In a state of flux
Anand Dutta, head (retail), Jones Lang LaSalle Meghraj, Pune, presents an insightful overview of the recent developments in the retail sector in and around the Pune region
Over the last few years, Pune has seen considerable growth in the IT sector, placing it close behind Bangalore and on par with Hyderabad. In the same period, the retail sector has ramped up to introduce a number of malls in response to the increased spending power and demographic changes.
The 2004 phase gave a defining new face to Pune’s retail sector. Today, there are many malls being planned. However, thanks to the economic slowdown, we expect many of these to see only partial occupancy until matters improve.
Currently, Pune’s retail-scape accounts for approximately five million sqft in terms of both organised and unorganised retail. As the city expands towards the Eastern and Western belts, there are about six 500,000+ sq ft malls under construction or in the development stage. The main focal areas of retail development are now clearly Kharadi, Hinjewadi, the Pimpri-Chinchwad region and other peripheral areas towards Kothrud and Bhugaon.
Pune’s retail catchments have been enlarging in tandem with the growth in its demographic profile. The city is now spreading across the Eastern and Western corridors. There are about 4-5 townships of over 100 acres each planned in the city, and retail would be an inherent component of each of these. The scheduled townships will open up new frontiers, as will the proposed international airport.
If we include the Pimpri-Chinchwad region, Pune houses about 50 lakh people in the average age group of 25-45. The average per capital income in Pune is about 40,000 rupees per head per annum, which comes to around $800 dollars per annum. However, the average figure does not give an accurate picture – we must keep in mind the fact that income-earning capacities are very disparate, with certain classes earning much higher incomes.
Traditionally, the primary shopping orientation in Pune is towards the meeting of daily needs, with a decidedly bargain-focused viewpoint beyond that. In this category, there is a high level of loyalty towards certain brands and smaller outlets. The newly aspirant class of shoppers is, however, growing in numbers and share of voice, and the city’s retail profile is changing accordingly.
Today, the citizens of Pune see themselves on par with other metros in terms of aspiration and spending capabilities. However, in the recent past, the aspiration levels have dropped more or less in proportion to the caution introduced by the economic slowdown prevailing in the rest of the country. In terms of shoppers’ profile, the city has seen fast evolution in taste levels, and there is now a distinct segment of buyers who prefer high-end brand products.
Lack of funding and slow economic growth are definitely impacting the retail sector in Pune. Retailers are not able to expand their presence, which in turn affects mall development. The mall rental debacle also needs to be sorted out – a wider acceptance of the revenue-sharing and minimum guarantee models would be a significant step forward all around.
Infrastructure availability in Pune can currently be pegged only as moderate. Like most other cities that grow organically, Pune is catching up with its infrastructure requirements retrospectively to the fast rate of development, and there are certainly lacunae.
There are distinct gaps in the overall approachability to new developing areas. This puts retail developments coming up in these areas at a distinct disadvantage.
The way forward is clearly in the form of extensive road widening, more flyovers and also the proposed Ring Road that will connect Kharadi, Hadapsar, the Expressway and the PCMC area. These developments would improve internal travelling ease and also open up the fortunes of the new retail catchments.
Road widening needs to be put on a faster track. Doing so would help sort out the various connectivity issues the city currently faces, and this would be a major boost for both existing and emerging retail catchments across the city.