Retail has emerged as one of the key drivers for warehousing demand in India over the last five years, with its share increasing from 8 percent in 2019 to 13 percent in 2022, according to a report by CBRE.
The report, The Three-mile Tale: Dissecting The New-age Retail Supply Chain Network, launched at the CII Realty 2023 conclave in New Delhi said that the share of the retail segment in the warehousing sector touched 9 percent in the first half of 2023.
As per the report's findings, the collective warehousing demand for e-commerce, FMCG, and retail sectors accounted for nearly 27 percent of the total demand from 2019 to H1 2023.
Within the retail segments, hypermarkets (51 percent) and fashion and apparel (32 percent) companies dominated the share in warehousing demand.
CBRE said the retail segment is expected to strengthen in the second half of 2023 backed by an anticipated increase in consumption during the festive season.
Also read: Industrial and warehousing sector touches 22.4 million sq ft of leasing in H1 2023, up 7%: Savills
“Evolving consumer preferences and expectations coupled with a shift in the social fabric, rapid technological advances, complex trade dynamics, and stricter compliance regulations, including sustainability, are key aspects creating a stir in the retail segment," Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE, said.
Retail players are trying to stay agile and nimble by reassessing their supply chains, which has led to a rise in demand for warehouse leasing and advanced warehousing solutions, he added.
Retail segments projected to grow
The report added that the fashion and apparel category is expected to expand by over 12 times by 2047 and the FMCG category is projected to grow nearly six-fold by 2027.
To support this expansion, the report said that temperature-controlled storage facilities will be essential to maintain product quality. Additionally, automated First-In-First-Out (FIFO) rotational methods within warehouses will be crucial to prioritise the sale of older products, minimising wastage.
Further, the report predicted that the consumer electronics category will grow 1.5-fold by 2027.
Rami Kaushal, Managing Director Consulting & Valuation Services, India, Middle East & Africa, said that the massive boom in Q-commerce for quick delivery of food, goods, and services, coupled with the rapid penetration in e-commerce, especially expanding to tier 2 and 3 cities, has led to a surge in demand for retail warehouses.
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