given the specifics of a certain city and the overall nature of retail construction in a particular location. The ranking takes into consideration only the most expensive mall in the respective city.

While DLF Emporio Mall — which is coming up in upmarket south Delhi — was found to the most expensive in the city, Phoenix Mall in south of Mumbai emerged as the dearest in the financial capital. Malls in central locations such as Chennai City Centre mall in central Chennai and The Collection Mall in central Bangalore emerged as the most dear in these cities.

Luxury mall, DLF Emporio, coming up in 2008 in South Delhi’s Vasant Kunj area will house high-profile brands such as Armani, Versace, Hugo Boss, Louis Vuitton, Christian Dior, Dolce & Gabbana, Escada and Cartier. At a rental of Rs 900-Rs 1,000 per sq ft per month, this will clearly be the most expensive mall in the country!

The recently opened Select Citywalk in Saket follows a close second, commanding rentals between Rs 650-Rs 750 per sq ft per month. PVR Cinemas, Pantaloons, Crossword and Esprit are the main tenants here. Says Rajneesh Mahajan, national head, Retail Services, C&W, “Locations like south Delhi have always been much sought after as retail destinations in the city. And now with Saket and Vasant Kunj offering mall options for retailers, south Delhi has sustained itself as one of the most expensive and exclusive shopping destinations in the country.

Besides location, a well designed mall with the right trade and tenant mix also decides the positioning and rental values of the mall. Easy accessibility, infrastructure and developer competency are other key factors that can instil confidence in retailers and hence support higher prices.”

B P Dhaka, COO, Parsvnath Developers, feels that other than a proper tenant mix, personalised services in malls are necessary too and help to differentiate one from the other. “A proper tenant mix for any class of people is essential. Besides that, the focus should be on what a customer wants while entering the store, the ambience plays a vital role,” he said.

Mr Dhaka added that,”Customer should be seen as the brand ambassador, he should be pampered…malls which combine all these factors are not surprisingly also the most expensive due to the quality experience that they offer.”

Phoenix Mall in Mumbai’s Lower Parel turns out to be the most expensive mall in the financial hub. With tenants such as Bigbazaar, Lifestyle and Pantaloons, rentals in Phoenix are roughly around Rs 662 per sq ft per month. Inorbit Mall in Malad is the second most expensive in the city with rentals at approximately Rs 450 per sq ft per month.

A lack of availability of mall spaces in the city has led to high mall rentals in these areas. In fact, there are no new malls expected in CBD and off–CBD locations in the next two or three years. Lower Parel will see a few more high value retail construction entering the market by 2009-2010, most of which will be constructed on erstwhile mill lands.

City Centre Mall in Kolkata, located at Salt Lake Sector 5, is a booming IT destination which has a big potential to be a top retail destination. Moreover, the area does not have any other organised mall development within the vicinity, thereby increasing the demand. Rentals vary between Rs 340 -Rs 400 per sq ft per month and Shoppers Stop, KFC, Nike, Colours of India, T Junction and Airtel are some of the tenants in the mall. Forum Mall on Elgin Road follows closely at between Rs 300-Rs 350 per sq ft per month. Presence in the CBD area and a good mix of medium to high end brands makes the mall command these rentals.

The first option for retail in Chennai has always been malls located in central Chennai. Chennai Citi Centre Mall located at R K Salai, is the only mall that has a multiplex in it. While INOX runs the multiplex, the anchor store is Lifestyle with Landmark, Giordano, Adidas, Wills Lifestyle, Helvetica and Zodiac in smaller formats. Rentals here vary between Rs 160-Rs 250 per sq ft per month. Prices in Central Chennai continue to rise as there is a demand for space by old as well as new retailers looking at expansion or moving into Chennai.

On account of the short mall supply in Bangalore, the pricing of micro markets for malls, is primarily determined by the positioning of the mall and the infrastructure committed by the developer. An upcoming mall on Vitthal Mallya Road, The Collection, in central Bangalore is the most expensive mall with rentals at Rs 600 per sq ft per month. Positioned as a luxury mall coming up by 2008, it will house top notch brands like Louis Vuitton, Gucci, Fendi, Mont Blanc, Omega and Zegna.

Perceived as a premium mall location by retailers and consumers, the mall commands high rentals also due to a shortage of operational malls in the region. Orion Mall in north Bangalore’s Yeshtwantpur area follows a close second with rentals between Rs 500-Rs 560 per sq ft per month. Being developed as a destination mall, it has achieved a differentiation by creating a premium 42 acre project with high-end 1500 apartments, inside the project.

