Retailers in India could soon benefit from the global slowdown as demand slows.
Large retail chains such as the Future group, Reliance Retail and Aditya Birla Retail are cutting costs and putting pressure on landlords to renegotiate rentals. Many are using the downturn as a good opportunity to rein in costs as they leased or purchased property in India at the peak of the market. This has had a major effect on their bottom line and it is being felt even more so now.
Reliance Retail, one of India’s largest companies is already renegotiating leases across India and hopes this would “bring down costs by about 20%-30%”.
Although suffering from the slowdown, India is will pause for breath rather than grind to a halt compared to the rest of the world with strong domestic demand. Growth in India will increase and move forward after the current crisis and this is when many expect Indian retail to flourish.
CB Richard Ellis, reports that the Indian retail market is now valued at $511 billion with “Organised retail” only accounting for less than 5% of the total retail market in India. KPMG have noted that over the next 4-5 years investment in Indian retail will be around $25-30 billion which illustrates further how far this market has to grow.
Tags: Aditya Birla, CB Richard Ellis, Commercial Property In India, Future group, Indian retail, KPMG, Reliance Retail, retailers in India
March 3rd, 2009 at 12:47 am
I agree that Indian retail industry is going to be flourished many times in the coming years. New pay scales for the govt. employees will expand the pocket size of the consumer. Yes, it is a good tactics to use ongoing economy crisis to reap out some organizational long term benefits. The task doesn’t seem tough too as property owners are well aware of the shortage of other options and they are bound to compromise.