2.1 India s Next 100 Retail Markets

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1 How many cities is Shoppers Stop present in? Where are Big Bazaar stores present? Or, what about Titan? This research study by Bangalore based retail spaces consultant Asipac, does an in-depth analysis of India s Next 100 Retail Markets, compared with the Top 30 Developed Markets. The study will help retailers across segments and sizes plan their store rollout programme for the next 5-10 years. By ASIPAC India s Ne xt 100 Retail Markets India s oldest organized sector retailer Bata has a presence in 500+ cities and towns across the country. There are World of Titan stores in 135 cities. Peter England a value fashion brand from Madura Garments (Aditya Birla Group) which started decades after Bata, is also present in 117 cities. India s largest F&B chain (by geographical spread) Café Coffee Day has its footprint in 74 cities. The country s largest hypermarket chain Big Bazaar has a presence in 65 cities. But what about others? How many cities does Shoppers Stop plan to have a presence in? Or rather, how many cities can sustain a department store like Shoppers Stop? This research study aims to do an in-depth analysis of India s Next 100 Retail Markets, as compared with the country s Top 30 Developed Markets. We hope that this study will help retailers across segments and sizes plan their store rollout programme for the next 5-10 years, at least until the detailed data from the 2021 census becomes available. As the first chart shows, India s Top 30 Developed Markets comprises a diverse range of cities, from the global megacity Mumbai, which has a population of 19.1 million (Greater Mumbai) to the relatively small city of Jalandhar in Punjab state, with a population of only 862,200 people, or just 4.5% of Greater Mumbai s population. In other words, Greater Mumbai is 22.2 times larger than Jalandhar. In contrast, as you will see from the second chart, the largest amongst the Next 100 Retail Markets (Srinagar, J&K) is only 5.8 times larger than the smallest (Hapur, UP). It must be understood that the Top 30 are not the thirty largest cities by population, but rather by market potential and exisitng development status. It must also be clear that, for the numerical part of the research and analysis, this study only covers the demand side and does not cover the supply side of organized sector retail space. Before going into the main topic of this study India s Next 100 Retail Markets we have first done a short analysis of the Top 30 Developed Markets, to help readers get a better perspective. Five of the Top 30 cities are in Maharashtra, four each in UP, Gujarat and Punjab (including Chandigarh, although it is technically a Union Territory), three in Andhra Pradesh, two each in Madhya Pradesh and Tamil Nadu, and one each in Karnataka, West Bengal, Rajasthan, Bihar and Chattisgarh. NCR is the thirtieth, obviously not falling in any one state. When we compare the largest and smallest of the 30 developed markets by population, as we have said earlier, Greater Mumbai is 22.2 times larger than Jalandhar. On India s Top 30 Developed Markets comprises a diverse range of cities, from Greater Mumbai, the megacity with a population of 19.1 million, to the relatively small city of Jalandhar in Punjab state, with a population of only 862,200 people, or just 4.5% of Greater Mumbai s population. comparison of the (socio-economic categories A&B) projected population for 2015, Greater Mumbai gives a value which is 26.5 times higher than Jalandhar. On the other hand, when we do a comparison based on Market Potential Value ( MPV ) of these 30 cities, based on the 2009 edition of the RK Swamy BBDO Guide to Market Planning, Greater Mumbai (with the highest MPV of 1000) is 40 times larger than the tri-city region of Raipur-Durg-Bhilai in Chattisgarh state (which has the lowest MPV of amongst the 30 markets). We have also used our own proprietary methodology to calculate the Total Retail Space ( TRSD, only factors organized sector retail space, including space within malls) in the 30 developed markets, as well as the Next 100 Retail Markets. In order to compute this, we have simply multiplied the projected population by a practical and viable Per Capita Retail Space ( PCRS ) ratio of eight (8.0) for the eight metros and seven (7.0) for all other cities. The PCRS in USA is 46.6, most of Western Europe between 11.2 and 17.2, and Eastern Europe about 6.2. Against this, we have considered 7.0 (except metros, where it is 8.0) for ONLY the population in 130 urban markets, and NOT for the whole of India. According to this methodology, Greater Mumbai will have TRSD of million square feet by 2015, compared to only 1.59 million square feet for Jalandhar. Thus, Mumbai s retail potential would be 30.3 times higher than Jalandhar. Whatever the methodology used, it is quite clear that there is a huge gap between the largest and smallest amongst the top 30 markets. 2. india retail report 2013 india retail report

