A new survey by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) reveals 1/3 of retail tenants are shifting into smaller cities like Nagpur, Pune, Ludhiana, Jaipur and Chandigarh as they face pressure of high rentals and low footfalls at shopping malls in larger cities like Mumbai, Chennai, Delhi, K
A new survey by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) reveals 1/3 of retail tenants are shifting into smaller cities like Nagpur, Pune, Ludhiana, Jaipur and Chandigarh as they face pressure of high rentals and low footfalls at shopping malls in larger cities like Mumbai, Chennai, Delhi, Kolkata and Bangalore.
Roughly 300-350 malls opened in the country over the last two years, but 75-80% of the space in these malls remains vacant. Around the same time, as many as 95 malls have shut shop, finds ASSOCHAM.
“The major3 core benefits for the retailer-tenants to move to smaller cities are lower operational costs and comparatively lesser competition and the novelty values still left in these areas where even the nearby rural population is thronging the air-conditioned halls and getting the taste of comfortable shopping,” said ASSOCHAM president Rana Kapoor.
“One of the main reasons for the high rentals in the big city malls is the exorbitant land prices and high development costs. Thus, in the foreseeable future, making such malls profitable will remain a challenge,” he said.
There is greater scope for growth in second- and third-tier cities, in particular where larger chunks of land are available than in metros, and at lower cost, he said.
The shopping trends in metro cities have influenced the consumer behavior in second- to fourth-tier cities. The demand of various products under one roof and increase in brand consciousness contribute to the major shift from conventional trader-run standalone shops to larger format retail malls.