In Chandigarh, the industrial area has come up as a sought after retail destination after Realtech Group’s City Emporio and Uppal’s upcoming Centra Mall. The close vicinity to Tribune Chowk, gives the city’s industrial area an edge over other developments which are primarily being developed on the outskirts of the city.

Hence developments from Uppal and Realtech are being leased out at higher rentals than the project announced by groups like DLF and MGF. City Emporio located on Phase I, industrial area is the most expensive in the city with rentals roughly at Rs 430 per sq ft per month. Tag Heuer, Samsonite, Zodiac and Lacoste are some of the tenants in the mall. Centra Mall in the same area follows second at Rs 390 per sq ft per month.

GVK1 Mall located on Banjara Hills in West Hyderabad is the most expensive with rentals ranging between Rs 170-Rs 180 per sq ft per month. And it’s not difficult to see why. With catchment that include high income residents of Banjara Hills & Jubilee Hills and a good brand presence, high mall rentals in this area do not come as a surprise. Significant retailing activity has also been witnessed here over the last 3-4 years which again makes this location gain an advantage.

A substantial retail development is being witnessed in Pune with major retail development happening in areas of western, eastern & Off CBD Corridor. Magnum Mall on Moledina Road is the most expensive in the city with rentals varying between Rs 320-Rs 340 per sq ft per month. Westside, Levis and Spiker are some of the primary tenants in the mall.

In Kochi, organised retailing is concentrated on M G Road and Marine Drive attracting footfalls from all parts of the city and this makes Summit Mall the most expensive with rentals at approximately Rs 90 per sq ft/ month. The zone is the prime location in the city, that taps the local residential catchment, thereby making sound locations for mall development.

Alfa1 Mall coming up next to Vastrapur lake and in close proximity to CG road is currently the most expensive mall in Ahmedabad with rentals as high as Rs 185 per sq ft per month for ground floor. Alfa 1 is spread over 8 lakh sq ft and has gained importance as it has secured some of the most prominent anchors such as Shopper’s Stop, Hyper City, Fame. It is a well zoned project with a good tenant mix. There are currently 4 operational malls in the city with Iscon Mega Mall being the second most expensive mall commanding Rs 150 – Rs160 per sq ft per month.

Fun Republic in Lucknow is the most expensive mall commanding a rental of Rs 190 per sq ft per month. There are very few operational malls in this region with more expected to come up by mid 2008. The country is riding high on mall mania. With organised retail taking shape and big retail giants entering major metros and smaller cities, it is no surprise that retail development is moving at a fast pace in the country.

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Cafe Coffee Day (CCD), ethnic apparel wear Biba and Samsonite, are some of the players looking to expand in Tier-I cities. High rentals were a stumbling block in most locations. That has changed now. “On an average, we have managed to bring down rents by about 15-20%. There have been instances where the reduction has been as much as 50%,” says Samsonite director (global) Ramesh Tainwala.

The correction in some locations in Delhi has been as much as 80%. Though, Samsonite opened only three new stores in 2008, it plans to add 35 stores by 2009 end. Biba is also using the slowdown as an opportunity to expand. “We have renegotiated our rentals for 10 properties in the last one week alone,” says Biba Apparel director Sanjay Bindra.

In one of the existing stores in Navi Mumbai, it managed to negotiate its rental and brought it down by 50%. Lower rentals are now helping it expand to prime areas in New Delhi, where it has just one store. Today, Biba has 64-standalone stores across the country and plans are on to add 30 more over the next year. A property broker, on the condition of anonymity, cites the case of a Hyderabad mall where the rent was at Rs 300 per square foot, a year ago. That is now down to just over Rs 100 per square foot. Likewise, rates in a prominent mall in south Mumbai have reduced from Rs 600 per square foot to a third at Rs 200 per square foot. Like a host of other players, CCD, too, plans to use the fall in rentals to expand in Tier-I locations.

“Rentals in malls would have fallen by 20-30%, while on high streets it would have fallen by 15-30%. Falling rentals are definitely helping our expansion plans and helping us enter locations where we were not present earlier,” says CCD director Alok Gupta. He adds that it takes less time to negotiate with developers. The plan is to establish a stronger presence in south Mumbai and Delhi where developers were unwilling to negotiate on rents. CCD, which currently has 800 outlets, plans to ramp it up to 1,000 in the next financial year. A large part of it is scheduled to come up in the 115 cities where it already has a presence.

