In 2024, among the retail categories, the home décor segment is likely to expand in online and offline formats, while fashion and apparel players will continue expanding in tier-I cities across malls and high streets, according to a report ‘2024 India Market Outlook’ by CBRE South Asia Pvt. Ltd.
Domestic jewellery brands are also expected to continue to expand. Emerging as an alternative to traditional cinema halls, the growing interest of consumers in the entertainment category is likely to lead to more traction in leasing as well, it said.
According to the report, the estimated leasing in the retail sector is expected to sustain between 6–6.5 mn. sq. ft. in 2024, fueled by primary leasing activity. The report also highlights a stable supply environment for the retail sector in 2024 due to the completion of numerous high-quality mall developments. By the year–end, 5-6 mn. sq. ft. of investment-grade mall space will become operational tier-I cities.
The report indicates that retailers, including anchor tenants and established brands, are expected to proceed cautiously with expansion plans. They will prioritise locations with high visibility, strong foot traffic and favourable consumer demographics. As a result, rental growth is expected to rationalise across both primary and secondary locations.
Moreover, while well-established domestic brands with a solid presence are likely to proceed cautiously with their expansion plans, international newcomers aiming to establish themselves, especially in tier-I cities, are anticipated to persist with their expansion strategies despite global economic challenges.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “Driven by robust consumer demand, India’s retail sector saw remarkable growth in 2023. Looking ahead to 2024, both retailers and consumers are cautiously optimistic. While tier-I cities remain key expansion hubs, promising tier-II markets are attracting new players. Malls are transforming into experiential centres, offering a mix of entertainment, dining and shopping. Fuelled by pent-up demand and strategic expansion, India’s luxury retail sector is experiencing a leasing boom, attracting both established brands deepening their presence and new international players entering the market. This expansion reaches beyond Delhi and Mumbai to the newer markets like Hyderabad and Ahmedabad.”
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “Foreign luxury retailers are entering India through partnerships with local players. The upcoming launches of a few brands underline this trend. This reflects a renewed optimism in India’s retail sector, with investments from major developers in tier-I cities, while institutional investors target tier-II cities, creating a dynamic retail landscape.”
Retail demand across investment-grade malls, prominent high streets and standalone developments has grown consistently since 2020. The year 2023 reported absorption of nearly 7.1 million sq. ft., a 47 per cent Y-o-Y growth in tier-I cities. Leasing activity was primarily driven by Bangalore, Delhi-NCR and Mumbai, with the three cities cumulatively accounting for nearly 61 per cent share.
Things to watch out for in 2024:
· Generative AI driving retail transformation: Indian retailers harness the power of Generative AI to enhance online and in-store experiences, automate tasks like product descriptions and offer virtual customer assistance.
· Hyper-personalisation revolutionises retail: Retailers shift towards hyper-personalisation, tailoring products and experiences to individual customers to optimize inventory management and boost satisfaction, loyalty and sales.
· Strategic supply chain management in a hyperconnected world: Indian businesses adapt to a strategic approach to supply chain challenges by implementing enhanced planning and optimization practices.
Inventory management software aids in efficient stock tracking and maintaining optimal inventory levels. The growing e-commerce sector and scarcity of raw materials underline the importance of proactive supply chain strategies.
Future of Retail Space: A Multifaceted Experience
· Experiential retail transformation: Malls are evolving from mere shopping centres to vibrant hubs, offering entertainment like cinemas, gaming zones and live performances, catering to modern consumers seeking immersive experiences.
· Culinary revolution: Food and beverage (F&B) offerings within malls are diversifying, offering unique dining experiences, themed restaurants and food festivals, transforming malls into gastronomic hubs with innovative layouts and designs.
· Design adaptability: Modern malls prioritize flexible design, allowing spaces to be repurposed based on trends and events, accommodating pop-up shops, product launches and community gatherings for a dynamic retail environment.
· Technology integration: Malls are incorporating technology like smart parking solutions, mobile apps for personalised recommendations and augmented reality (AR) displays to enhance the shopping journey and offer immersive experiences.
