What’s Happening?
According to real estate investment firm CBRE, retailers are expected to lease over 5.1 million sq. ft. of space in 2022. The previous two years’ combined figures stood at 5.9 million sq. ft.
March has seen a sharp recovery, with most companies surpassing the pre-COVID levels owing to strong demand driven by the opening up of offices and schools and increased demand due to the wedding season.
Which Firms Are in the Race?
In the company’s Q3 FY22 earnings call, Shoppers Stop CEO Venugopal Nair said that the retailer would expand stores into tier-2 markets with an excellent opportunity to grow. The company is opening 8-10 stores/year on average.
The departmental store chain Lifestyle International aims to increase its store count in high double-digits this year. This will be the company’s fastest expansion in the past five years as sales improve each month!
What Lies Ahead?
After the revenues of brick and mortar retailers suffered a 40% decline in FY21 because of COVID-19, the segment is expected to grow by 20-25% in FY22, driven by a strong demand despite the third COVID-19 wave.
Also, an increase in retail rentals is seen as leasing space is inching back to pre-pandemic levels.
Increased demand at retail stores will lead to higher sales and, in turn, higher bottom line figures, provided everything else remains favourable for them. This can be good news for investors in these companies. After two dull years, they will have something to cheer for!