2 Top 30 Developed Retail Markets Rank City (2011 (2001 State/UT Actual ( ) ( ) in 2015 in 2030 SEC- A&B Popn % SEC- A&B PCRS (sft) MPV TRSD: Total Retail Space (msft) as per SEC Popn. and PCRS Total Retail Space (msft) as per MPV Bata CCD Peter England 1 Greater Mumbai 19,130,565 17,139,506 Maharashtra 11.6% 12.5% 20,087,093 23,674, ,026, Y Y Y Y Y Y Y Y 2 NCR 15,828,138 12,901,896 Delhi 22.7% 26.0% 17,474,264 23,647, ,591, Y Y Y Y Y Y Y Y 3 Bangalore 8,425,970 5,438,065 Karnataka 54.9% 58.0% 10,380,795 17,711, ,633, Y Y Y Y Y Y Y Y 4 Hyderabad 6,809,970 3,637,483 Andhra (AP) 87.2% 40.0% 7,899,565 11,985, ,448, Y Y Y Y Y Y Y Y 5 Kolkata 9,209,301 8,782,807 West Bengal 4.9% 5.0% 9,393,487 10,084, ,442, Y Y Y Y Y Y Y Y 6 Chennai 5,751,981 5,096,296 Tamil Nadu 12.9% 22.5% 6,269,659 8,210, ,006, Y Y Y Y Y Y Y Y 7 Ahmedabad- Gandhinagar 8 Pune-Pimpri- Chinchwad 5,778,884 3,716,070 Gujarat 55.5% 55.0% 7,050,238 11,817, ,762, Y Y Y Y Y Y Y Y 4,844,790 3,550,945 Maharashtra 36.4% 40.0% 5,619,956 8,526, ,742, Y Y Y Y Y Y Y Y 9 Surat 4,462,002 2,433,835 Gujarat 83.3% 50.0% 5,354,402 8,700, ,552, Y Y Y Y Y Y Y _ 10 Jaipur 3,073,350 2,322,575 Rajasthan 32.3% 45.0% 3,626,553 5,701, ,051, Y Y Y Y Y Y Y Y 11 Lucknow 2,815,601 2,185,927 UP 28.8% 30.0% 3,153,473 4,420, , Y Y Y Y Y Y Y Y 12 Kanpur 2,767,031 2,551,337 UP 8.5% 15.0% 2,933,053 3,555, , Y Y Y Y Y Y Y _ 13 Vishakhapatnam 1,730, ,904 Andhra (AP) 76.0% 45.0% 2,041,778 3,209, , Y Y Y Y Y Y Y Y 14 Indore-Dewas 2,250,069 1,706,640 MP 31.8% 35.0% 2,565,079 3,746, , Y Y Y Y Y Y Y Y 15 Patna 2,405,421 2,052,066 Bihar 17.2% 25.0% 2,645,963 3,547, , Y Y Y Y Y Y Y Y 16 Ludhiana 1,613,878 1,398,467 Punjab 15.4% 20.0% 1,742,988 2,227, , Y Y Y Y P Y Y Y 17 Raipur-Bhilai- Durg 1,904,463 1,394,630 Chhattisgarh 36.6% 40.0% 2,209,177 3,351, , Y Y Y _ Y Y Y Y 18 Bhopal 1,795,648 1,437,354 MP 24.9% 27.0% 1,989,578 2,716, , Y Y Y Y P Y Y Y 19 Vadodara 1,666,703 1,306,227 Gujarat 27.6% 33.0% 1,886,708 2,711, , Y Y Y Y Y Y Y Y 20 Nagpur 1,683,200 1,366,444 Maharashtra 23.2% 27.0% 1,864,986 2,546, , Y Y Y Y Y Y Y Y 21 Amritsar 1,132, ,862 Punjab 17.2% 30.0% 1,268,692 1,778, , Y Y Y Y P Y Y Y 22 Nashik 1,486,973 1,077,236 Maharashtra 38.0% 45.0% 1,754,628 2,758, , Y Y Y Y Y Y Y Y 23 Agra 1,574,542 1,275,134 UP 23.5% 26.0% 1,738,294 2,352, , Y Y Y Y Y Y Y Y 24 Rajkot 1,286, ,476 Gujarat 33.0% 35.0% 1,467,174 2,142, , Y Y Y Y Y Y 25 Chandigarh- Mohali 1,125, ,099 Chandigarh 20.7% 25.0% 1,237,937 1,659, , Y Y Y Y Y Y Y _ 26 Coimbatore 1,061, ,882 Tamil Nadu 14.0% 20.0% 1,146,363 1,464, , Y Y Y Y Y Y Y Y 27 Aurangabad 1,171, ,311 Maharashtra 34.1% 36.0% 1,340,002 1,972, , Y Y Y Y Y Y Y Y 28 Vijayawada 1,048, ,282 Andhra (AP) 23.1% 35.0% 1,194,994 1,745, , Y Y Y Y Y Y Y Y 29 Meerut 1,309,023 1,068,772 UP 22.5% 25.0% 1,439,925 1,930, , Y Y Y Y Y Y Y _ 30 Jalandhar 862, ,043 Punjab 22.1% 25.0% 948,416 1,271, , Y Y Y Y Y Y Y Y Allen Solly Big Bazaar World of Titan The Mobile Store Reliance Trends The McKinsey Global Institute (MGI) April 2010 study titled India s urban awakening: Building inclusive cities, sustaining economic growth predicts that by 2030, 590 million people will live in cities, nearly twice the population of the United States today. As per our study, the top 130 cities will have million people by 2015, and by extrapolating the same population growth figures that we have used, million by This means that these 130 cities will have 44.4% of India s urban population, if MGI s prediction comes correct. The MGI study says that India will have 91 million urban middle class households by 2030, up from 22 million today. According to our study, assuming an average household size of 3.25 persons and assuming a 50% growth in the percentage between now and 2030, these 130 cities will have 14.4 million households by 2015 and 29.6 million by We assume that middle class includes the SEC-C population as well. Moving on, when we do a comparison between Greater Mumbai and Bangalore, although Mumbai comes out 3.93 times higher in MPV terms, it is only 1.66 times higher based on Asipac s proprietary methodology of computing TRSD. If we consider the ratio based on MPV, it means that, if Bangalore can sustain seven Shoppers Stop department stores, Greater Mumbai should be able to sustain about stores. If we consider Asipac s methodology, Greater Mumbai would be able to sustain 12 Shoppers Stop stores. We have done one more similar comparison going by MPV, if (and by when) the tri-city region of Raipur-Durg-Bhilai can sustain one Shoppers Stop store, Greater Mumbai should be able to sustain 40 stores. Based on Asipac s methodology, Greater Mumbai would be able to sustain Shoppers Stop stores, at the same time when Raipur-Durg-Bhilai can sustain one. It is left to Shoppers Stop (and other retailers) to decide which of the methodologies is more accurate and closer to market realities, and which one they would like to use in planning out their future growth options. A large population does not necessarily mean large demand for all categories and brands. It also depends on various qualitative factors within each city/town, such as modernisation index, westernisation index, youth population, etc., says Govind Shrikhande, Managing Director of Shoppers Stop, The Indian consumer, all said and done, will continue to be a value consumer, so the demand for pricey merchandise will continue to have lesser depth. This is clearly visible from the success of specific films that are meant for the masses versus a few that are targeted towards the young urban multiplex viewer. Some of these qualitative factors also explain why cities like Ahmedabad haven t been kind to modern retail for a long time. We also used the same methodologies and comparisons to analyze the potential for hypermarkets. Assuming that 4. india retail report 2013 india retail report

