By: Anshuman Magazine, CMD, CBRE South Asia
Track2Realty: The expanding retail footprint of global brands in India has been a major growth driver of retail real estate in the country. In an effort to map and analyze the spread of international retailers, CBRE undertook a research study of more than 300 prominent global retailers—Expanding Horizons of Global Retailers in India—to identify operating trends, expansion strategies, and extent of penetration across leading cities.
Most of the international retailers surveyed for the study opted to enter India by opening a store in a major metropolitan city, such as New Delhi (79%) or Mumbai (68%), before gradually expanding their footprint to other tier I locations, including Bangalore, Chennai, Hyderabad, Kolkata and Pune. The graph below presents where retailers are already operating in India, as well as their preferred cities of operation:
The India entry strategy for most global retailers from the CBRE survey continues to be guided by the economic and demographic dynamics of leading metropolitan cities. New Delhi is the top destination preferred by retailers, followed closely by Mumbai and Bangalore. In recent times, smaller cities in proximity to these large urban agglomerations have also witnessed a spill over effect, with an increased percolation of global brands. Hyderabad ranks fourth on the list of cities most favored by global retailers; but the gap between the number of retailers present in Hyderabad and Bangalore is significant (66 in Hyderabad compared to 102 in Bangalore).
Apart from the major locations of New Delhi, Gurgaon, Noida, Mumbai and Bangalore, where a majority of global brands and retail segments are present, it is interesting to note the density of global brand segments in other tier-II and III locations. The emerging locations of the country with a growing presence of global retailer presence include Chandigarh, Ahmedabad, Ludhiana, Amritsar, Lucknow, Surat, etc. Chandigarh is the most penetrated city in terms of global fashion apparel brands, with more than 50% of international retailers present there belonging to this segment. Ludhiana and Amritsar follow close behind. As far as global F&B brands are concerned—apart from the NCR locations of Noida and Gurgaon with a sizeable penetration of global eating outlets—nearly 25% of global brands in Lucknow happen to be F&B brands, closely followed by Jaipur and Amritsar. Jaipur also has the most sizeable presence (~10%) of global cash-and-carry brands in the city’s bouquet of international shopping outlets.
Most of the global brands included in the CBRE study preferred to enter the country by setting up base in a metropolitan city, such as New Delhi (and the NCR) and Mumbai, before gradually expanding to locations such as Bangalore, Chennai, Pune, Hyderabad, and in select cases, Kolkata. These locations have emerged as prime destinations mainly due to their high per capita incomes, the presence of a large working population and, in particular, a sizable share of households earning an annual income greater than INR 1 million. According to the study, luxury brands in particular have set up base in these cities before expanding to Hyderabad and Kolkata guided by the density of high net worth individuals in each of these prominent locations.
| CITY | GLOBAL RETAIL DYNAMICS |
| Jaipur | A prominent tourist destination, Jaipur has emerged as an important retail destination in North India. Organized retail has come up and is proliferating in areas such as Tonk Road, Malviya Nagar, Ajmer Road, among others. |
| Chandigarh | Increasing per capita income, growing commercial activity and high literacy rates are factors spurring the growth of the retail sector in the city. The Elante mall has been met with a resounding response, reiterating the significance of the city as a retail destination. |
| Ludhiana | The city is a strong industrial hub, has high per capita income and a large NRI population. These factors have led to an improvement in its socio-economic profile. Ferozpur Road is the main growth corridor and major developers such as Ansals, DLF, Omaxe, etc., are entering the market to develop retail space. |
| Amritsar | The city houses brands that are similar to the brand mix observed in the suburban regions of the NCR. The city being a leading tourist destination, it has led to increasing footfalls for retail developments in the city. |
| Ahmedabad | The city has emerged as one of the fastest growing cities in the country on account of infrastructure initiatives and industrial growth. Ahmedabad also has a high number of educational institutes, besides emerging as a key center for the IT/ITeS sector. A combination of these factors is leading the city to emerge as a favorable retail destination. |
| Lucknow | The city is poised to emerge as one of the key locations expected to witness high retail activity over the coming years due to significant retailer interest and high shopping development activity. |
