Real estate to partner in Indian retail expansion

MUMBAI: Organised retail has immense potential and the future of this sector lies in Tier II and Tier III cities said Ajay Dua, secretary DIPP, Government of India, at the National Retail Summit 2006. 

Addressing at the CII’s National Retail Summit 2006, Ajay Dua said he noted the overseas trend in setting up hundreds of stores in the suburbs and mentioned that this pattern of development needs to emerge in India as well. This would also allow retailers to have benefits of lower real estate prices, which has emerged as an issue of great concern with retailers, he added.

Responding to the issue on land availability, Dua agreed that ULCRA needs to be repealed in the States which had not yet done so since the Centre had been strongly advocating this repeal.

Kishore Biyani, chairman, CII National Retail Summit 2006, spelt out the core challenges for the Indian retail sector. These he said, related to real estate issues, forecasting future trends and HR management strategies for the sector. He also stressed on the necessity of introducing regulations to check possible predatory pricing in retail. These were crucial aspects to be prioritised for gearing up to the forthcoming competition in the retail sector.

An important issue was that of making adequate land available for fostering retail development. The Government, it was felt, should take steps in this direction, being the largest owner of land in India. Mr Biyani also emphasized on the necessity of forging partnerships between real estate developers and retailers to serve the interests of the retail sector better. He noted for instance, the over supply of malls in Ludhiana which did not speak of business efficiency.

Anuj Puri, MD Trammell Crow Meghraj Pvt Ltd. India said that while it was important to focus on the Tier II and III cities for retail development, infrastructure development in these cities in terms of proper connectivity, good roads etc required to be spruced up. The onus of this he felt, rests with the government. The aspect of proper city planning with due attention to the development of retail zones, easing of FSI restrictions, was also highlighted in the course of the discussions.

The Summit also discussed facets of airport retailing, a crucial part of travel retail - a $27 billion global business, which had a vast potential for growth in India. Manifold increase air travel, a booming airlines business and the huge pent up demand, offer great opportunities for development in this segment. A heightened cause of concern in this segment too, was the inflated rentals in airports.

With malls emerging as an integral part of Indian retail development, various aspects of mall development and management were highlighted during discussions at the Summit. Designing of malls in keeping with the trade mix, and customer profile was important. Selection of location was also to be accorded due priority while building of malls. Mall designing and management had to have a long term perspective since mall re development was already emerging as a potent issue.

CIOL Bureau