With the construction of new highways, the increasing affordability of cars, and the soaring rental prices on high streets, it is natural for retailers to reconsider their location strategies
Ten years from now, highways will contribute to a sizeable turnover to retailers than highstreets, up significantly from a minuscule contribution now. In recent years, a significant shift has been observed in retail. The high street—a traditional hub for shopping and food—has been facing challenges as more and more businesses are considering a move to highways.
In the last decade, the Government of India has constructed over 1,00,000 km of roads/highways and shall continue to do so, for many years to come. As per the data released by the Ministry of Roadways in India, the National Highways (NH) since 2014 have almost doubled.
With the construction of new highways, the increasing affordability of cars, and the soaring rental prices on high streets, it is natural for retailers to reconsider their location strategies. This shift raises the question: will retail shift from highstreets to highways?
What’s driving the shift
One of the primary drivers behind this shift is the rise in the number of highways being developed. Governments and private investors alike recognize the need for efficient transportation networks to connect cities and towns. As a result, highways are becoming more widespread, providing increased accessibility and convenience to consumers.
This development has led to a surge in the number of cars on the road, with more people opting to travel through highways for shopping and leisure. Most families plan a weekend outing these days for distances not over 500 km and prefer to drive in their own cars, many times with small groups of friends and family.
Moreover, the decreasing costs associated with owning a car have also contributed to this trend. In the past, car ownership used to be a luxury for a select few. However, with advancements in technology and increased competition, cars have become more affordable and accessible to a wider audience. In India, anyone who has Rs. 1,00,000 can now own a pre-owned car, the cheapest in the whole of Asia. This democratization of car ownership has created a larger consumer base and has led to a greater demand for retail establishments near highways.
Another significant factor propelling this shift is the escalating rental prices on high streets. Rents at some high streets are in the range of Rs 1,000 – Rs 2,000 per sq. ft. per month, including in some small cities and towns Retailers have to maintain a certain cost of occupancy (COO), to ensure their profitability. As more businesses compete for limited space on high streets, with absolutely nil parking or amenities, landlords take advantage of the situation by raising rents to maximize their profits. This trend has made it increasingly difficult for retailers to establish a presence on high streets, especially for smaller and independent businesses with limited budgets.
In fact, the high rentals have put pressure on retailers to increase their margins, which is impacting their affordability. Consequently, retailers are exploring alternative options that offer more feasible rental rates, which highways can provide.
The highways advantage
The convenience factor associated with retail establishments on highways cannot be overlooked. Highways are designed to provide easy access and ample parking facilities, ensuring a hassle-free shopping experience for consumers.
This ease of access and parking greatly appeals to customers, who are often deterred by the limited parking spaces and congestion found on high streets, not to forget the dust and filth around. Additionally, retail establishments on highways are often part of larger Way Side Amenities (WSA), offering a variety of amenities and services in one convenient location.
The Challenges
While the shift from high streets to highways seems logical and practical, it does come with its own set of challenges. One major concern is the loss of the traditional charm and character associated with high streets. High streets are often embedded within the history and culture of a city or town, attracting tourists and offering a unique ambience. It would be unfortunate to see the gradual disappearance of these iconic locations, which have been the heart of retail for centuries.
Moreover, this shift also raises questions about the impact on local communities. High streets typically serve as centres of social interaction, where residents and visitors engage with each other and foster a sense of community. Retail establishments on highways, on the other hand, may lack this interpersonal connection, potentially diminishing the vibrancy and spirit of a local community.
In conclusion
Retail is indeed shifting from high streets to highways. With the construction of new highways, the affordability of cars, and the rising rental prices on high streets, businesses are compelled to explore alternative locations. The increasing accessibility, convenience, and affordability associated with retail establishments on highways make them an attractive option for retailers and consumers alike. However, it is crucial to consider the potential loss of charm and community spirit that high streets offer. Striking a balance between progress and preservation will be essential to ensure the retail sector evolves while maintaining the unique character of our cities and towns.
Will the smart retailers, look at this trend and take advantage to gear up their future store locations on highways, or wait for others to take the lead and then follow suit? Highways are the future of not only food, restaurants, highway services, retail stores, ATMs and petrol pumps but also entertainment and games.
