Value formats like Pantaloon Retail, who had to struggle to maintain their footfalls over the past few months have managed to keep the going smooth with special offers, intelligent product bundling, increased stocking from in-house private labels and other sundry measures at cost optimisation, according to the company’s spokesperson. Add it to the group’s diversification into other consumption spaces with Future Capital, Future Brands, Future Logistics, Future Media and Future Space, and the impact of the slowdown is somewhat lessened. “We as a group are very focused on optimising costs through a series of strategic moves, particularly in the area of integrating management, marketing, HR and IT functions during this time,” said the spokesperson. While the property boom has begun to peter out in other segments (such as residential and commercial space) the outlook in the organised retail segment is rather mixed. According to property observers, while demand is slowing in some areas, high-profile retailers are reluctant to try out new locations, causing an oversupply in some areas. In this context, a report by property consultants Cushman & Wakefield indicates that despite lack of quality space, the top eight cities are witnessing around 18 per cent vacancy across the 40 million sq ft of operational units.
“Their fears that rentals may be high in newer areas however are misplaced, as rents have fallen with rising interest rates and an over supply of housing stock in the suburbs,” said one property consultant. Organised retail currently accounts for less than five per cent of the total retail market in India. It is expected to grow at a compounded annual growth rate of 40 per cent and touch US$107 billion by 2013, according to an AT Kearney estimate. Rental prices in Delhi’s suburbs Noida, Greater Noida and Gurgaon (except for MG Road) have witnessed a decline in recent months on account of slowing demand and unwillingness on the part of retailers to look beyond established locations. In Mumbai, emerging retail destinations in extended suburbs will take sometime to establish their foothold, while in Bangalore, to attract retailers, developers are moving towards a revenue-sharing model instead of rentals in order to share risks. One silver lining to this dark cloud is the launch of exclusive luxury malls.
Collections got launched in Bangalore recently and another from the DLF stable is fast coming up in South Delhi. According to the Luxury Marketing Council-India survey, last year the luxury apparel and accessories sector grew by 50 per cent, while top-end automobiles also doubled. The high-end Scotch whisky market shot up by 45 per cent, while international travel rose by 35 per cent. Club to this the number of millionaires in the country (with assets over US$ 1 million) who are expected to grow from the present 83,000 to 135,000 by 2009 and it would be easy to understand how Audi Q7 became the “most admired imported car” in 2007 and why Louis Vuitton, Armani, Maybach and Gucci and Glengoyne are all keen to set up shop in India. If all goes well, “modern retail may come to constitute 11 per cent (up from the present 5 per cent) of today’s market in the next three to four years,” predicts the Pantaloon spokesperson. He pegs the modern retail opportunity at US$ 300 billion.
Courtesy : Deccan Chronicle
The mantra of ‘buy one, get one free’ is working as never before.