Understanding Retail Realty
Established in 1986, Brigade Group has carved its niche in all the segment of realty sector. Vishal Mirchandani, CEO, Commercial & Retail, Brigade Group, shared his views on retail real-estate.
What is the growth pattern of retail real-estate in India?
Visiting a mall has become an intrinsic part of the urban lifestyle. Customers look for a wholesome experience while visiting a mall which includes avenues for leisure, recreation and entertainment, rather than going only for shopping. It should also be noted that while organized retail is growing at 17% annually since the last five years, the shopping mall space is not being added leading to undersupply of the same.
Retail space is becoming increasingly customer-centric, experience and convenience driven. Today’s retail space is a fluid, dynamic one, constantly changing to keep the customer’s interest alive and to engage with the customer. The retail space has become the hub for retail brand’s promotional activities and visual merchandising and décor, as silent selling techniques, are playing a big role in attracting customers.
Development of dynamic retail concepts can be witnessed across categories led by entertainment and dining which are increasingly finding newer ways to connect with the youth and young families thus energizing the shopping mall experience. Now-a-days, consumers are well-travelled, well-informed and aware of global trends. They look for an international experience in a mall. So, leisure and entertainment options, including a choice of food and beverage avenues, also become priorities, along with a great choice of retail brands.
Cutting edge design and technology are being deployed to create a seamless experience for everyone. This ranges from hi-tech parking facilities to other amenities. Shopping malls are moving towards a digital experience in order to connect with the millennials.
What are the operational challenges for mall establishments?
The major challenge that shopping malls face is related to town planning and resulting traffic issue. Here local bodies and town planners must facilitate process of providing smoother access to customers so as to reduce pressure on the approach road and other infrastructure related issues. The other challenge is with respect to the development rules for shopping malls. The key to overcome any challenge related to the mall establishments is to have a thorough understanding of the business environment.
What are the retail lease/purchase formats prevalent today?
The most prevalent format is the minimum guarantee or revenue share, whichever is higher. When mall developers work closely with retailers to enhance footfall and consequently, retails sales it becomes a mutually beneficial equation, delivering great results for both.
However, we must guard ourselves from complacency in successful shopping malls and collaborate better in the malls that are moderate performers thus ensuring that growth trajectory in retail sales is healthy and sustained.
We see remarkable growth of 17% in organized retail, leading to commensurate demand in retail real-estate which will have to deliver the experience that the customer and the retailer are looking for. Doing that consistently well is the challenge. Apart from that, the external factors like availability of land, infrastructure and bureaucratic bottlenecks are critical challenges that continue to slow down the momentum in the sector.
What are the opportunities ahead for the sector?
The urban population with disposable incomes and aspirations to match is growing rapidly following the fast pace of urbanization in the country. Private consumption is growing faster than India’s GDP and Indian retail market size is estimated to be USD 1 trillion in 4-5 years, this presents a huge opportunity for the retail and retail real estate sectors. The opening up of 100 % FDI in retail will also fuel this growth along with the added opportunity presented by Tie 2 and 3 cities. Mall Developers will have to assess this growth story and be ready to cater to it with a long term perspective.
What are Brigade Group’s major retail projects?
The multi-awarded Orion Mall @ Brigade Gateway, Bangalore is Brigade Group’s flagship shopping mall project and a significant portfolio for the group. It has been ranked as the best mall of South India for last five years. We have already launched our second mall – Orion East and are focusing on expanding the brand in South India where it is already established as the segment leader. We are also on different stages of creating two more malls in South India.