Retailers in India are the most aggressive in Asia in expanding their businesses, thus creating a huge demand for real estate.
Their preferred means of expansion is to increase the number of their stores in a city, and also expand to other regions, revealed the Jones Lang LaSalle third annual Retailer Sentiment Survey-Asia.
The survey, carried out in three sub-regions in Asia (India, greater China and South East Asia) involving nine key markets, revealed that India topped the chart with 45 per cent expanding rapidly followed by Greater China at 27 per cent and other South East Asian capitals at 6 per cent.
The survey is likely to have an impact on investors who are looking for more out of their current premises. This covers both management and pricing.
For retailers, it means looking at strategies that include working with landlords over a portfolio of properties at suitable locations.
Retailers in India now have more ambitious plans than that they did a few years ago and a majority of the respondents are planning to expand within the current city, and a similar percentage is willing to open new stores in other cities within the country.
Another mode of expansion has been mergers and acquisition (M&A). Retailers see this as one of the ways to achieve economics of scale, spread out support resources bet
ter and take advantage of more locations
in
short time.
On trading prospects, again retailers in India are bullish compared to other Asian capitals and are particularly optimistic about the impact of strong economic growth, spending levels and tourism on their performance.
The survey also revealed that almost two-thirds (63 per cent) of the respondents expect that their overall trading will improve over the next 12 months, and only 5 per cent expect a weakening. While retailers across the region are upbeat about their performance expectations, some categories are more optimist that others.
The most confident are home and interior retailers and sports apparel/equipment retailers, followed by department stores and jewellery and food retails.
Asian retailers are more guarded about their expectations of profit than revenue. Slightly less that half (46 per cent) expect an improvement in profit margins.
But an overwhelming majority (95 per cent) of Indian retailers believe that their turnover will improve this year and half of them are expecting improved profit margins.
Major concerns are fuel prices, occupancy costs and competition.