Indian retail leasing activity in major cities slumped 35 per cent last year. Retailers have had to reduce costs – not least of all by realignment of retail spending. The worst-affected sector was fashion, where falling consumer spending has impacted the top line of several major retail groups, which are scaling back expansion plans this year. With spending on fashion declining, there has been a significant reduction in demand for new fashion-specific mall spaces among local brands and global brands.
Discretionary spending remains low and the ticket sizes of purchases have shrunk – with predictable impact on retail leasing activity. Slow sales and sluggish activity across sectors such as automobiles, fashion and telecom are translating into reduced leasing across retail spaces as players shift their operational strategy. Jewelry, electronics, books and music, hypermarkets and men’s formal clothing are other retail categories where leasing activity declined last year.
However food and beverage, family entertainment centers, cinemas and beauty/wellness boutiques have seen a decent rise in space leasing and are doing fairly good business depending on factors such as location, accessibility, brands etc. Though rising rentals in prime locations are hindering the growth plans of many brands, Indians’ affinity for eating out and entertainment remains undiminished.