3 Rank City Populaion (2011 State/UT Actual ( ) ( ) Next 100 Retail Markets in 2030 Popn % PCRS (sft) MPV TRSD: Total Retail Space (msft) as per SEC Popn. and PCRS Total Bata CCD Peter Retail England Space (msft) as per MPV Allen Big World The Solly Bazaar of Titan 31 Srinagar 1,192,792 J&K 32.8% 33.0% 1,350,241 1,940,673 17% 229, _ 1.61 _ Y Y Y Y P Y 32 Dhanbad 1,161,561 Jharkhand % 25.0% 1,277,717 1,713,302 17% 217, _ 1.52 _ Y Y Y _ Y Y Y Y 33 Madurai 1,016,885 Tamil Nadu 9.5% 15.0% 1,077,898 1,306,697 20% 215, Y Y Y _ P Y Y Y 34 Varanasi 1,201,815 UP 10.1% 12.5% 1,261,906 1,487,246 17% 214, Y Y Y _ P Y Y _ 35 Allahabad 1,117,094 UP 14.5% 16.0% 1,188,588 1,456,691 18% 213, Y Y Y _ Y Y Y Y 36 Mysore 887,446 Karnataka 17.5% 25.0% 976,191 1,224,675 22% 210, Y Y Y Y Y Y Y Y 37 Gwalior 1,053,505 MP 27.4% 28.0% 1,171,498 1,613,970 18% 210, Y Y Y Y Y _ 38 Kochi (Cochin) 601,574 Kerala 0.9% 15.0% 637, ,023 33% 210, Y Y Y _ P Y Y Y 39 Guwahati 963,429 Assam 19.0% 21.0% 1,044,357 1,347,837 20% 208, Y Y Y Y Y Y Y Y 40 Ranchi 1,073,440 Jharkhand 26.7% 30.0% 1,202,253 1,685,301 17% 204, Y Y Y Y Y Y Y Y 41 Jabalpur 1,054,336 MP 13.1% 15.0% 1,117,596 1,354,822 18% 201, Y Y Y _ Y Y Y Y 42 Solapur 951,118 Maharashtra 9.0% 10.0% 989,163 1,131,830 20% 197, Y _ Y Y P Y 43 Jodhpur 1,033,918 Rajasthan 21.5% 23.0% 1,129,038 1,485,740 17% 191, _ Y Y _ P Y Y _ 44 Kota 1,001,365 Rajasthan 44.2% 40.0% 1,161,583 1,762,402 16% 185, Y Y Y _ Y _ Y _ 45 Hubli-Dharwad 943,857 Karnataka 20.1% 21.0% 1,023,141 1,320,456 18% 184, Y Y Y _ Y Y Y Y 46 Salem 831,038 Tamil Nadu 19.3% 25.0% 914,142 1,225,781 20% 182, Y _ Y _ P Y Y _ 47 Trichy 846,915 Tamil Nadu 12.6% 15.0% 897,730 1,088,286 20% 179, Y _ Y _ P Y Y Y 48 Asansol-Kulti 878,468 West Bengal 14.8% 15.0% 931,176 1,128,831 18% 167, Y _ Y _ Y Y 49 Bhubaneswar 837,737 Orissa 29.3% 33.0% 948,318 1,362,998 17% 161, Y Y Y Y Y Y Y Y 50 Moradabad 889,810 UP 38.7% 40.0% 1,032,180 1,566,066 15% 154, Y Y Y _ P _ Y _ 51 Trivandrum 752,490 Kerala 1.0% 3.0% 761, ,382 20% 152, Y Y Y Y Y Y Y _ 52 Bareilly 898,167 UP 25.0% 26.0% 991,576 1,341,861 15% 148, Y _ Y _ Y _ Y Y 53 Aligarh 872,575 UP 30.4% 31.0% 980,774 1,386,522 15% 147, Y Y Y _ P Y 54 Jamshedpur 629,659 Jharkhand 9.9% 12.0% 659, ,221 21% 138, Y Y Y _ Y Y Y Y 55 Jamnagar 529,308 Gujarat 19.3% 23.0% 578, ,616 23% 132, _ Y Y _ P _ Y Y 56 Guntur 651,382 Andhra (AP) 26.6% 29.0% 726,942 1,010,293 18% 130, Y Y Y _ P Y Y Y 57 Warangal 620,116 Andhra (AP) 16.9% 24.0% 679, ,889 19% 129, Y _ Y _ P Y Y Y 58 Mangalore 484,785 Karnataka 21.3% 25.0% 533, ,058 24% 127, Y Y Y Y Y Y Y Y 59 Amravati 646,801 Maharashtra 17.7% 20.0% 698, ,585 18% 125, Y Y Y _ Y Y 60 Calicut 432,097 Kerala (1.0%) 1.0% 433, ,307 28% 121, Y Y Y Y Y Y Y Y 61 Saharanpur 703,345 UP 54.3% 37.0% 807,440 1,197,797 15% 121, Y Y Y _ P Y Y _ 62 Gorakhpur 671,048 UP 7.8% 10.0% 697, ,547 17% 118, Y _ Y _ P _ Y Y 63 Cuttack 606,007 Orissa 13.3% 16.0% 644, ,233 18% 116, Y Y Y _ Y Y Y Y 64 Bhavnagar 593,768 Gujarat 16.2% 20.0% 641, ,400 18% 115, Y _ P Y 65 Dehradun 578,420 Uttarakhand 35.6% 36.0% 661, ,059 17% 112, Y Y Y Y Y _ Y _ 66 Kolhapur 549,283 Maharashtra 11.4% 15.0% 582, ,829 19% 110, Y Y Y _ Y Y _ Y 67 Bikaner 647,804 Rajasthan 22.3% 25.0% 712, ,511 15% 106, Y _ P _ Y _ 68 Nanded 550,564 Maharashtra 27.8% 30.0% 616, ,385 17% 104, Y _ Y Y P Y 69 Tumkur 396,604 Karnataka 59.3% 60.0% 491, ,733 21% 103, _ 0.72 _ Y Y Y Y 70 Sangli-Miraj & 502,697 Maharashtra 15.1% 16.0% 534, ,517 19% 101, Y Y Y _ P Y Kupwad 71 Patiala 405,164 Punjab 33.7% 35.0% 461, ,598 22% 101, _ 0.71 _ Y Y Y _ Y _ Y Y 72 Tirupur 444,543 Tamil Nadu 29.0% 30.0% 497, ,933 20% 99, _ Y Y _ Y Y Y Y 73 Nellore 505,258 Andhra (AP) 33.5% 35.0% 575, ,255 17% 97, Y Y Y _ P Y Y _ 74 Ajmer 542,580 Rajasthan 11.7% 15.0% 575, ,215 17% 97, Y _ P Y 75 Belgaum 488,292 Karnataka 22.2% 22.0% 531, ,398 18% 95, Y Y Y Y Y Y _ Y 76 Ujjain 515,215 MP 19.7% 20.0% 556, ,997 17% 94, Y Y Y _ Y Y _ Y 77 Ozhukarai 300,028 Puducherry 37.8% 38.0% 345, ,648 27% 93, Y Y Y _ 78 Kurnool 424,920 Andhra (AP) 57.9% 55.0% 518, ,961 18% 93, _ 0.65 _ Y _ P Y Y _ 79 Jammu 503,690 J&K 36.1% 35.0% 574, ,644 16% 91, _ 0.64 _ Y Y Y _ P Y 80 Tirunelveli 474,838 Tamil Nadu 15.3% 15.0% 503, ,167 18% 90, Y _ P Y Y _ Mobile Store Reliance Trends Rank City Populaion (2011 State/UT Actual ( ) ( ) Next 100 Retail Markets in 2030 Popn % 2.1 India s Next 100 Retail Markets PCRS (sft) MPV TRSD: Total Retail Space (msft) as per SEC Popn. and PCRS Total Bata CCD Peter Retail England Space (msft) as per MPV Allen Big World The Solly Bazaar of Titan 81 Durgapur 566,937 West Bengal 14.9% 15.0% 600, ,514 15% 90, Y Y Y Y Y Y _ Y 82 Bellary 409,644 Karnataka 29.3% 25.0% 450, ,225 20% 90, _ 0.63 _ Y _ Y _ P Y Y _ 83 Davanagere 435,128 Karnataka 19.4% 22.0% 473, ,012 19% 89, Y Y Y _ P Y Y _ 84 Siliguri 509,709 West Bengal 7.9% 8.0% 526, ,185 17% 89, Y Y Y _ Y Y Y Y 85 Gulbarga 532,031 Karnataka 25.9% 27.0% 589, ,963 15% 88, Y _ Y _ P Y Y Y 86 Jalgaon 460,468 Maharashtra 24.9% 25.0% 506, ,190 17% 86, Y _ Y _ Y _ 87 Rohtak 373,133 Haryana 30.1% 35.0% 425, ,266 20% 85, _ 0.60 _ Y _ Y Y 88 Malegaon 471,006 Maharashtra 15.0% 15.0% 499, ,243 17% 84, Y _ P _ 89 Thrissur 315,596 Kerala (0.6%) 1.0% 316, ,592 26% 82, _ 0.58 _ Y _ Y _ Y Y _ Y 90 Udaipur 451,735 Rajasthan 16.0% 17.0% 482, ,645 17% 82, Y Y Y _ Y Y Y Y 91 Kollam (Quilon) 349,033 Kerala (3.5%) 1.0% 350, ,665 23% 80, Y _ Y Y _ Y 92 Jhansi 