By IANS
New Delhi : India's retail trade industry is booming and virtually doubling in market size each year but a shakeout is imminent that will test many a player, says a global real estate consultancy.
"The organised retail sector is developing at a breathtaking speed and the insatiable demand for modern retail is far outpacing the supply," says a study by Jones Lang LaSalle Meghraj, released Wednesday.
"But undoubtedly there will be losers as well as winners," notes the report, entitled 'The Geography of Opportunity – The India 50' that also identifies 50 Indian cities ideally positioned to benefit from the boom.
The total retail mall stock has been doubling every year from just one million square feet in 2002 to 40 million square feet by end of 2007 and an estimated 60 million square feet by end of 2009, says the study.
The expansion is fuelled by strong economy, favourable demographics, rising wealth levels, and rapidly changing lifestyles and consumer aspirations of an ever-burgeoning middle class, it says.
"Yet in the rush to expand retail formats and build new malls many retailers and developers have lacked strategic vision, and in a booming market they have often lost sight of the end game."
The report points out the vast opportunity of retail trade still existing in Delhi and Mumbai, estimating that the two metros will contribute 40 percent of organised retailing by 2008.
"Delhi and Mumbai lead the Indian mall culture with estimated total mall stock of 22 million and 15 million sq ft respectively by 2008-09," the report said.
Organised retailing in India's other main cities such as Bangalore, Kolkata, Hyderabad, Pune and Chennai is growing rapidly, along with the small cities and towns.
"Smaller cities of India clearly offer substantial and compelling opportunities for the growing retail sector. With a population of over 1 million each, these cities will form the very core of India's emerging retail hierarchy," said Vincent Lottefier, CEO, Jones Lang LaSalle Meghraj.
According to the report, cities such as Chandigarh, Ludhiana, Jaipur, Lucknow and Kochi are also increasingly attracting considerable retailer interest due to high incomes and strong brand awareness.
"India's retail awakening is characterised by rapidly changing customer behaviour, new market entrants and evolving government policy. It is imperative to comprehend India's enormous cultural and regional diversity to get a realistic perspective on the opportunity at hand," Lottefier added.
Pioneering retailers and mall developers are now seeking to benefit from the first mover advantage offered by cities like Aurangabad and Rajkot, which are likely to provide good long-term opportunities, the report said.