E- comm poised to cross USD 100Bn mark while malls continue to suffer: Study

A slowdown in consumer sentiment, coupled with online shopping that provides convenience of delivery at door steps, have led to troubles for the shopping malls in India, which are suffering 20-25% vacancy rates and 30% drop in rentals in the last one year, according to latest findings in an ASSOCHAM-PwC report.
The Indian trend mirrors the declining number of footfalls in retail space in over 200 shopping malls across the United States, UK and other countries. In the US, malls are facing 46 percent vacancy rates whereas malls in UK got impacted by 32%, the study reveals.
Meanwhile, the Indian e-commerce industry appears to be unaffected by the demand slowdown and is likely to clock a compounded annual growth rate (CAGR) of 35 per cent and cross the USD100-billion mark in value over the next five years, the study said. It valued the e-commerce industry in India presently at USD17 billion.
Additionally, the e-commerce industry is estimated to see a 72 per cent increase in the average annual spending on online purchases per individual in 2016 from the current level of 65%, the study said.
“It is true that the online shopping has shown handsome growth while the brick and mortar malls are witnessing slowdown. It looks that the growth in e-commerce looks impressive because of quite a low base and increasing penetration of internet,” D S Rawat, ASSOCHAM Secretary General said.
“In India, sales in shopping malls have dipped by 25-30 per cent and footfalls by 15 to 20% compared to the same period last year,” the study notes. There were around 50 operational malls in 2005, a number that rose to 610 in 2015 in top ten cities. Additionally, with improvement in infrastructure such as logistics, broadband and internet-ready devices, there is likely to be a significant increase in the number of consumers making purchases online, the study said. It estimates around 65 million consumers in India to buy online in 2015, as against around 40 million in 2014.
Mobile technology is also having a huge impact on brick and mortar retail. Amazon recently reported that roughly 8-10% percent of their total sales are being generated by mobile devices, and expect this trend to continue upwards, highlights the study.
The study also estimated that about 45% of malls in India are expected to be converted into non-retail space in the next 15 years and replace d by by movie theatres, restaurants, discount retailers etc. As per the report, the construction of several malls have significantly been delayed and withdrawn due to lukewarm response from retailers.
The biggest shopping mall can feel like a pretty lonely place, majority of retailers said that they are holding back on new store openings and focusing on existing stores.