507,293 UP 32.2% 30.0% 568, ,450 14% 79, Y _ Y _ P _ 93 Akola 427,146 Maharashtra 6.6% 8.0% 440, ,072 18% 79, Y _ P Y 94 Latur 382,754 Maharashtra 27.6% 28.0% 425, ,379 17% 72, Y _ Y Y 95 Bokaro 413,934 Jharkhand 5.1% 6.0% 423, ,122 17% 72, Y _ Y _ P Y 96 Rajahmundry 343,903 Andhra (AP) 9.1% 11.0% 359, ,779 20% 71, Y _ Y Y Y _ 97 Ahmadnagar 350,905 Maharashtra 14.1% 15.0% 371, ,913 19% 70, Y _ Y _ Y Y Y _ 98 Gaya 463,454 Bihar 20.2% 22.0% 504, ,178 14% 70, Y _ P Y _ Y 99 Bhilwara 360,009 Rajasthan 28.5% 30.0% 403, ,214 17% 68, _ 0.48 _ Y _ Y _ Y _ 100 Muzaffarnagar 392,451 UP 23.9% 25.0% 431, ,865 15% 64, _ 0.45 _ Y _ Y Y 101 Bhagalpur 398,138 Bihar 16.8% 18.0% 426, ,301 15% 64, _ 0.45 _ Y _ Y Y 102 Bijapur 326,360 Karnataka 43.0% 33.0% 369, ,988 17% 62, _ 0.44 _ Y _ Y _ 103 Bilaspur 330,106 Chhattisgarh 20.1% 22.0% 359, ,090 17% 61, _ 0.43 _ Y Y Y Y Y Y Y Y 104 Tirupati 287,035 Andhra (AP) 25.8% 26.0% 316, ,830 19% 60, _ 0.42 _ Y _ Y Y Y _ 105 Mathura 349,336 UP 15.4% 15.0% 370, ,897 16% 59, _ 0.41 _ Y Y Y _ 106 Panipat 294,150 Haryana 12.4% 15.0% 311, ,983 19% 59, _ 0.41 _ Y _ Y _ Y _ 107 Shimoga 322,428 Karnataka 17.5% 17.0% 344, ,572 17% 58, _ 0.41 _ Y _ Y _ 108 Hisar 301,249 Haryana 17.4% 18.0% 322, ,276 18% 58, _ 0.41 _ Y _ Y _ 109 Kakinada 312,255 Andhra (AP) 5.4% 6.0% 319, ,852 18% 57, _ 0.40 _ Y _ Y Y Y _ 110 Chandrapur 321,036 Maharashtra 10.9% 11.0% 335, ,133 17% 56, _ 0.40 _ Y Y 111 Bhatinda 285,813 Punjab 31.6% 33.0% 323, ,018 17% 55, _ 0.39 _ Y Y Y Y Y _ Y _ 112 Nizamabad 310,467 Andhra (AP) 7.5% 8.0% 320, ,658 17% 54, _ 0.38 _ Y _ Y Y Y _ 113 Jalna 285,349 Maharashtra 21.0% 22.0% 310, ,625 17% 52, _ 0.37 _ Y _ Y _ 114 Bardhaman 314,638 West Bengal 10.2% 10.0% 327, ,419 16% 52, _ 0.37 _ Y _ Y _ Y Y _ Y 115 Muzaffarpur 351,838 Bihar 15.2% 15.0% 372, ,112 14% 52, _ 0.37 _ Y _ Y Y _ Y 116 Alwar 315,310 Rajasthan 21.0% 22.0% 343, ,110 15% 51, _ 0.36 _ Y _ Y _ 117 Ichalkaranji 287,570 Maharashtra 11.6% 12.0% 301, ,136 17% 51, _ 0.36 _ Y Y Y _ Y _ 118 Karimnagar 260,899 Andhra (AP) 26.9% 27.0% 289, ,740 17% 49, _ 0.34 _ Y _ Y _ 119 Rampur 325,248 UP 15.5% 15.0% 344, ,944 14% 48, _ 0.34 _ Y _ Y _ 120 Anantapur 262,340 Andhra (AP) 19.9% 20.0% 283, ,029 17% 48, _ 0.34 _ Y _ Y _ 121 Shahjahanpur 327,975 UP 10.6% 11.0% 342, ,522 14% 47, _ 0.34 _ Y _ Y _ 122 Satna 280,248 MP 24.3% 25.0% 308, ,366 15% 46, _ 0.32 _ Y _ Y _ 123 Darbhanga 294,116 Bihar 10.0% 10.0% 305, ,998 15% 45, _ 0.32 _ Y Y 124 Bihar Sharif 296,889 Bihar 27.9% 25.0% 326, ,911 14% 45, _ 0.32 _ Y _ Y _ 125 Purnea 280,547 Bihar 63.4% 40.0% 325, ,763 14% 45, _ 0.32 _ Y _ Y _ 126 Hospet 206,159 Karnataka 25.5% 23.0% 225, ,250 20% 45, _ 0.32 _ Y _ Y _ Y _ 127 Mau 279,060 UP 31.2% 30.0% 312, ,124 14% 43, _ 0.31 _ Y _ Y _ 128 Farrukhabad 275,750 UP 20.8% 21.0% 298, ,774 14% 41, _ 0.29 _ Y _ Y _ 129 Raichur 232,456 Karnataka 12.1% 12.0% 243, ,456 17% 41, _ 0.29 _ Y _ Y _ 130 Hapur 262,801 UP 24.0% 24.0% 288, ,638 14% 40, _ 0.28 _ Y _ Y _ Y _ Mobile Store Reliance Trends 6. india retail report 2013 india retail report

4 Greater Mumbai can support 80 hypermarkets by 2015 (based on 75,000 population per hypermarket), Bangalore would be able to support only 20 hypermarkets based on MPV, and 48 by Asipac s methodology. Similarly, the tri-city region of Raipur-Durg-Bhilai can support only two hypermarkets based on MPV, and five by Asipac s methodology. The reality is that Bangalore already has 36 hypermarkets and most of them are doing reasonably well. Since this is a fact, does it mean that if the MPV values were the correct indicator of market potential Greater Mumbai can actually have 142 hypermarkets today? Since we are on the subject of hypermarkets, it is amply clear from our study that this is one of the most undersupplied segment of modern retail. The Top 30 Developed Markets can sustain as many as 626 modern hypermarkets by Currently, there are only 256 hypermarkets in these cities, or an under-supply of as much as 59%. The key question is, are 370 new hypermarkets going to open in these 30 cities in the next three years, or are the Indian hypermarket players going to continue to under-tap the market potential. Perhaps another argument in favour of allowing FDI (foreign direct investment) in multi-brand (especially food) retail. Overall, the Top 30 Developed Markets can sustain/support TRSD of about 352 million square feet by 2015 based on Asipac s methodology and 254 million square feet based on MPV. Against this demand, by the best of estimates, total current supply of organized sector retail space is only about 140-odd million square feet. Therefore, we conclude that there is more than 60% under supply of organized sector retail space in India s Top 30 markets. Obviously, the demand is being met by strong regional and local unorganized sector retailers. While this is the overall scenario, several micro-markets within certain cities (such as central Pune, the Whitefield area in Bangalore and Gurgaon) have substantial over supply of organized sector retail real estate. Before moving on to the Next 100 Retail Markets, we would like to comment on the supply side in the Top 30 Developed Markets. India s largest hypermarket chain Big Bazaar is not present in three of the Top 30 cities Ludhiana (ranked #16 by TRSD), Bhopal (#18) and Amritsar (#21). This is certainly a missed opportunity. All the other retailers researched as part of this study Bata, Café Coffee Day, Peter