Saturday, December 24, 2005

Bangalore's retail boom

Bangalore's retail boom

The Hindu Business Line

The growth in the retail sector is not just confined to the central business district of Bangalore, but has spilled over to other localities too.


The retail sector in Bangalore is witnessing an explosive growth, despite traffic snarls that jam every important junction. "Far from getting saturated, Bangalore is facing a severe shortage of retail space," says Bikash Kumar, Head, Integrated Retail Management Consulting. He estimates that the city can accommodate another 50-60 retail units of 30,000- 40,000 sq ft. "Shanghai with a 15 million population has 120 super and hyper markets. Bangalore with 8 million can easily have more than half of that," he says. Two years ago, with far less traffic, Bangalore had Big Bazaar, Globus, Lifestyle and Westside and some other outlets, accounting for 6 lakh sq ft of retail space. Since then, the 3.5-lakh sq ft Forum Mall, including an 11-screen PVR multiplex, and the 2.3-lakh sq ft Garuda Mall have also come up.

But the rush to set up more retail stores seems unabated. The growth is not just confined to the central business district of Bangalore, but has also spilled over to other parts such as Kormangala, Indiranagar and Airport Road in the east, Jayanagar in the south and Malleshwaram in the north. These areas offer retail giants a huge opportunity because the middle-class population here would rather shop in nearby places than travel to the business district on weekends. The retailers also have the advantage of acquiring space here at low rentals — between Rs 60 and Rs 90 per sq ft.

Kormangala is where the Forum Mall is located. Pantaloon Retail, which owns the country's biggest retail chain, is set to increase its space to 10 lakh sq ft from the existing three lakh sq ft in three years. The company plans eight more hypermarket discount stores branded Big Bazaar in Bangalore, taking the total to 10, which means almost every area will have one Big Bazaar with not less than 40,000 sq ft. Indiranagar will shortly get another Big Bazaar outlet, and Jayanagar and Malleshwaram too will have them. Bangalore looks set to have the largest number of Big Bazaars in the country.

"Bangalore means big money for us as the middle-class population is not only huge but prepared to spend money," says Vishnu Prasad, Pantaloon's retail head for south. Both the Big Bazaars in the city have total sales of around Rs 150 crore, while the Bangalore Central Mall, another Pantaloon retail store catering to the higher income group, mops up an annual sale of Rs 100 crore.

Pantaloon's resolve to make a mark in Bangalore can be gauged from the fact that `Bangalore Hebbar', the city's showcase for culture, is fully sponsored by the retail chain. "We have funded the entire event because we want to identify with the city," Prasad says. The event was earlier sponsored by the State Government. "Everytime a Bangalorean wants to shop for anything, Big Bazaar should immediately come into his mind," he says.

According to estimates, Bangalore will have a retail space of around 4 million sq ft by 2007; it is now less than 1 million sq ft, of which Pantaloon alone has a 25 per cent share. According to Mayank Saxena of Trammell Crow Meghraj, one of India's leading property consultants, developers are getting aggressive in Bangalore because of the potential they see in the retail sector. "Earlier, they were comfortable because IT was the main focus. Now because of the IT boom, the spending power has gone up considerably and this has given a major push to the retail sector expansion in the city," he says. It is a view shared by LG Electronics' Vice-President - Marketing, Girish Rao too. "Bangaloreans are more aware of technology than others." LG Electronics now looks at Bangalore as one of the top three cities for growth. "There is a huge potential here and it is one of the fastest growing markets in India," Rao says.

The reason for the retail boom is the city's growing affluence. In the last 10 years Bangalore's population has increased around 30 per cent; it is ranked the seventh most affluent city in India. It is estimated that over one-third of the households in Bangalore have an annual expenditure between Rs 50,000 and Rs 1 lakh, while 40 per cent of the city's population has annual incomes ranging between Rs 70,000 and Rs 1.4 lakh. The 15-45 age group is a retailer's delight.

The retail boom in Bangalore is not merely visible in bigger malls but also among the smaller ones like MK Ahmad Stores, Foodies, etc which are basically large departmental stores and have sprung up in shopping areas in several localities. "In Bangalore, the retail boom can be seen in every nook and corner," says Bikash Kumar. Smaller shops, which not so long ago struggled for survival, have started expanding and one can see at least three-four supermarkets in almost every locality. "Very few kirana shops have closed down. They have in fact morphed into bigger stores or mini supermarkets," he adds.

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