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The festive season has come and gone creating a brief lull before Christmas and the New Year celebrations kick in. For retailers it does not appear to have brought much cheer, as sales growth was lesser than anticipated. Corporate gifting was down but discount and value retailers continued to benefit. Another worry on the horizon is that of excess retail space, particularly that of malls. It means lower rentals and even hybrid rental models where retailers bargain for terms like revenue sharing. Several mall developers have turned their upcoming projects into commercial and office areas, to offset the fall in retailer interest in new stores. Meanwhile, organized players are planning ahead, reorganizing their stores to leverage their experience. As eternal optimists and believers in India’s retail story would say, the next upturn is simply this downturn away.
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More plans from the organized players, although this time round it is tempered with caution and experience. One interesting report speaks of how big retailers are considering going nice and premium – from health products to eye care and consumer durables, they have a format and brand for each category. A case in point is Future Group, which recently launched a store for ethnic products.
This month has news and more news on how the economic slowdown resulted in a damp festive season. Corporate gifting was down as was major purchasing. Value and discount retailers, however, saw an increase in sales over the same period last year. Compounding the problem is the fact that most metros in India will face a mall oversupply shortly as all under construction retail space gets ready for occupation, but will have few buyers.
Reliance Retail continues to expand its pan-India footprint. Bangalore’s latest MegaMart boasts of value pricing round the year while Hyderabad’s Max Retail outlet aims for an international look and feel to the shopping experience.
The much awaited debut of international brand Armani in New Delhi hogged the limelight this month. Global food retailer Spar enters India with a supermarket in Hyderabad along with Max Hypermarkets. A new category that has emerged in the luxury sector is eyewear. From being a necessity, a hated and tedious one at that, eyewear is grabbing eyeballs and how. Home furnishing is another category that is seeing some action.
Part of the joy that retail growth in India brought was on account of the many jobs it created for India’s youth. The economic slowdown has affected temporary staff, as perhaps a precursor for things to come.
Slowdown or not, high end apparel and accessories are always in demand it would seem. Reliance is set to bring in international brand Diesel while Armani is set to grace Delhi.
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Chillibreeze Research Team
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