England, Allen Solly, The World of Titan and The Mobile Store have a retail presence in all 30 cities, with the sole exception of Allen Solly missing from There is >60% under supply of organized sector retail space in India s Top 30 developed markets. Obviously, the demand-supply gap is being met by strong regional and local retailers. However, several micro-markets within certain cities have substantial over supply of organized sector retail space. the Raipur-Durg-Bhilai tri-city region and Rajkot, which also does not have a Peter England store. India s largest department store chain by number of stores, Shoppers Stop, has 53 stores in 21 cities, of which three (Durgapur, Latur and Siliguri) are not amongst the Top 30. Of these, Latur has a TRSD of only 507,000 square feet (Mumbai is 95 times larger) and an MPV of only (Mumbai is 97.3 times larger). In our current stage of growth, Shoppers Stop, which is positioned in the premium to bridge to luxury space of merchandise, is targeting the 45+ cities with a million plus population and we are heading towards 75 stores in 30+ cities over the next three years, says Shrikhande of Shoppers Stop, Yes, the Indian market is growing across cities and tiers, but each brand/format has to make a choice about their brand s connect with the consumer and then decide the roll out plans. Lifestyle is present in 16 of the Top 30 cities. It is not yet present in Kolkata (ranked #5 by TRSD), Lucknow (#11), Vizag (#13), Indore (#14), Patna (#15), Raipur (#17), Bhopal (#18), Vadodara (#19), Amritsar (#21), Nashik (#22), Agra (#23), Rajkot (#24), Chandigarh (#25), Aurangabad (#27) and Meerut (#29). Of these 14 cities, Shoppers Stop is also not present in nine (Vizag, Patna, Raipur, Vadodara, Nashik, Agra, Rajkot, Chandigarh and Meerut). It is unfortunate that we are not yet present in an important market like Kolkata, says Kabir Lumba, Managing Director of Lifestyle, We had signed up for a property a long time back, but the mall got really delayed. Lumba adds that Lifestyle will have a presence in Indore, Raipur, Bhopal, Amritsar and Chandigarh within the next six months. So it seems like consumers in cities like Vizag (#13), Patna (#15), Vadodara (#19), Nashik (#22), Agra (#23), Rajkot (#24) and Meerut (#29) will have to wait for another couple of years or maybe even longer before they can have the pleasure of shopping at a real department store. Lifestyle s value fashion subsidiary Max is present in 28 cities, of which 13 are not in the Top 30. This is something that we didn t quite understand why would a value fashion retailer such as Max not be present in key markets such as Surat (ranked #9 by TRSD), Jaipur (#10), Kanpur (#12), Patna (#15), Ludhiana (#16), Nagpur (#20), Nashik (#22), Rajkot (#24), Chandigarh (#25), Aurangabad (#27), Vijayawada (#28), Meerut (#29) and Jalandhar (#30)? Max has missed six of the Top 20 and 13 of the Top 30 cities. On the other hand, it is present in Mysore (#36), Jabalpur (#41), Trichy (#47), Bhubaneshwar (#49), Trivandrum (#51), Bareilly (#52), Calicut (#60), Nanded (#68), Durgapur (#81), Siliguri (#84) and Jalgaon (#86). It baffles us as to how Max could open stores in cities such as Durgapur, Siliguri and Jalgaon, before opening stores in much larger markets such as Surat (18 times larger than Jalgaon in TRSD terms) and Jaipur (12 times larger than Jalgaon). Max being an international value fashion player is naturally positioned to cater to the young aspirational lifestyle customer in Tier II / Tier III cities, apart from metros, says M. Vasanth Kumar, Executive Director of Max Retail, This needs two drivers for traction - quality retail development (mall or high street) and local white collar service industry job creation. While the first 100 stores of Max are happening predominantly in the Top 20 cities, we see significant contribution from smaller cities for the next 100 Max stores. Even though it started 3-4 years after Max, Reliance Trends has a much larger presence - it has retail stores in a whopping 65 cities 26 of the Top 30 and as many as 39 of the Next 100. Amongst the Top 30, Reliance Trends is not present Consumers in cities like Vizag, Patna, Vadodara, Nashik, Agra, Rajkot and Meerut will have to wait for another couple of years or maybe even longer before they can have the pleasure of shopping at a real department store. in Surat (#9), Kanpur (#12), Chandigarh (#25) and Meerut (#29). Is there something about Surat and Kanpur that these retailers know, but we don t? The most common response is that either good real estate is not available, or is too expensive. Amongst the Next 100, Reliance Trends even has a presence in towns like Bilaspur (#103), Bardhman (#114) and Muzaffarpur (#115). According to a reliable company source, Reliance Trends will have stores in 80 cities within the next six months. Now let us move on to the main subject of this study India s Next 100 Retail Markets. The Next 100 can sustain/ support TRSD of about 73.7 million square feet by 2015 based on Asipac s methodology. Since MPV data is not available for many of these cities, it was not possible to compute MPV-based retail space demand. Against this demand, by the best of estimates, total current supply of organized sector retail space is only 20-odd million square feet. Thus, there is almost 73% under supply. Of the 100 cities, 15 are in Uttar Pradesh, 13 in Maharashtra, 12 in