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Hurdles to retail spread in east

Calcutta, Dec. 18: Organised retail in the east has fallen behind the rest of the country because of limited investments in building a quality retail environment and inadequate government support, particularly by the states.

According to Jones Lang LaSalle Property Consultants, sops and incentives such as tax rebates can trigger a retail boom in the east.

“We have not seen big investments in building a quality retail environment in the east. We have not marketed east India as a whole. It is not that the size of the market does not exist. It may not be as big as in New Delhi or Mumbai. It is not very small, too,” said Pankaj Renjhen, managing director (retail services), Jones Lang LaSalle Property Consultants (India) Pvt Ltd.

“There is a need to provide quality environment to come and shop. The environment provides a stimulus to buy. There has not been sufficient investments into building a quality retail stock at the right locations,” he added.

According to Renjhen, any area with a million population can be considered a big market. He was speaking on the sidelines of a retail conference.

Brands expanding in the country primarily focus on the west, north and south and then tap the adjoining markets; for most, the eastern region still means only Calcutta.

“Respective governments are not doing enough to push it. East is still an unexplored part. States need to realise the employment generation capability of the retail sector. They should give more sops and incentives, auction more land to build shopping centres at reasonable conditions. The perception that there is a big market beyond Calcutta is not there,” he said.

Steep land prices, high interest rates and returns on properties being less than the interest paid are primary concerns.

The government’s intervention in rationalising land prices is essential.

Some of the established malls are witnessing rising vacancy levels with developers not paying attention to the design and the catchment area. Retailers and developers need to chalk out a profitable and workable retail model.

Renjhen said around 650 malls were scheduled to come up in the country between 2007 and 2014, but only about 300 have started operations.

This can be attributed to the economic slowdown, deficient productivity and limited cash flow of the developers.

While the eastern region has around 44 malls, Mumbai alone has close to 50.

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