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India’s retail shopping malls witnessed robust growth with 3.1 million square feet added in Q4 2023 (Oct-Dec) compared to the pre-pandemic time, according to a Cushman and Wakefield report, which highlighted that a shift in consumer preference has driven the demand for high-quality mall space across Tier-I and Tier-II cities.
Regarding shopping, tangible experiences offered by malls continue to hold weight and play a key role in consumers’ purchase decisions. With 5.9 million square feet of mall supply commencing operations across the top 8 cities in India, 2023 saw the biggest supply addition post-Covid, the report said. In 2019, the same cities witnessed a new supply addition of about 5 million square feet of Grade A and B+ malls. India’s top 8 cities studied by Cushman and Wakefield are Mumbai-MMR, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai, Kolkata and Ahmedabad.
A shift in consumer preference has driven the demand for high-quality mall space across Tier-I and Tier-II cities of India, the report said. Consequently, vacancies in superior-grade malls (institutional or single ownership, lease-only malls with larger areas and footprint) across the 8 top cities have plummeted and currently range between 2-9 per cent.
“Owing to high demand and tight vacancies, the mall portfolio is expanding with new supplies being added by developers. Moreover, the Indian retail landscape is adapting amidst surging interest from retailers who are eager to tap into evolving consumer preferences, shifting consumption patterns, and a favourable business environment,” said Saurabh Shatdal, managing director, Capital Markets and Head of Retail, India, Cushman & Wakefield.
“While prominent Indian retailers have showcased growth and expanded their footprint in 2023, they have plans to increase penetration, especially in the Tier-II market. Superior grade assets constitute 65 per cent of the overall grade A malls, across top cities,” added Shatdal.
Major Indian developers for retail malls indicated that rising demand, tight vacancies, investments, and buyer inclination, are among the significant reasons behind the strong growth.
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“The future of organised retail in the Indian market is a fascinating journey, from a seamless integration of smart technologies to architectural innovations, malls are undergoing a transformative phase. As malls redefine themselves not just as shopping destinations but as cultural and community-centric hubs, they are poised to shape the future of organised retail in India,” said Sunil Munshi, vice president - Retail, Brigade Group.
“Across various categories, brands are not only opening larger stores but also expanding existing ones, driven by consumer preferences leaning towards enhanced in-store shopping experience," said Munshi of the Bengaluru-based group.
New Delhi-based Pacific Group said that retailers and shoppers often select a mall keeping in mind factors like convenience, available brand offerings, entertainment, and dining options. Other pivotal elements include proximity as shorter travel time tends to attract more footfalls.
“Accessibility and extended travel times correlate with increased engagement in leisure activities within the mall, highlighting the link between accessibility and prolonged stays. Ultimately, the amalgamation of accessibility, diverse shop offerings, and the potential for varied leisure experiences serves as a magnet, enticing both retailers and shoppers to choose a particular mall,” said Abhishek Bansal, executive director, Pacific Group.
“Retailers are embracing sustainability, diversity, and inclusivity, resonating with the evolving values of consumers. This year promises an exciting journey of reinvention and growth for the retail mall segment, with opportunities for creativity and customer-centric strategies to flourish,” added Bansal.
Abu Dhabi-headquartered Lulu Group said that the outlook for 2024 is promising, as it plans to expand further into Tier-III markets with five mini-malls in Kerala. The company said it would explore models like hypermarkets and compact malls.
“Despite global uncertainties and pandemic challenges, the resilience of retail malls in India is evident. Malls are evolving into lifestyle hubs, catering to the growing middle class and increased consumer spending,” said Shibu Philips, director of Shopping Malls, Lulu Group India.
