Hyderabad has huge potential for modern retail: Knight Frank

Knight Frank India today launched the first edition of its report on Hyderabad retail sector titled – Hyderabad Retail: Unlocking the Potential. The reportlooks into the emerging trends in multi-channel retailing, shopping centers and new formats. As part of the city-level analysis, the report estimates the size of the retail market and the growth opportunity for modern retail in apparel, F&B, Entertainment and Daily Needs (supermarket/hypermarkets).

Key Highlights:

  • The city’s annual consumption expenditure stands at INR 1,251 bn, making it the fourth largest market in the country after the MMR, NCR and Bengaluru.
  • Hyderabadis far ahead of Pune and Chennai in terms of retail expenditure, which includes spending on apparel and footwear, F&B, home and lifestyle, electronics, watches and jewellery, entertainment and daily needs. In 2015, the annual consumer spending on these retail categories stood at INR 384 bn.
  • Despite having a sizeable customer base with high consumption and retail expenditure, modern retail penetration in Hyderabad stands at a meager 9%- the lowest among top seven cities in the country. This reflects a big opportunity for the growth of modern retail in the city. Hyderabad lags behind in modern retail expenditure, which stands at INR 36 bn.

  • Modern retail in Hyderabad expected to grow at a CAGR of 23% between 2015 and 2019 from Rs.36 bn to Rs. 86 bn.
  • It is estimated that by the year 2040, modern retail penetration in Hyderabad will increase to 50% from the current 9%, with both brick-and-mortar and e-tail formats contributing significantly to the growth.
  • Locations like Abids, Punjagutta, and Begumpet in Central zone offer the highest opportunity for modern retail across all product categories. Uppal in the East is a location that is likely to experience modern retail growth.

Dr. Samantak Das, Chief Economist &National Director of Research, Knight Frank India said,

“Hyderabad at 9% has the least penetration of modern retail compared to the top seven cities in India. This in itself is a big opportunity for retailers and real estate developers and we estimate that modern retail in the city is expected to grow at a CAGR of 23% between 2015 and 2019 from Rs.36 bn to Rs. 86 bn. The manifestation of modern retail can be accelerated by new mall development, transformation of existing traditional high street shops into modern outlets and increasing e-tailing activities.”

Aditya Sachdeva, Director, Retail, Knight Frank India said, “The modern retail growth in Hyderabad will be propelled by both brick-and-mortar and e-tail formats and we have estimated the modern retail penetration to 50% from the current 9% by 2040.”

As per Vasudevan Iyer, Director, Knight Frank, Hyderabad, “Hyderabad has been witnessing a sizeable customer base and that drives the success of retail developments in Hyderabad. It has emerged as a sought-after retail market in the last couple of years, with a number of national and international giants like IKEA desiring to set up stores in the city.While there is great potential for the overall growth in the brick and mortar retailing methods, proper implementation of state level policies is a must to make retail business conducive.”

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