The post-pandemic era has witnessed an undeniable shift in the shopping landscape, particularly among the youth, as their attraction to malls has intensified, fuelled by the lure of renowned international brands. This growing preference has translated into an unprecedented demand for high-end products, marking a distinct change in consumer behaviour.
In the wake of the pandemic, the mall business faced unprecedented challenges. However, the current trajectory suggests a steady return to normalcy. The influx of patrons into malls has been consistently on the rise, as indicated by a recent report from Ikra, citing a remarkable 14-15% growth in total business for the current fiscal year. There is a shift in the inclination of consumers, not just in metropolitan areas but also in smaller towns, towards acquiring branded products.
“Retail sales have experienced a significant surge in the aftermath of the pandemic. The demand for products from international brands has been steadily rising, with a noticeable appeal to the younger demographic. Consequently, there has been a massive uptick in mall operations and monthly rentals. We expect malls will continue to lure customers to shop physically well into the new year.” says Ajendra Singh, Vice President (Sales and Marketing), Spectrum Metro.
“The number of customers shopping in malls is consistently increasing. Undoubtedly, customers coming to malls were significantly affected during the COVID period. But the current situation is quite the opposite. Today, people are increasingly drawn towards malls, especially for big brands. It is anticipated that there will be a surge in shopping trends in malls in the coming year,” says Mr. Pankaj Kumar Jain, Director KW Group.
Projections hint at a robust annual growth of 10-12% in the business landscape, especially favouring premium brands that hold sway over urban consumers. Ikra’s report further adds that mall rents are poised for an upward trajectory, with an anticipated increase of 8-9% in the upcoming fiscal year. This potential rise in rent holds the promise of bolstering profits for mall operators, affirming a positive outlook for the industry.
Recent months have also witnessed an extraordinary surge in consumption, surpassing established averages, across various sectors within malls. From jewellery and electronics to clothing, premium beauty care products, and entertainment, these domains are experiencing a flourishing trend, one expected to persist amidst unwavering consumer demand. The RBI Consumer Confidence Survey of September 2023 indicates a surge in private final consumption expenditure on Indian domestic products, particularly over the last four quarters, reflecting an encouraging trend for mall operators.
Analysis by ICRA points to an optimistic future for mall operators and predicts a substantial increase in rental income, with expectations of 9-10% growth in 2024 and 8-9% in 2025. This optimistic outlook is attributed to the estimated commercial value growth and rent. ICRA’s report, covering a sample set of 38 malls totalling 25.4 million square feet across 12 states, revealed an impressive 8.4% annual growth in rental income during the first half of the financial year 2024.
The retail mall landscape is poised for expansion, with the Grade A retail mall supply in the top six markets reaching approximately 105 million square feet by September 30, 2023. Forecasts hint at an increase to around 116-118 million square feet by March 2025. Leading the charge is the Delhi NCR region, contributing 30% to the total supply, followed by Bangalore (20%), Mumbai Metropolitan Region (17%), Pune (14%), Hyderabad (13%), and Chennai (6%). ICRA predicts an 85% surge in new supply in Delhi NCR, Pune, and Hyderabad in the financial year 2025.