India’s retail industry is projected to expand to $4.5 trillion by end of the decade

India’s retail industry is projected to expand to $4.5 trillion by the end of the decade, according to Deloitte India and the Shopping Centre Association of India (SCAI). Currently, the Indian retail market is valued at around $1.3 trillion as of 2022.

The report underscores the pivotal role that malls and shopping centres play in the organised brick-and-mortar retail sector. This segment is expected to exhibit rapid expansion, with an estimated compound annual growth rate (CAGR) of 17 per cent from 2022 to 2028, surpassing the overall growth of the retail market.

Visitors flock to malls for various reasons, with shopping being the primary motivation for 82 per cent of consumers. Additionally, 73 per cent come for movie-watching, 56 per cent for dining, and 56 per cent for leisure activities with friends and family. Other attractions include gaming zones (22 per cent), festival celebrations (18 per cent ), children’s play areas (11 per cent), concerts and shows (10 per cent), and exhibitions (8 per cent).

In 2022, malls and shopping centres accounted for approximately 12 per cent of India’s total retail market, contributing around 1.2 percent to the country’s GDP. With an annual revenue of nearly ₹1,80,000 crore, providing employment for 1.2 crore individuals, and contributing ₹35,000 crore in taxes, the shopping centre industry is a driving force behind economic growth and job creation.

Infra development

Rajat Wahi, Partner at Deloitte India, emphasised, “As India strives to achieve a $5 trillion economy, it is crucial to underscore the potential role of shopping centres in our nation’s growth. Beyond revenue generation, shopping centres also contribute to the development of the country’s social infrastructure and offer both foreign and domestic businesses a platform to access the Indian market.”

Approximately 50 per cent of India’s shopping mall stock is concentrated in eight major cities: Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, the National Capital Region (NCR), and Pune. The NCR leads with a 34 per cent share, followed by Mumbai at 18 per cent and Bengaluru at 17 per cent.

Expansion of malls

Malls are also expanding into tier-2 and tier-3 cities due to lower rental rates and operating costs, bolstering retail growth in India. Between 2006 and 2017, these cities attracted $6.2 billion in retail investments, making substantial contributions to the country’s retail sector.

Mukesh Kumar, Chairman of the Board of Directors at SCAI, remarked, “Shopping centres have emerged as catalysts for retail growth in the country. Developers have shown enthusiasm for constructing malls not only in tier-1 and tier-2 cities but also in tier-3 and -4 cities. With 275 to 300 million square feet already operational and an additional 35–40 million square feet set to become operational in the next 18–24 months, the industry is making a significant contribution to the economy.”

With a continued focus on advancement, malls and shopping centres are expected to attract global brands seeking to enter the Indian market by collaborating with local manufacturers. Furthermore, this growth is anticipated to bolster manufacturing, create employment opportunities and contribute to the overall economic expansion of the country.

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