Karnataka, 10 are in Andhra Pradesh, seven in Rajasthan, six in Bihar, five each in Kerala and Tamil Nadu, four each in Jharkhand, Madhya Pradesh and West Bengal, and three in Haryana. No other state has more than two cities in the Next 100. It must be noted that 32 of the Next 100 cities are in South India. Some years ago, modern retail existed only in metros and some key cities of the South. But in the last decade, it has reached other parts of India.. Modern retail is gradually entering B and C class cities and changing the buying habits of consumers. In this decade, many national players will enter the untapped smaller towns and increase the penetration of Indian modern retail, said Anand Agarwal, MD, Anand World, the largest department store in Sambalpur, Orissa, a small town of less than three lakh people, which does not even find a place (yet) in the Next 100 Retail Markets. In the second chart, we have broken up the Next 100 Retail Markets into 8. india retail report 2013 india retail report

5 three colour-coded groups, the first group being numbers (ranked out of total combined 130 cities), the second group being numbers and the third numbers Bata India s largest retailer in terms of number of stores across any category with stores in 500+ cities and towns across India is present in 28 out of the 30 cities in the first group with the two exceptions being Jodhpur (#43) and Jamnagar (#55); 27 out of the 30 cities in the second group with the three exceptions being Bhavnagar (#64), Tirupur (#72) and Tirunelveli (#80); and 33 out of 40 cities in the third group. We believe that a retailer with a presence in 500+ towns has not given a miss to the two J s (Jodhpur and Jamnagar) in the Top 30, or to 12 cities in the Next 100 Retail Markets, out of deliberate choice. We see a shift in focus from urban centres to tier II and III markets. (but) back-end infrastructure has to be developed in tier II and tier III towns, says Rafique Malik, MD, Metro Shoes, India s second largest footwear retailer, with 175+ retail locations (including associate retail brands Mochi and Studio M) spread across 33 cities. There is no doubt that the industry will grow by leaps and bounds, as the purse of the middle class is going fatter and a large chunk of the population is moving into this bracket at a steady pace. This is the most important catalyst for the growth of B and C class cities. There is no dearth of consumers in India s emerging market, which brightens the prospects of the growth of modern retail, said Ved Vyas Chhabra, MD, Touristor Shoes, a chain of 33 footwear stores in Eastern India. Café Coffee Day, India s largest coffee shop chain, is present in 24 out of 30 cities in the first group, 16 out of 30 cities in the second group and only 4 out of 40 cities in the third group. This F&B retailer has an ambitious plan of adding 900 outlets in the next three years, by which time we are quite certain it will fill in the gaps at least in the first two groups. Peter England has a presence in 117 Indian cities, including 28 cities out of 30 in the first group. It is only missing in Gwalior (#37) and Asansol (#48). It is also present in 25 out of 30 in the second group and as many as 34 out of 40 cities in the third group as well. On the other hand, another brand from Madura Garments Allen Solly is only present in 46 cities, including 9 in the first group, 5 in the second group and 2 in the third group. Though it (modern retail) has got somewhat stagnant in the bigger cities, the tier II and tier III cities are fast moving, said Viren Shah, Director of Roopam and Roop milan, one of Mumbai s best known ethnicwear retailers. Tier 2 cities have grown at a rapid pace. these are rapidly coming up with malls and this trend will continue in the coming years, said Kishan Bansal, Owner, Moncher Fashions, a local retailer in Siliguri, West Bengal. Big Bazaar, India s largest chain of hypermarkets, has stores in 17 out of 30 cities in the first group, 12 in the second group and 9 in the third group. We can t understand why Big Bazaar has opened stores in places like Bardhaman (#114), Alwar (#116) and Ichalkaranji (#117), before opening stores in Ludhiana (#16), Bhopal (#18) And Amritsar (#21). The TRSD of Ludhiana is almost 10 times that of Alwar or Ichalkaranji. By 2020, modern retail will stop being a story. Instead of being restricted to some catchments and cities, it will become mainstream and turn into a way of life, the way kirana stores are today, says Damodar Mall, Director (Food Strategy), Future Group. One of the main factors, critical to the health of modern or organized retail, is the availability of property in the right location at the right price and this seems to be far away, says Rajan Malhotra, Head (Retail Strategy), Future Group, Of the Next 100 Retail Markets in India, 15 are in UP, 13 in Maharashtra, 12 in Karnataka, 10 in Andhra, seven in Rajasthan, six in Bihar, five each in Kerala and TN, four each in Jharkhand, Madhya Pradesh and WB, and three in Haryana. There are a lot of cities with potential for modern retail... but our experience shows us that a bad location in a top tier city quickly becomes a good location as the catchment around it rapidly develops, (but the) same is not the case with some of the smaller cities... availability of large floor plates in smaller cities, especially for food or hypermarket retail, is quite low, leading