NEW DELHI – Under rapidly changing circumstances, Indian retail has slowly opened up after months of shutdown in most states across the country, as a brutal second wave of COVID-19 appears to be retreating as fears grow of another variant of the deadly virus.
But a side effect of the second wave is quickly emerging: After more than a decade, when the country’s nearly 900 billion. $ Retail market was exhausted by mall fever, the high streets see a resurgence.
The spur of the change has fallen in rents in streets and local markets, which have fallen by 10 to 15 per cent in many of the largest markets and streets nationwide.
“Leading retailers have closed more than 120 leases in prominent high-street markets across the country between April 2020 and May 2021,” Pankaj Renjhen, co-CEO and CEO of Anarock Retail, a retail consulting firm, told Headline 4 Ever. “Of the categories that closed high street leasing, clothing had the largest share of deals with more than 23 percent share, followed by food and beverage with 15 percent share and jewelry with 12 percent.”
Trade sizes ranged for areas as low as 400 square feet up to 35,000 square feet.
The major cities where leading brands expanded during this period include Bengaluru, Pune, Hyderabad, Delhi, Chennai, Mumbai and Gurgaon. Prominent Tier 2 and 3 cities include Lucknow, Ahmedabad, Chandigarh, Patiala and smaller towns in Uttar Pradesh and Madhya Pradesh (Indore, Bhopal, Gwalior), he noted.
With stores closing in recent months, except for major retailers, losses have been added, according to retailers. COVID-19 has taken a huge toll – there have been more than 30 million cases in India and over 390,000 deaths from January 3, 2020 to June 23, 2021, according to the World Health Organization, the second highest number of cases after the United States
As in other countries, the pandemic has had serious economic consequences. Consumer confidence fell to a very low level in May, falling from 53.1 per cent in March to 48.5 per cent in May. This is expected to hit the economy badly, with financial analysts now questioning the previously forecast GDP growth of 10.5 per cent for this year. Last fiscal year, which runs from April 1 to March 31, a decline of 7.3 was the steepest ever for India.
“Retail losses have been between $ 25 billion and $ 30 billion during April and May this year,” said Kumar Rajagopalan, executive director of the Retailers Association of India.
In 2020, there was a 45 percent drop in sales from March to October. However, the festive season was a recovery, with sales returning to 93 percent of their pre-pandemic level in the first two months of 2021, Rajgopalan told Headline 4 Ever, citing figures from the association’s surveys.
While malls in Mumbai, Bengaluru, Chennai and other major metro areas remain closed, they opened in New Delhi earlier this month, initially with an alternative mandate and then with limited opening hours, a limit on the number of customers in stores and 50 percent occupancy for restaurants.
Cautious consumers in the city take into account that COVID-19 infections are now below 200 per day, down from the peak of almost 30,000 cases per day in April.
“Stores will be open seven days a week from 10 to kl. 20, ”said Delhi Prime Minister Arvind Kejriwal earlier this week. “Relaxation will be on a trial basis for a week and strict action will be taken if COVID-19 numbers increase.”
Shopping malls in Delhi have sprung up to welcome consumers – especially newly equipped ones like DLF Avenue in Saket, which spent 10 million rupees or $ 135,000 for refurbishment and opened on 1 February 2020 just before closing. Pushpa Bector, CEO of DLF Retail, said disinfection measures were in place and more than 10,000 DLF Retail employees have been vaccinated, ready to “speed up another journey back to normal.” Clearly, brands are not running completely away from malls – Forever 21 opened on DLF Avenue in January, while Go Colors, a store focusing on ethnic and western pants, opened this week. A strong focus on food and beverages is expected to pull consumers back in the long run.
Anarocks Pankaj Renjhen noted the changing retail market and said that the number of retailers is likely to decline over a period of time as well as the size of the stores.
“Right now we’re talking about consolidation before we talk about growth. Growth only happens with capitalized retailers and larger chains and well-capitalized retailers who have their business model in place, ”he said.
Some retail chains close 40 percent of their stores.
“Nobody is talking about growth anymore at the expense of losing money in the long run – the story is completely out now. The shift from unorganized to organized [retail] has already happened – COVID-19 is just pushing it and giving direction, ”he said, emphasizing that the trend towards independent stores will also continue to be driven by greater consumer resilience in Tier 2 and Tier 3 cities. Indian retail has long been dominated by small mom-and-pop stores, which have limited the ability of leading global retailers, including Walmart, to enter the market.
“While the familiarity and location convenience of high street retail is a driving factor, operating costs are more competitive for high street retailers in subways as well,” Renjhen noted.
Rental figures over the last few months support his point:
• In New Delhi, the country’s most expensive retail hub – Khan Market – saw a drop of between 8 and 17 percent in average monthly rents from April to June compared to the same period the year before. The average monthly rent was 1,000 to 1,100 rupees per month. Square foot ($ 13.63 to $ 15). In the prestigious Greater Kailash M Block, rents fell between 13 and 14 percent to approx. 300 to 350 rupees per. Square foot ($ 4 to $ 4.77 per square foot).
• Mumbai saw a 5 to 10 percent drop in rents in key markets with the current average monthly rent on Bandra Linking Road of around 750 to 900 rupees per annum. Square meters ($ 10.22 to $ 12.27) and in both Kala Ghoda and the Fort area are about 450 to 500 rupees per square meter ($ 6.14 to $ 6.82).
• Bengaluru’s well-known Brigade Road saw a drop in rents of between 8 and 17 percent, with the average monthly rent between 250 and 275 rupees per square meter. ($ 3.40 to $ 3.75) At Indiranagar, rents range between 225 and 250 rupees square feet ($ 3.06 to $ 3.40).