- Fashion & apparel, food & beverage (F&B), hypermarkets, homeware and department stores led the
retail leasing activity in 2022. - As retailers look to leverage the spending power of these towns and cities, Tier-II, Tier-III and even Tier-IV locations are expected to gain traction, the CBRE report says.
- International retailers are expected to be more active in the apparel and QSR segments, says Ram Chandnani, managing director, advisory and transactions services, CBRE India.
“Leasing is likely to strengthen further, given the strong supply pipeline and strong domestic demand, although global headwinds might cause a short-term anomaly. Entry of more international brands, especially in the F&B space, is likely, while expansionary demand from domestic brands continues,” said the report named India Market Monitor 2022.
The key sectors that drove leasing activity in 2022 were fashion and apparel, food and beverage (F&B), hypermarkets, homeware, and department stores. Overall, Bangalore and Delhi-NCR had a major share (61%) in leasing activity in 2022, while Chennai, Hyderabad and Pune had 9% share each.
KFC, McDonald’s go deeper into Bharat
Retail leasing is also expected to pick up in non-metros in the coming year. Tier-II, Tier-III and even Tier-IV locations are expected to gain traction going ahead as retailers look to leverage the spending power of these towns and cities.
“Going forward, we expect retail leasing to gain traction in Tier II, III, and even IV cities as retailers and landlords are looking to leverage the purchasing power of these towns and cities. Activity in these cities will remain strong from domestic retailers, with international retailers expected to be more active in the apparel and QSR segments,” said Ram Chandnani, managing director, advisory and transactions services, CBRE India.
In FY22, as many as 671 stores were added across the country by quick service restaurants or QSRs like Dominos, Dunkin Donuts, McDonald’s, KFC, Pizza Hut and more, according to an IIFL Consumer Outlook report. Moreover, it estimated that as many as 821 stores will be added in FY23, and another 866 in FY24 – across major franchises like Jubilant FoodWorks, Westlife Development, Devyani International, Sapphire Foods and more.
“We also expect more international brands, especially in the F&B space, to enter the country,” said Anshuman Magazine, chairman & CEO - India, CBRE.
Hybrid strategies of retailers
In spite of a pick up in e-commerce across fashion and more, CBRE believes that hybrid shopping – that focuses on the convergence of offline and online, is likely to remain a key retailer strategy.
The CBRE report says that domestic brands will strengthen their presence across all retail categories, with consolidation, acquisition and partnerships remaining key to their expansion strategies.
To cater to these varied demands, there has been an expansion in mall space as well. On a pan-India basis, Bangalore recorded the highest share of mall completions, with a share of 79%, in the December ending quarter of 2022. This was followed by Pune at 21%, the research firm said.
“The Indian economy is likely to remain steady despite tightening monetary conditions and recessionary global headwinds. Even though a challenging scenario across developed economies, retail leasing activity scaled a new high in 2022. Given the robust supply pipeline planned for 2023 and strong domestic consumption, leasing activity is anticipated to remain steady,” said Magazine.
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