BUILDING BLOCKS

Correction in some locations in Delhi has been as much as 80% Samsonite plans to add 35 stores by 2009 end Biba, too, plans to add 30 stores over the next year Biba has managed to negotiate its rentals and bring it down by 50% CCD, which currently has 800 outlets, plans to ramp it up to 1,000 in the next fiscal.

When Crossroads, the first mall in Mumbai and in the country was launched, little did we know that the city would witness such a huge retail boom in the years to come! Today, Mumbai is home to some of the most prominent and successful malls in the country.

The start of this retail revolution in Mumbai can be traced to the initial years of the last decade. However, during the time frame of 2003-04 to 2007-08, the sector witnessed significant growth of around 11 per cent. The second half of the year 2010 re-witnessed an upsurge in the retail market post the economic meltdown.

Mumbai is estimated to have total organised retail stock of 8.72m sq. ft. and will witness 11.26 m sq. ft. of new retail development over the next three years. According to a study by McKinsey Global Institute, India is poised to become the fifth largest consumer market by 2025. The retail sector in the western parts of India like Mumbai, Pune, Nagpur and Ahmedabad, have seen a huge transformation, thanks to the changing consumption patterns, high disposable income in hand and favourable demographics.

Explains Shreesh Misra, Center Director of Phoenix Marketcity, Kurla, “An asset like a mall becomes a catalyst for people to converge at a particular location and spend leisure time beyond their office hours or during their weekends thus offering utmost convenience. So as and when the consumers start frequenting a mall or a retail space, the administration also plays a key role to support the property with proper infrastructure. Considering all these factors when people of a certain profile start taking a keen interest in a particular demographic it directly results in demand of residential spaces thus resulting in a complete makeover of the area.”

Phoenix Marketcity, which is coming up at Kurla, is predicted to change the face of this central suburb. It will floor 2.1-m sq ft project area for retail and boast of one of the biggest multiplexes in the city with 11 screens.

Retail developments in Mumbai like Inorbit Mall at Malad, Center One at Vashi and High Street Phoenix at Lower Parel were among the first to successfully bring in landscape changes in these respective areas. Such developments have had a positive impact on the real estate prices in the areas of their operations. Commercial places like Kamala Mills Compound, One Indiabulls Centre, Raghuvanshi Mills have gained prominence after High Street Phoenix. Adds Misra,”High Street Phoenix has acted as a catalyst for commercial and residential developments for Lower Parel which was not perceived to be good for any kind of development earlier. Today, it is one of the most sought after locations.”

Similarly, several residential projects by leading developers like Rustomjee and Kalpataru, to name a few, have launched their residential projects post the launch of Inorbit Mall in Malad.

Mumbai undoubtedly has a large number of working couples, migrants, DINK (Double Income and No Kid) and families with good disposable incomes and display an increasing appetite for socializing. These retail destinations being closer to such residential hubs add more vibrancy and convenience to the lifestyle.

Says Reema Kundnani, V.P – Marketing & Corporate Communications, Oberoi Realty, “Today, an average Mumbai family spends their weekend in a mall where the lady of the family gets to shop and meanwhile the kids get to play in the fun zone.

The main reason why malls are gaining popularity is because facilities like shopping, entertainment, movies and food are all available under one roof which makes it a hassle-free destination. We started with Oberoi Mall as the initial step of Oberoi Garden City project followed by the other planned developments.”

Similar is the story of central suburbs and Navi Mumbai where the mall culture is fast spreading with the commencement of malls like R-Mall, Nirmal Lifestyle, Korum, Eternity and Center One, Inorbit and Raghuleela in their respective suburbs. Center One, the first mall in Navi Mumbai, has played a significant role in the development of Vashi node.

Says Sandeep Runwal, Director, Runwal Group, “A good retail development changes the entire look of the area. Before the launch of R-City mall the area wasn’t a preferred destination for residential spaces. But now the residential prices have been almost doubled or tripled in the area. A good mall always adds value to the area and people are willing to pay premium price for a good lifestyle.” Runwal Group has established R-Mall, the first mall in Mulund, R-City and R-Odeon in Ghatkopar and R- Mall in Thane.

Clubbed with 7 -7.5% growth in GDP, the organised retail market is expected to grow in the near future, adding convenience and a new buzz to residential locations across the city.