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East India: Evolving into a brand conscious, product savvy retail sector

The key industries which would drive eastern India’s economy were leather, jute, tea, locomotives, steel and mining. The region contributes more than 20 percent of the national output in each of these industries. As of last fi scal year, the Eastern region contributes the maximum in terms of locomotive equipment output at 63.5 percent, out of which West Bengal alone chips in with 46 percent share, almost the entire (99.2 percent) jute production output of which over 79 percent comes from West Bengal alone, and over 82 percent of the country’s tea production. The region also contributes to over 25 percent of leather production, 21.5 percent of steel output and 44.1 percent of mining and quarrying, 28.7 percent of crude oil output and 10.4 percent of chemicals and chemical products, says the KPMG report.

The rise of these industries is ultimately a boon for the local and regional retail industry. The retail industry in East has abundance supply of skilled labourers and as a result there are so many brands in the apparel, accessories and leather industry which are quite popular in the region and are doing actually good on the revenue parameters as well. East India is a hub for small scale industries and retailers.

There is thus huge potential for the retail market in this sector. The areas which have attracting investments andnew players are:

– Shopping Malls
– Jewellery shops
– Clothes lines
– International Brands
– F&B
– Furniture
– Glass products

Shopping Malls: Shopping malls in the East are the face of organised retail industry. Over the years, East has seen ahuge rise in the number of shopping malls.

Cities like Kolkata, Ranchi, Bhubaneswar, Bokaro have witnessed major investments happening the retail real estate in form of huge malls. Even the smaller citiesin the region are moving ahead from the shopping complex concepts are welcoming the mall culture. And the reason is quite simple.

Malls are the platform which engages visitors by offering promotions, contests, polls, customised offers, gift ideas, targeted advertisements based on real-time intelligence and location-based marketing and of course information under one roof. There are so many factors which make consumers visit the mall on a regular basis both for their needs and leisure. Malls are also increasingly turning Omnichannel, making use of the consumer’s smartphone to attract him/her in. In short, smart malls of the East are using digital technology to heighten their unique value propositions.

Sanjeev Mehra, VP, Quest Properties India Limited explains, “Mall culture is now around 15 years old in the East and very well established in the region. What we are observing, is that, cities like Guwahati, Shillong, Bhubaneshwar, Patna, Jamshedpur, and other secondary and tertiary cities, are picking up and entering in the retail growth of the East. Progress has been made to create shopping centers in all these secondary and tertiary cities. In the last three years, we have seen a rise in them, even centers with 100,000 sq.ft. are coming up which is very encouraging and allows patrons to enjoy a retail experience. Bottleneck always hunkered around ‘Quality Retail Space’ in the East. For retail to grow in the very nascent market, it is important to ensure that we have quality retail space.

Predominantly, we have seen the high streets facing challenges like noisiness, dirtiness, unhygienic conditions and with complete absence of management – does not encourage international brands to open up on a high street. This clustered around substantial plots, which are to drive in Retail for Shopping Centers, is sadly missing. The great opportunity is to make centers in all these spaces of around 200,000 to 300,000 sq. ft. centers as it needs to be closer to a certain density area.

The government must give incentives to develop such quality retail space. We believe these incentives are going to be the opportunity for the government and the city equally for the combined growth, as we have seen in South East Asian countries where quality retail space work hand-in hand. If the city authorities and the government in the region decide, then the bottlenecks can be removed, and the huge opportunity can be tapped.

Rajdeep Laha, Head Leasing, Galaxy Mall, Asansol explains further, “With the intense competition in the metros, mall developers are aiming those markets which promise viable financial returns. Here density of population, strength of purchasing power of the targeted population, viable rent to revenue ratio, lower cost of construction and land play a significant role. Tier II & III cities are untapped markets where it is important for retailers to establish their brands and the process is evident by the presence of brands in different formats. There are certain challenges and problems in East, which is often conceived as a land of political turmoil, conservative consumer behavior and a place where unorganized retailers still rule the rest. The biggest issues are intrusive government policies and local laws, high tax rates, poor infrastructure and logistics and very significantly the dearth of quality retail spaces in this region.”

Arijit Chatterjee, COO, Junction Mall says, “In East, semi-premium, large and medium format malls or complex with international, national and regional brands are holding viability and are operating successfully. Successful properties are becoming popular not only because of the brands that they host but also for other off erings including dining options, entertainment zones, multiplexes and few of exclusive services that they off er. Small towns like Durgapur, Siliguri, Haldia,Bhagalpur, Gaya, Ranchi, Cuttack are also showing serious potential of becoming busy retail addresses in parallel with Kolkata, Guwahati, Bhubaneshwar, Patna etc. Logistics is the biggest bottleneck in our industry. There are many operational challenges in the logistics industry as well. Also, there is a crisis of skilled manpower resulting in a bottleneck. Changes in policies are also factors to look into.”

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