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Anarock Retail MD & CEO, Anuj Kejriwal, says: “While e-commerce and brick-and-mortar stores will continue to co-exist in India, e-commerce currently has a definite edge over physical retail in India’s tier-II and tier-III cities,” said Anuj Kejriwal, MD & CEO – Anarock Retail.
Releasing Anarock Retail’s report ‘Rebirth of Retail Malls: New, Improved and Revitalised’, Kejriwal said that India’s tier-II/tier-III cities will also be a key contributor to the country’s retail growth going forward. The organised retail market is growing at CAGR of 20-25 per cent.
“Nearly 100 million people out of India’s 300-400 million-strong middle class currently live in tier-II and tier-III cities,” Kejriwal said.
He further said: “This indicates that a significant portion of Indian retailers’ target clientele lives in the non-metro cities. In cities such as Jaipur and Surat, household income is expected to cross Rs 80,000 crore and 26 other cities will cross Rs 40,000 crore by 2020."
"Considering the rising purchasing power and the consumption pattern in these cities, the slow deployment of physical organised retail there is worrisome.”
Tier-II cities alone received investments of more than $6,000 million between 2006 and 2017 and tier-III cities received around $500 million. Tier-I cities collectively saw $1,300 million investments in the same period.
“Investors and mall developers are beginning to realise the massive potential of these 'smaller' markets and trying to make their presence felt,” Kejriwal said.
“However, the speed of quality retail deployment must pick up at a considerably faster pace to leverage the huge opportunities India’s tier-II and tier-III cities offer.”
The report also warned that the lack of physical outlets is allowing e-commerce to flourish in these towns and cities. This main competitor to physical retail is growing rapidly and is expected to cross $100 billion in value by 2020.
The major share of online shoppers in India includes millennials (Gen Y) aged 18-35 who currently account for 34 per cent of the population. The high purchasing power of this online shopping population is insufficiently tapped in these cities due to lack of good quality physical retail spaces.
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