Malls rentals down by 30%, vacancies up by 25%: Study
Updated: Sep 07, 2015 12:06:12pm
New Delhi, Sept 7 (KNN) Slowdown in consumer, coupled with online shopping that provides convenience of delivery at door steps, have led to troubles for the shopping malls which are suffering 20-25 per cent vacancy rates and 30 per cent drop in rentals in the last one year, according to a latest study.
Industry body ASSOCHAM in its study report said the online shopping mainly focusses on purchasing items like electronics, books, music, apparel, sporting and outdoor goods.
The Indian trend is in line with the declining number of foot falls in retail space in over 200 shopping malls across the United States, UK and other countries. In the US, the malls are facing 46 percent vacancy rates whereas malls in United Kingdom (UK) got impacted by 32 per cent, reveals the latest findings, it said.
The paper added that in the US, UK, internet retailing has taken 48 per cent and 39 per cent of industry growth since 2005 which is mainly driven by the different structural market factors such as high population density, high rental costs and long working hours.
The brick and mortar outlets on high streets and inside malls are trying to hold on through lower prices and deals, it said.
There were around 50 operational malls in 2005, a number that rose to 610 in 2015 in top ten cities. Additionally, with improvement in infrastructure such as logistics, broadband and internet-ready devices, there is likely to be a significant increase in the number of consumers making purchases online, the study said. It estimates around 65 million consumers in India to buy online in 2015, as against around 40 million in 2014.
The paper also highlighted that mobile technology is also having a huge impact on brick and mortar retail.
About 45 per cent of malls in India are expected to be converted into non-retail space within next 15 years and replace them with movie theatres, restaurants, discount retailers etc., added the paper.
As per the report, the construction of several malls have significantly been delayed and withdrawn due to lukewarm response from retailers.
The industry is also facing problems like multiple taxes, lack of clarity in policies and shortage of experts in areas such as supply chain and store management, added the paper. (KNN Bureau)
Industry body ASSOCHAM in its study report said the online shopping mainly focusses on purchasing items like electronics, books, music, apparel, sporting and outdoor goods.
The Indian trend is in line with the declining number of foot falls in retail space in over 200 shopping malls across the United States, UK and other countries. In the US, the malls are facing 46 percent vacancy rates whereas malls in United Kingdom (UK) got impacted by 32 per cent, reveals the latest findings, it said.
The paper added that in the US, UK, internet retailing has taken 48 per cent and 39 per cent of industry growth since 2005 which is mainly driven by the different structural market factors such as high population density, high rental costs and long working hours.
The brick and mortar outlets on high streets and inside malls are trying to hold on through lower prices and deals, it said.
There were around 50 operational malls in 2005, a number that rose to 610 in 2015 in top ten cities. Additionally, with improvement in infrastructure such as logistics, broadband and internet-ready devices, there is likely to be a significant increase in the number of consumers making purchases online, the study said. It estimates around 65 million consumers in India to buy online in 2015, as against around 40 million in 2014.
The paper also highlighted that mobile technology is also having a huge impact on brick and mortar retail.
About 45 per cent of malls in India are expected to be converted into non-retail space within next 15 years and replace them with movie theatres, restaurants, discount retailers etc., added the paper.
As per the report, the construction of several malls have significantly been delayed and withdrawn due to lukewarm response from retailers.
The industry is also facing problems like multiple taxes, lack of clarity in policies and shortage of experts in areas such as supply chain and store management, added the paper. (KNN Bureau)
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