The most evolved retail markets in India

Have had a fascinating time understanding the face of retail in India and how it is developing. In one of my recent projects at work, I was asked to evaluate and rate cities on their retail environments.

To begin with, let me give you a quick snapshot of retail in India. India has 11 million retail stores. Yes 11 million retail stores. They are mostly small with only 4% larger than 500 sq ft. It employs 7% of India's population and generates 14% of national GDP. Yet only 2% of it is organised. And it will stay unorganised for a long long time. Why? Because its most successful format which is food retailing will always suffer from sourcing issues since India's agriculture is hugely fragmented with average holdings of less than a hectare.

So how do you go about judging the most evolved retail market in the country. Is it on the proportion of organised retail in total retail? Or on area of organised retail to total retail? Total number of malls? In my personal view, it would have to be the nature of anchor stores at the various organised retail setups mushrooming all over the place.

Let me start by explaining the word "mall" in an Indian perspective. In India, mall is euphemism for organised retail. So all that is hip and happening takes place in and around the mall. Now each mall has an anchor store. A store which on its sheer weight pulls in the footfalls. Its the nature of this store that tells you a lot about the evolution of retail in that market.

If the retail anchor serves functional needs and is largely in the domain of meeting basic utilities such as food and basic entertainment, it could be considered less evolved(e.g. Big Bazar or PVR as an anchor store). On the other hand, if the anchor is a store which serves lifestyle needs (Paintings, Serious book shops, accessories, high-end clothing) then it is obviously a much more evolved retail market. The point here is that every other store in the mall looks up to the anchor to draw in the crowds. An evolved category anchor indicates an evolved retail market.

So who wins this race? Well, this work explored Delhi, Calcutta, Bangalore, Hyderabad and Ahmedabad and Pune (No Mumbai sorry). My personal choice for the most evolved retail market was Hyderabad. In Hyderabad across malls, the anchor stores are high-end clothing and accessory stores. Bangalore is a very close second where anchors are pretty sophisticated but there is the odd mall dependent largely on a PVR to draw crowds. However I do feel that the nature of organised food retail is most sophisticated in Bangalore.

Pune, at the end of the day is a small town really. But quickly getting there. Its a bit like what Bangalore used to be 10 years ago. Another interesting thing about Bangalore. I believe its the most culturally stimulating city to live in. Just do a quick recce across shopping areas in Bangalore and count the number of serious book shops you find. I am only slightly exaggerating when I say that in Bangalore, every 5th shop is a serious book store. Check it out yourself.

So where does that leave Delhi-NCR. Miles behind I am afraid. Across organised retail, you find that the anchor is a PVR or a food store e.g Mcdonalds, Sagar Ratna etc etc.

Another, interesting city, I have missed mentioning is Ahmedabad. There are malls developing all over the place here. But occupancy of these grand and ostentatiously created structures would be around 20% to the naked eye. A huge number of gold retail stores though. Found it quite interesting but then the gujarati community has always invested well. Another interesting story about Gujarat follows....