A healthy growth in passenger traffic and transport infrastructure bodes well for India's transit retail segment. According to a recent report - Catch them Moving - published by Knight Frank India, the transit retail segment in the country is likely to grow from current $2.2 billion to $21.6 billion by 2030. The report projects healthy growth across various transport hubs, including airports, highways and bus stations, metros and the railways over the next decade.
"India is going through an infrastructure revolution. The government's focus on developing and modernising the transport modes including airports, railway stations, metro and highways is opening up unprecedented opportunities for the organised retail segment in the country," said Shishir Baijal, CMD, Knight Frank India. The report states that while the retailing potential is best tapped at airports, it is still at a nascent stage for other modes like metros, railways, highways and bus stations. A large part of the retail opportunity at transit hubs is currently untapped due to lack of retail infrastructure at these nodes, the report highlighted.
According to the report, the proposed metro network and mega transformation of Indian Railways opens up retail opportunity to the tune of $7.5 billion by 2030. India is expected to see a total development of 1,000 km length of metro development that opens opportunity for retailing to the tune of $5.6 billion by 2030. There are about 500 metro stations across India with an estimated retail market size of $0.6 billion as of 2019. Similarly, based on the commercial potential of the 400 redeveloped railway stations across India, it is estimated that the annual passenger traffic will increase to 18.2 billion by 2030, translating into a retail opportunity of $1.9 billion by the year from $0.1 billion in 2019.
The large retail potential translates into lease rental opportunity of $1 billion, which is estimated to grow to $3.2 billion by 2030. The development of retail infrastructure at key transportation nodes through a public private partnership can present huge opportunities to operators and retailers to monetise the potential of guaranteed footfalls with 'wait time'. According to Baijal, considering the current lease rent opportunity, the government can potentially monetise these transit-oriented retail assets to generate funding to the tune of $10 billion. Such monetisation, he added, will reduce dependencies on passenger tariffs and develop the retail eco-system for a largely unexplored territory, besides opening up a new revenue stream for future infrastructure developments.
While the advent of transit retail will provide retailers with captive audience that is willing to spend, the transport hubs will have to create appropriate space with prominence and visibility, smart revenue models and correct product mix to ensure that retailers see value in their presence in a transport hub.