THE eastern part of India has the lowest share of retail and mall development. Lack of adequate commercial centres and absence of political will have been the reasons for the slow progress in these sectors. The only centre for commercial and economic acti
Though Kolkata had been the most forward and developed city during the British India period, it has been a bit late in catching up with the retail revolution in the India. However, the city has great potential to become a retail hub and a major centre in the east in the near future.
Kolkata, the 300-year old fascinating city on the eastern banks of river Hoogly, is one of the most intriguing cities of the world. As the erstwhile capital of British India, it is a city comprising various cultures and religions, presenting a mix of music, theatre, traditional arts and crafts, historical buildings and interesting side streets, besides also serving as a leading centre of commerce, and a port of call for eastbound vessels. It is a fascinating amalgam of life's extremities where the rickshaw and the modern underground metro rail co-exist, where there is great wealth yet great poverty, where spaciousness is cheek by jowl with the most overcrowded slums in the world, and where bustling markets and ultra-modern malls thrive alongside.
Retail majors venturing into Kolkata
Recently, Kolkata has witnessed some of the biggest IT ventures and its real estate retail characteristics have begun to look like a turn-around-story. Apart from the 70 lakh resident population, this metropolis attracts another 70 lakh people visiting daily for services, business and entertainment.
Today, national as well as international players are eyeing a fat slice of Kolkata's real estate pie. Confirms Rajat Banerjee, Manager-Marketing Support, Mani Group, Kolkata, "A lot of national and international players, such as developers Salim-Ciputra-Universal Group, Unitech and DLF, and marketing agents like Trammel Crow Meghraj and Nai, to name a few, have come into Kolkata, bringing with them a new energy in the industry."
Kolkata, undoubtedly, is an ideal location for the growth of the retail industry. The city is expected to receive the highest share of malls in this region in the coming years. The city has come a long way in terms of retail maturity with a proliferation of brands and organised retail chains.
The disposable incomes of Kolkatans have been on the rise, according to a report by the National Council of Applied Economic Research (NCAER). About 62 per cent of the households in Kolkata had annual incomes of up to Rs 18,000 in 1985-86, while a decade later the figure touched Rs 25,000 to 77,000 for some 61 per cent of the households.
According to KS Bagchi, MD, Bengal Peerless Housing Development Co. Ltd, "Real estate growth in West Bengal was disorganised till 1996. But with the inception of several joint sector companies, this particular industry has also taken a new turn and created a huge interest amongst the common people, who earlier could never dream of having their own home in Kolkata. This aspect has led to a high demand for real estate not only for the purpose of housing but also for investment. The price of real estate has increased by over 80 per cent during the last four years. This phenomenon has attracted national players to come to Kolkata for real estate business."
HyperCITY, India's largest hypermarket, launched recently in Mumbai's Malad by retail major K Raheja Corp Group, is keen to get its homework right before setting up shop in Kolkata, hopefully by 2007-end. The chain, which plans 55 HyperCITY outlets across the country, feels Kolkata should have six in the next 10 years. The hunt for land is already on.
From Marks and Spencer to McDonald's, international players are also keen to gain a share of Kolkata's real estate. They are big names and they want it big. The city's retail sector is experiencing a rush of adrenaline with other international players too, including Mango and Costa Coffee, and national ones like RPG Retail, Reliance Retail and the Future Group angling for bigger spaces from anywhere between 3,000 and 50,000 sq.ft. The result is frenetic construction in and around the city.
Mani Square, on the eastern fringes of the city, having 6 lakh sq.ft of space, has already been taken up by players like RPG Retail (50,000 sq.ft) and Westside (30,000 sq.ft). Another 25,000 sq.ft is for Pantaloons' e-mart and e-zone, while IMAX and Adlabs together have taken up 40,000 sq.ft. Spencer has also taken up 70,000 sq.ft at the South City mall. The entry of Reliance Retail, of Reliance Industries Limited, in the city markets before the year-end would speed up the retail sector's pulse rate even higher.
Reliance Retail is now collecting feedback on the city's supply network for its hypermarket of 1 to 1.5 lakh sq.ft and supermarkets of 50,000 sq.ft. The huge demand for space is also because of the international brands, which are bringing in portfolios instead of just one brand. Marks and Spencer, Guess, Next, Bodyshop and Women's Secret have taken up 30,000 sq.ft at the Avani High, near Rabindra Sadan. The Marks and Spencer store will be one of its largest in the country.
My Dollar store, which has been having a successful run in Mumbai, has signed up for 20,000 sq.ft in New Town, Rajarhat, and is now looking at central business district areas.
Lifestyle, which is part of the Dubai-based Landmark Group, is looking around for 1 lakh sq.ft while its footwear and apparel brand, Max, will soon touch down in the city with an 8,000 to 10,000 sq.ft anchor store in a mall being developed on EM Bypass. Several entertainment companies are also adding to the clamour for space.
Mumbai-based Fun Republic is scouting for locations in Howrah and south Kolkata, while Cinemax is looking for properties between 30,000 and 35,000 sq.ft in Rajarhat and Howrah. M2K, a New Delhi-based multiplex, has signed up a 25,000-27,000 sq.ft area on EM Bypass.
