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The poor quality of retail space, regulatory issues and subdued economic growth are holding back international retailers from expanding their presence in the country, say experts.
"There is supply constraint in the market and the next few years are going to be a bit of a challenge. Besides supply constraints, lack of quality retail space is also impacting the overall sentiment in the retail real estate sector," Anupam Yog, marketing director at Virtuous Retail, which is into mall development, told PTI.
Although several overseas groups took up space in new developments in anticipation of a future supply crunch, a few retailers are cautious as the economic outlook remains subdued, CBRE South Asia said in its report.
"International brands had plans to expand their presence here. But now they are adopting a careful approach in smaller cities," CBRE South Asia retail services head Vivek Kaul said.
Though interest for expansion is there, they are not proactive because of the ups and downs in the economy and no clarity on the future, he said, adding, "they are focusing only on top 10 cities now."
International brands like Swarovski, Jack N Jones, Only, Vero Moda, Tommy Hilfiger, Levis, Louis Philippe, Puma, Nike, Voi Jeans, Marks & Spencer, and Calvin Klein among others are present in the country today.
On the retail space developers, PwC associate director Bhairav Dalal said, "while vacancy levels in some malls, which are not strategically located, are more, a few developers have even shut down. Typically developer would want a particular return from the brand both domestic as well as international.
"If it is not giving the particular result the developer is expecting, then it would tell that retailer to shut shop and go. In such a scenario, local brands are the ones who are surviving," he added.
