Major sector challenges

High rental costs are a major issue for the sector; a correction in the real estate market is required as margins are being squeezed. Shankar Balan, Head of Accessories and Brand Licensing at Madura Garments and Peshwa Acharya, VP & Head of Marketing & Consumer Experience at Reliance Retail each make it the primary sector challenge.

Acharya also feels that the sector is suffering from a general lack of talent due to lack of experience, in addition he highlights the difficulties of establishing a retail model that is a mixture of Western and Eastern influences.

Salil K. Sahu, Managing Director of Home Stores India comments that due to the sector being in its infancy there are a lack of experts who understand both Indian sensibilities and retail design. This has led to, "a lack of coherent concepts and brand experiences".

Future of the sector

Balan predicts that organised retail will turn its focus to new local markets, "There is huge untapped potential from the secondary and rural markets where the aspirations run high on account of media penetration."

He also makes the point that India's socialist roots; high income tax and low wages will insulate the sector from the global downturn as consumers will spend only what they can afford, rather than being tempted by easy credit.

Acharya expects new formats to evolve but warns that Western models and format designs will not necessarily work in India. Salil agrees, "The sector lacks an Indian identity and has not developed a sensibility for design, aesthetics and branding". He goes on to say, "the sector has not created environments where Indian's are inherently comfortable".

Evolution of the mall

In Metro cities, Balan expects better zoning and mall management, in addition he believes that developers will improve the range of activities available, making the point, "while we do not the equivalent of Ski Dubai, the shift to leisure activities will gradually take place". Acharya agrees, and anticipates that mall schemes will become, "all day entertainment locations".

Balan forecasts that once consumer sentiment and the economy recover, the speed of development in secondary cities will "surprise everyone".

New mall models are predicted by Acharya, including micro-malls in city centers, hyper-malls located outside city centers and specialist malls catering for specific market segments.