Kolkata's shopping destinations
Kolkata has emerged as a strong prospective destination, lately, in the expansion plans of retailers, and is now perceived as a latent but highly potential market. Prominent retail chains like Music World, Westside, Dominos, Pizza Hut, Shopper's stop, Willsport, Barista, and Pantaloon have already established their presence in the market.
Besides these, there are small format, new local product markets like Shreeram Arcade, which offer a wide variety of items from garments, watches and footwear, to consumer durables like household electronic gadgets. The local retail chains, which have become household names in Bengal include Arambagh Hatcheries Ltd and Khadims.
The medium and large format branded and non-brand shopping complexes which have come up in Kolkata, and are operating successfully, include Forum, 22 Camac Street, Metroplaza, Emami No.1 City Centre, Enclave.
Changing shopping patterns
Shopping trends in Kolkata have witnessed a radical shift over the recent years from the conventional traders-run stand-alone shops to more organised and large retail formats. Banerjee believes, "Shopping is nowadays more an experiential family affair, than just a functional activity where someone merely picks up essentials on one's shopping-list and rushes back home. Currently, with average families being increasingly strapped for time to spend together, the basic activity of shopping has also been converted into a family outing combined with dining out and, say, a recreational activity like bowling. The infrastructure for this 'combined' family quality time together can only be provided by a mixed-use development like a shopping mall-cum-multiplex-cum-food court. Hence, you will now see more and more families catching up with their weekly provisions."
"Kolkata is going to be one of the best destinations for IT and other industries. Several malls and shopping plazas have been set up and the choice of the buyers has shifted from conventional stand-alone shops to organised shops. This is not only because of the availability of enough disposable money with the middle class, but also because organised shopping gives mental relief to, and saves time for, the buyers, who then like to follow it up with a meal at KFC and a movie at IMAX," says Bagchi.
Support from the state
With the current chief minister of West Bengal showing a liberal face, the retail industry is expected to get a fillip and lead to a very active commercial real estate market in Kolkata.
Banerjee comments, "Any industry can only develop in an environment having positive state support. As the resounding mandate revealed by the recently conducted state elections have proved, the current state government's proactive approach towards industrial development in the last few years has received widespread appreciation. Their desire to further accelerate the process by attempting to be more transparent and expedite clearance bottlenecks should be further steps in the right direction. While age-old entrenched attitudes are difficult to remove, at least the promise of a fresh beginning is there."
Bagchi believes, "The government of West Bengal has set its industrial policy and Kolkata will witness an improvement in the future. The chief minister is a leader with great prudence and has a practical approach to all problems. His initiatives have attracted the interest of industrialists towards destination Kolkata, where the 'honesty and keenness' of the government is clear. I think this quality is very rare in any other government.
Kolkata, the market of tomorrow
A city, which has been characterised by price-conscious consumers and non-status-conscious spenders, is fast shedding its old attributes. The least tapped of all Indian metros, Kolkata is now brimming with skyrocketing disposable incomes and glossy retail and lifestyle developments, as leading fashion brands make their entry into the city.
Banerjee believes, "Kolkata, the second-most populous metropolitan area in India (after Mumbai) with a population density of 25,000 per sq.km, is emerging as a retail hub. The city is eastern India's main trading centre and financial hub. A recent NASSCOM study on the competitiveness of nine cities in India as destinations for IT enabled services has ranked Kolkata fourth. Overall, even apart from the IT boom, the city has witnessed the rise of a 'feel good' factor that has been spurring consumption levels. This has naturally drawn more brands to the city and franchising is the only way to go."
The retail rush is likely to push up commercial real estate prices, but players that are taking up space in the city are big with deep pockets, and for them money is no problem if the space is right.
Bagchi holds, "There is no doubt that Kolkata will be the future retail destination of the country. One might say that Kolkata is young as far as industrialisation is concerned. However, take the example of the IT sector in Kolkata, which has made the city one of the most important places for the development of this sector. This sector has young and new employees, earning more money and thus having more spending power.
Quoting an example from his own company, Bagchi informs, "We are developing a shopping mall with other infrastructure aspects like the ICT centre, financial supermarket, and so on within the same complex. In that mall almost all the large and renowned brands of India along with several brands from Europe have flocked together. These people are smart enough to understand that Kolkata has got enough disposable income with its middle class."
Evidently, the future of retail in the city lies in new-age shopping malls, which provide variety, value and convenience in a more comfortable environment. This is also corroborated by a surge in consumer spending on branded goods in recent times.
"Within the coming five years, with the development of new townships, the real estate industry of Kolkata shall witness substantial growth," says Bagchi.
Banerjee believes, "Kolkata will emerge as more professional in its approach and become more proactive in dealing with the needs of the retail, commercial and residential sectors. There will be continued demand for large format housing complexes to cater to the lower and upper middle income brackets, as well as more exclusive stand-alone amenity-loaded tower buildings for the upper income group. Continued growth areas include Rajarhat, Garia-Baruipur, and across the river near the Kona expressway."