The Indian retail sector is experiencing significant growth, driven by rising disposable incomes, a growing youth population, and urbanization. This growth is reflected in the expanding shopping center landscape across the country, with the National Capital Region (NCR) and Bengaluru emerging as key retail hubs.

NCR Leads in GLA

The NCR tops the list of 29 cities in India with 31.3 million square feet (sq ft) of gross leasable area (GLA) in shopping centers in 2023. This dominance is attributed to strong leasing performance, particularly in Noida.

Drivers of Growth in NCR

• Rising Disposable Incomes: Increased purchasing power fuels consumer spending on retail goods and services.
• Youthful Demographic: Young consumers are driving demand for trendy products and experiences.
• Rapid Urbanization: Growing populations in urban areas create a larger consumer base for retail businesses.
• Modern Amenities: Noida Expressway offers a well-developed infrastructure with ample space for new developments.
• Proactive Government Initiatives: Supportive government policies facilitate commercial growth.

These factors have made Noida Expressway a critical hub in India’s commercial landscape, attracting significant retail investment.

Bengaluru: A City with High Shopping Center Density

Among Tier 1 cities, Bengaluru stands out with a high shopping center density figure of 1,147 sq ft, indicating a robust retail infrastructure and commercial vibrancy. This density signifies the availability of shopping centers in relation to the city’s population.

Bengaluru’s Retail Advantages

• Aspirational City: Bengaluru attracts both local and global investors due to its thriving economy and a large young, tech-savvy population.
• Prime Locations: Bengaluru’s desirable locations offer opportunities for unique retail experiences, drawing in both investors and consumers.
• Experiential Shopping Destinations: Developers are increasingly focusing on creating unique shopping experiences to differentiate themselves and attract customers.

High Streets: A Thriving Retail Format

Despite the growth of shopping centers, high streets remain a dominant retail format in India.

The Appeal of High Streets

• Cultural Landmarks: High streets act as both commercial centers and cultural landmarks, attracting tourists and locals alike.
• Diverse Brand Mix: High streets offer a good mix of regional and international brands, catering to a variety of consumer preferences.
• Experiential Shopping: Customers can engage with their surroundings and discover new products and experiences beyond just shopping.

NCR and Bengaluru boast a significant presence of high streets, reflecting the demand for diverse retail offerings that go beyond traditional shopping centers.

Leasing Activity Surge

Leasing activity in the retail sector is surging, driven by the demand for quality retail spaces in prime locations.

Factors Driving Leasing Growth

• Preference for Grade A Shopping Centers: Retailers are increasingly opting for well-maintained and high-quality spaces, resulting in low vacancy rates.
• Strong Demand: The strong demand for quality retail spaces has contributed to a decline in vacancy rates, highlighting the resilience of the sector.
• Evolving Needs of Retail Businesses: Retailers are seeking spaces that are adaptable to changing consumer trends and technological advancements.

Future Outlook: Growth and Challenges

The Indian retail sector is expected to continue its growth trajectory with a projected CAGR of 23% between 2023-24 and 2028-29.

Opportunities for the Future

• Rising Disposable Income: The increase in purchasing power will fuel consumer spending on retail goods and services.
• Growing Youth Population: The large and tech-savvy youth population is driving demand for new and innovative retail experiences.
• Experiential Retail Formats: Consumers are seeking more than just basic shopping experiences. Retailers are responding with immersive environments, interactive displays, and personalized services.

Challenges

• Competition from E-commerce: The rise of online shopping is a challenge for brick-and-mortar retailers. To stay relevant, retailers must leverage the digital space and offer integrated omnichannel experiences.
• Attracting and Retaining Top Retailers: Retailers are demanding high-quality spaces in prime locations. Developers must adapt to these evolving needs to secure tenants.
• Sustainability: Environmental consciousness is increasingly important. Developers and retailers must prioritize sustainable practices to attract environmentally conscious consumers.

Takeaway Points

• NCR and Bengaluru Lead the Way: These cities are key retail hubs, attracting both domestic and international investment.
• High Streets Remain Dominant: These commercial and cultural landmarks offer a diverse brand mix and experiential shopping experience.
• The Future of Retail is Bright: The sector is expected to continue growing due to rising disposable incomes, a large youth population, and the shift towards experiential retail formats.
• Challenges Remain: The competitive landscape includes e-commerce giants and the evolving needs of retailers.
• Innovation is Key: Retailers and developers must adapt to these challenges by embracing innovation, sustainability, and providing unique and engaging customer experiences.