Anuj Kejriwal, MD & CEO – ANAROCK Retail

The tragic debacle around CCD’s debt-ridden founder may be indicative of a larger malaise

  • Rentals can eat away almost 15-20% of the overall revenue an Indian coffee shop generates
  • Corresponding costs in countries like the US is just around 5-6%
  • many indigenous coffee shops are unable to survive more than 18 months into the business

From the early morning dose to business deals closed over a cup of java, coffee keeps us charged; the millennial coworking culture is often incubated and based in cafés. As a consequence, there has been a stupendous rise in the number of coffee chains and concept bistros across the country.

It all started with Café Coffee Day – popularly known as CCD – which gave the country its first coffee shop way back in 1995, long before global giants arrived.

Today, places like Café Coffee Day are no longer just hangouts or meeting joints, and certainly not just about coffee. They offer a unique ambiance, music and free Wi-fi to youngsters and entrepreneurs alike.

Anuj Kejriwal, MD & CEO – ANAROCK Retail 

The advent of ecommerce in India ‘smartly’ altered the shopping habits of Indian netizens. Anything and everything – from groceries to apparel to electronics etc. – is now just a click away.

For a while, it appeared that ‘couch potato shopping’ was gaining prominence and disrupting the entire brick-and-mortar business. It now emerges that this has not really happened.

Despite causing disruptions, the ‘ecommerce effect’ was not enough to have a significant and lasting impact on the conventional retail formats.

For a while, online giants like Amazon and Walmart-owned Flipkart were basking in the rising success of the effervescent Indian ecommerce business arena. They were manoeuvring strategies to penetrate deeper into newer markets by way of discounts for their customers.

And then, the Government pulled out a wild card – and thereby threw a major spanner in the works – with the new ecommerce policy.

It came as a shock for the affected entities, including consumers who were buried deep in the world of cash-backs and deep discounts. However, thanks to the new policy, traditional retailers now had a more level playing field and could regain a significant share of their brick-and-mortar stores.

  • Cities that saw maximum retail growth in 2018 included MMR, NCR, Bengaluru and Kolkata
  • PE investment inflow in the segment grew 54% in H1 2018
  • 32 new malls spanning nearly 13.5 million sq. ft. is slated to be operational in 2019

Anuj Kejriwal, MD & CEO – ANAROCK Retail

Besides commercial office spaces, the retail sector also emerged as one of the most vibrant and fast-paced real estate sectors in India in 2018.

Among the major policy overhauls, the Government further liberalized FDI policies early in the year. These policy interventions repositioned the Indian retail sector on the global map of investments, attracting a large number of global retailers into India and further fuelling the growth of organized retail in the country.

The Government’s decision to allow 51% FDI in multi-brand retail and 100% FDI in single-brand retail under the automatic route was a definite crowd-pleaser that attracted giants like Walmart to make forays into the country.

The Government is now mulling to further tweak norms for retail trade – similar to SEZs – and enacting a 365-days working policy to help India climb higher on the Ease of Doing Business index among 190 countries.

Anuj KejriwalAnuj Kejriwal, MD & CEO – ANAROCK Retail

  • Online retail is projected to grow to US$ 73 billion by 2022
  • Retail sector attracted US$ 147.40 million investments in FY18
  • Organised retail penetration expected to reach 10% in 2020 against current 7% 
  • Amazon & Alibaba are investing in offline stores – brick-and-mortar retail will survive the ‘online assault’

The Changing Dynamics of Indian Retail 

The Indian retail sector is on a faster roll than ever before. Rapid urbanization and digitization, rising disposable incomes and lifestyle changes – particularly of the middle-class – are acting as booster rockets for the Indian retail sector, which is projected to grow from US$ 672 billion in 2017 to US$ 1.3 trillion in 2020.

Over the last two decades, the Indian retail market has witnessed phenomenal changes, evolving rapidly from traditional shops to large multi-format stores in malls offering a global experience, and on to the highly tech-driven e-commerce model.

These changes have resulted in unprecedented growth in overall consumption with numbers suggesting that consumer expenditure in India will rise to US$ 3,600 billion by 2020 from US$ 1,824 billion in 2017.

Anuj Kejriwal, MD & CEO – ANAROCK Retail

The e-commerce revolution and the upsurge in digital technologies are fundamentally transforming shoppers’ expectations.

This transformation also has a major bearing on the function of brick-and-mortar stores, which now need to render more useful and entertaining customer experiences.

As trends advance globally, mall operators are forced to rethink and re-strategize as to how they must design, enable and operate their physical stores.

The Advent of ‘Smart’ Stores

In today’s digital era, physical stores are getting ‘smarter’ by using technologies like robotic intelligence, analytical data and consumer-centric platforms such as Augmented Reality (AR) or Virtual Reality (VR) to attract customers and give them an impactful experience.

By uniting conventional methods with key success elements of the digital ethos, brick-and-mortar retailers, in fact, have an advantage over e-commerce, as they can offer mall visitors an experience that vastly surpasses that of online shopping.

Information technology can be effectively used to tap into tech-savvy consumers’ predilections with appropriate tech-enabled in-shop ‘responses’.

Numbers suggest that consumer expenditure in India will rise to US$ 3,600 billion by 2020 from US$ 1,595 billion in 2016.

Anuj Kejriwal, MD & CEO – ANAROCK Retail

There is so much talk of the death of brick-and-mortar retail as a consequence of the aggressive advent of e-commerce into the country, when the fact is that shopping malls have just got started in India – and they are definitely here to stay.

As developers learn through trial and error and come up with more winning formulas for their malls, and as retailers get more into omnichannel selling, we will see the Great Indian Mall revolution spin into its next cycle of evolution.

Why the Indian Mall Story Rocks

Unlike ‘couch potato’ e-commerce shopping, malls offer an experience… a touch-and-feel benefit which online shopping cannot. Also, going to a mall becomes an outing for the family and friends, often coupled with a meal at the food court and a movie at the cineplex.

All this in air-conditioned comfort, escalators and lifts connecting everything to the parking below, and scrupulously cleaned sanitary facilities at all levels. The massive Indian middle class loves this experience and online retail is unlikely to put malls in the shade in India anytime soon.