to lower penetration... the markets and the consumers are ready even beyond the top 100 cities it is the retailers and the marketers who have to be ready now. India s largest watches retailer, World of Titan, has 341 stores spread across 135 cities and towns. Titan says it is planning to expand its presence in small towns as it has identified the multiple benefits of expansion in non-metros, in the form of huge demand, less competition and scope of occupying a large market share. Titan s jewellery division has 164 stores across 113 cities (Tanishq 132 stores in 81 cities and Gold Plus 32 stores in 32 cities). The Mobile Store from the diversified Essar Group, India s first countrywide chain of retail outlets for mobile phones and accessories, has a presence in 88 cities, including 26 in the first group, 16 in the second group and 16 also in the third group. Modern retail will go to every nook and corner of the country by 2020, believes Ajit Joshi, MD & CEO, Infiniti Retail (a TATA company which owns Croma the largest CDIT retailer in India). Echoing Joshi s sentiment, Sanjeev Mahajan, CEO, Spice Retail (another large mobile phones and accessories retailer) says: By 2020, modern retail would grow to almost 20% of the total retail market one big push must come from the tier B and C towns. As per a recent article in The Economic Times, many enterprising entrepreneurs are creating business models targeting increasingly affluent non-metro consumers. They are finding out that the small-town consumers are also willing to spend, if not more, then at least as much as metro consumers, for good quality products and services. Supporting this theory was another recent front-page article in Mint, which states that consumption in rural India is growing at a faster pace than in cities and towns for the first time in two decades. The article attributed this growth to rise in household incomes due to various factors like greater non-agriculture job opportunities, government-initiated employment generation schemes, as well as migrants in urban cities from these areas who are sending increased remittances home to their families, leading to boosted consumption. There is also a shift in consumption now in small towns with people moving beyond necessities and using products that once sold only in urban areas. According to a study by Nielsen, Middle India (towns with a population of 100,000 to one million people), which is home to 100 million Indians, constitutes up to 20% of the country s FMCG products consumption. Middle India s FMCG products consumption grew at 12% in 2011, while metros saw a lesser growth of 11.5%. Modern retail has been able to set its roots only in some parts of urban India. There is still a lot of ground to cover. By 2020, modern retailing would cover all the urban centres in a comprehensive manner and rural India would still be available to explore and explode, comments Vinay Nadkarni, MD & CEO of Globus, a chain of 25-odd fashion stores from the Rajan Raheja Group. Globally, the 600 largest cities (which house 22% of the world s total population) generate about 60% of the total global GDP. While 60% of the global GDP will continue to be generated by 600 cities in 2025 (by which time they will house 25% of the world population), the composition of these 600 top global cities will be very different in the next years, as the center of gravity will move strongly east and to a lesser degree, south. The scenario is not much different within India. Look at the changes that have taken place in the last 20 years. Kolkata has moved down from the third place (in terms of retail market potential) to the fifth place, while Bangalore has moved up from fifth to third place. NCR is fast catching up with Mumbai and is most likely to overtake the Mumbai There are a lot of cities with potential for modern retail... the markets and consumers are ready even beyond the top 100 cities the retailers have to be ready now, says Rajan Malhotra, Head (Retail Strategy), Future Group. market by 2030, if not earlier. Chennai has dropped to the sixth place (from fourth), while Hyderabad has climbed to the fourth (from sixth). Surat, which was not amongst the top 20 markets twenty years ago, is now in the ninth place. Bangalore is expected to have the highest per capita GDP amongst Indian cities by 2030, more than 50% higher than that of Mumbai. Our analysis shows that there will be quite a few changes in the composition as well as the ranking of the Top 30 markets by Like we said in the previous paragraph, NCR will most likely overtake Mumbai as the #1 market in India. Bangalore will be very close to Mumbai by 2030 and may even overtake Mumbai by Chennai will overtake Kolkata, which will drop further down to #6. Vizag will overtake Kanpur by a wide margin and even Indore will cross Kanpur, whose rank will come down to fourteenth place. Nashik is likely to climb up to the Top 20 and Vijayawada to the Top india retail report 2013 india retail report

