High streets lure top brands in post-pandemic retail expansion
High streets are an attractive proposition for many retail brands now. A study by Anarock Property Consultants shows, post pandemic retail expansion for many brands will be in high streets across the country. The study reveals from April 2020 to May 2021, brands have finalized 120 retail deals on prominent high streets across the country. These deal sizes range from 400 sq. ft. to up to 35,000 sq. ft.
Apparel brands finalize most deals
Top apparel retailers and large format stores like Pantaloons, Westside, Zudio, Reliance Trends and Max (typically anchor tenants in malls) are now attracted to high streets and looking at opening stores there. Also among the group are Some Quick Service Restaurants (QSRs) within the F&B category like: Starbucks, Pizza Hut, KFC, etc.
As Pankaj Renjhen, COO & Joint MD-Anarock Retail explains, “High street markets have been doing very well in post-pandemic times and we are seeing many retail brands eye these locations as a part of their expansion strategy. Well-capitalised retailers with established business models are using their competitive advantage to negotiate good deals to expand their footprint and gain a larger market share.” He goes on to say, what attracts brands to high streets is that they offer a good opportunity with attractively low start-up time, lower cost of operations and less dependency on immediate adjacencies. What’s more, high streets already have a considerable base of footfall traffic. In metros, many retailers are willing to take well-located, road-facing spaces within good catchments rather than sign up at expensive high streets.
What’s more, apparel brands are among the categories who have finalized maximum number of high street lease deals with an over 23 per cent share, followed by F&B at 15 per cent, and jewellery at 12 per cent. Hypermarkets and supermarkets have mostly leased large high street spaces in smaller towns and cities.
The top cities where these brands are attracted and picking up high street spaces are: Bengaluru, Pune, Hyderabad, Delhi, Chennai, Mumbai and Gurgaon. The prominent Tier II, III cities in this list are: Lucknow, Ahmedabad, Chandigarh, Patiala, and smaller towns in Uttar Pradesh and Madhya Pradesh like Indore, Bhopal, Gwalior.
Small towns attract big retail
Another trend that has emerged post-pandemic is the importance of small towns for retail expansion. Top hypermarkets and supermarket brands are now actively looking at spreading in Tier II, III, IV cities across the country. One reason is that many smaller towns offer high revenue-growth potential for them. Till now most of these cities shopped from neighbourhood kirana or mom-and-pop stores to meet t heir grocery needs.
The Anarock study shows, there is great demand from retailers - particularly large corporate retail chains - in high streets of Tier II, III, IV cities. This demand is backed by increasing resilience of non-metro customers. With lack of quality retail centres in these cities, demand is focused on high streets. Moreover, the cost of operations in high streets in small cities is more competitive for retailers and for consumers, the familiarity and location convenience of high street retail augurs well.
Retailers like More Retail have mostly leased large areas in smaller cities such as Agra, Faizabad, Muzaffarnagar, and Sitapur in UP and Bhubaneshwar in Orissa. And as Renjhen points out, "Going forward, with limited quality retail stock coming up and in smaller cities' convenience as a key parameter, high streets are a viable solution for retailers to bridge the gap.” He says, except in a few large cities, large-sized retail centres will be difficult to sustain as the pandemic has shrunk the retailer category - both in terms of number of players and store sizes.
