Retailers prioritize improved shopping experience; seek larger store spaces despite high rental costs
03 March 2023, Mumbai
Retailers are increasing their store sizes despite the high rental costs, with many brands seeing the value of offering shoppers an improved experience.
After retailers started shutting stores or reducing their size to save on rental during the Covid-induced lockdown, brands are now asking for an extra 30-40% space to expand their stores, not to store more products, but to give shoppers more space to roam around and improve the quality of time they spend in-store.
The focus on experience has resulted in a reversal of the decade-old trend of launching smaller outlets. Many brands have increased their average store size by 30-40%, while a few have doubled their store size, indicating that consumers are increasingly looking for an experience when they shop.
According to property consultant Anarock, the share of leasing of less than 2,000 square feet of retail space fell to 59% in 2022 from 64% in 2021, while the share of transactions sized between 2,000 sqft to 5,000 sqft increased to 28% from 24% during the same period.
Apparel, entertainment, and food and beverage (F&B) together accounted for 70% of total retail space absorption in 2022. The share of entertainment in absorption increased to 28% from just 2% in 2021.
Brands across categories, including Levi’s, Tasva of Aditya Birla Fashion and Retail Ltd, Celio, Puma, and Apparel Group India, among others, are opening larger stores to provide a better experience to shoppers. Brands have also noticed that conversion rates are better at larger stores, as consumers are not only coming to buy, but they also want the experience.
Mall operators in tier-2 cities have also noticed this trend, with new brands with aggressive expansion plans looking for larger space than what they had initially planned.
