Retail rush: India's store boom defies urban slowdown

Despite a slowdown in urban consumption, retail giants such as Aditya Birla Fashion and Retail Ltd and Tata Group-backed Trent Ltd are pressing ahead with plans to expand their physical footprint.

- Suneera Tandon

Store additions are projected to grow by 18-20% this fiscal year, with a slight increase anticipated in FY27, according to property consultancy Knight Frank India. In comparison, FY24 saw 9-10% growth, while the previous year reported 14-16%. Demand for real estate will be led by large organised retailers. Meanwhile, tier-two and tier-three cities are expected to drive growth in retail occupancy, while the top seven cities will see availability of Grade A mall supply.

Experts say retailers tend to plan store networks with a 10-20 year horizon, locking in prime spaces in anticipation of demand increasing. While discretionary spending, particularly in urban areas, has slowed, consumption is expected to recover aided by a good monsoon, lower inflation, and the recent income tax cut.