6 According to another (and more recent) MGI report titled Urban world: Mapping the economic power of cities, half of the global GDP in 2007 came from 380 cities in developedregions, with more than 20% of global GDP coming from 190 North American cities alone. The 220 largest cities in developing-regions contributed another 10%. But by 2025, one-third of these 380 developed-market cities will no longer make the top 600. By 2025, 136 new cities are expected to enter the top 600, all of them from the developing world. similar to USA and Japan. By 2025, the MGI study projects that nearly 70% of consumption in India will be discretionary spending. In comparison, China s consumption share of GDP was only 39% in However, due to China s higher per capita income and population, its private consumption will be almost double that of India in dollar terms. The infrastructure in China is far better than India. The cities are more organised and (organized) retail business is not limited to a narrow radius. The government (here) has to India s income pyramid has changed dramatically during the past two decades and will evolve even more significantly. As a result, consumption driven by choice instead of need will grow significantly. Delhi is expected to have the 16th highest GDP growth rate amongst the global top 600 cities by 2025, while Mumbai is at the 24th spot. In terms of sheer population, Mumbai is expected to become the second largest city in the world by 2025, Delhi the fifth and Kolkata the sixth largest if we take NCR as a whole, it will be the third largest urban region in the world by Global retailers (those who are present in two or more continents) must take note. Until some time ago, it was justified for such retailers market strategies to be focused on developed economies. But the developed economies are likely to generate less than 30% of global market growth in the next 15 years. According to this MGI report, today s 23 megacities with populations of 10 million or more will contribute about 10% of global growth from now to 2025, below their current 14% share of global GDP. In contrast, 577 cities with populations of between 150,000 and 10 million, are seen as contributing more than half of global growth from now to MGI says that emerging-market cities with populations above 150,000 together are likely to contribute to more than 45% of global growth from 2007 to It is estimated that by 2025, cities amongst the global top 600 which are in developing countries will have 235 million middle-class households earning more than $20,000 a year at purchasing power parity (PPP). Compare this with about 210 million such households in the cities amongst the global top 600 which are in developed countries. The MGI study finds that the population of the global top 600 cities will grow 1.6 times faster than the population of the world as a whole. By 2025, these 600 cities will have an estimated 310 million more people of working age, and almost two-thirds of this new workforce is going to come from the largest cities of China and India. Private consumption plays a larger role in India s economy than China s, accounting for 60% of GDP in 2005, a level improve infrastructure to increase the radius of modern retail so that new pockets get developed, said Sarat Binani, MD, Himalaya Optical, a chain of 55 eyewear retail outlets spread across 26 cities. India s income pyramid has changed dramatically during the past two decades and will evolve even more significantly. The MGI study finds that the number of urban households that will join the consuming and global segments in India s top 177 cities could potentially increase fivefold, from just five million households in 2007 to 25 million households in As a result, consumption driven by choice instead of need will grow significantly. Shoppers Stop s Shrikhandhe puts in some strong words of caution: There is clearly a large gap between demand for space and availability of space in big cities. This is unlikely to change and hence organised retail will have to take the ecommerce route in a big way, if it has to really touch 10% plus share of the total retail market. Real estate prices will remain unaffordable in a majority of the micro markets, making modern retail unviable. Hence, we do not see the possibility of modern retail hitting 20% share by 2020, based on the current reality. In most parts of the world, the average size of households is declining, thus leading to an increase in the number of households. MGI expects the number of households in the global top 600 cities to grow at 2.3 times the rate of global population that s 250 million new households in these cities. India s urbanization is at a relatively early stage. Choosing the right markets requires combining macro market intelligence with specific market information. A strategy based on city clusters could be an attractive option for many retailers in India, a country with significant regional differences in market characteristics. We at Asipac hope that this in-depth research based study will help all large as well as midsized retailers (whether national or regional) to review their business plans and target new (ignored) geographies in a much more informed fashion. Asipac has exercised reasonable care in developing the information incorporated into this report. While Asipac believes that the information presented herein is reasonably correct, Asipac does not make any warranty to that effect. Asipac disclaims all other warranties, either express or implied, including, without limitation, the implied warranty of merchantability and fitness. The appropriate use of the information contained in this report requires professional business judgment and may require sourcing of additional detailed information and proper due diligence. 12. india retail report 2013