Hypermarkets in malls are reducing their space, with some even closing down, as sales have dropped due to the growing popularity of quick commerce apps like BlinkIt and Zepto, according to three mall operators.
One mall operator mentioned that Spar India, part of the Landmark Group, has downsized stores and shuttered some locations in Delhi-NCR and Bengaluru due to declining sales. Another operator noted a similar trend with Reliance Smart Bazaar, experiencing a roughly one-third decrease in sales. Additionally, Deerika Hypermart, with outlets across Delhi NCR, has closed three stores. Despite inquiries, Reliance, Spar, and Deerika remained unresponsive.
According to Muhammad Ali, CEO of Retail at Prestige Group, impulsive purchases at hypermarkets have declined, with people now only purchasing essential items.
He said, “By reducing space, companies save on rent while sales remain the same.”
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The Prestige Group manages Forum malls located in southern India.
According to a retail industry expert, buyers are no longer willing to tolerate the inconvenience.
The person remarked, “Who will endure traffic, parking, and queues for billing? Consumers’ shopping habits are evolving rapidly.”
Hypermarkets were originally envisioned as the main attractions in malls, drawing in crowds. However, this trend has changed. Numerous companies have opted to surrender 15-20% of the leased space in order to reduce rental expenses.
It’s reported that dining has become the new attraction factor.
“Restaurants are now the main drivers of foot traffic for malls and have taken on the role of new anchors,” stated Harsh V Bansal, co-founder of the Unity group, which oversees operations of over half a dozen malls in Delhi and Punjab. “With various delivery apps offering instant service, shoppers are hesitant to visit malls for grocery shopping.”
According to one mall operator, a hypermarket that previously recorded sales of INR 6 crore per month has now decreased to INR 3-4 crore. Another mall operator reduced the size of its hypermarket from 60,000 sq ft to 40,000 sq ft.
“Deerika hypermarket has temporarily closed three stores in Delhi, Ghaziabad, and Faridabad,” stated Abhishek Bansal, Managing Director of Pacific Malls, which manages multiple malls in the NCR region. “In general, the category now occupies less space compared to before.”
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The Lulu Group from the UAE, recognized for its chain of hypermarkets, is expanding its operations by positioning its outlets as family-friendly destinations in Kerala and Uttar Pradesh. The company is contemplating the development of small-scale malls with a focus on hypermarkets in cities such as Prayagraj, Gorakhpur, Kanpur, and Varanasi.
In tier 2 cities, experts noted that hypermarkets are still regarded as destinations, but the trend has reversed in metro cities.
The same-store sales growth of the grocery leader Dmart was also affected by lower-than-anticipated festive season sales in non-FMCG (fast-moving consumer goods), alongside significant inflation within FMCG in agricultural staples.
As per the Boston Consulting Group, a deceleration in growth was evident across sectors in recent quarters, with grocery experiencing the most pronounced impact. Sales slowed to 16% in the March quarter from 23% in the corresponding period of the previous year.
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