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Rift in the Retail Space of Pune City: A GIS Analysis  Dr (Mrs.) Sulochana Shekhar Lecturer Department of Geography University of Pune India sulogis@gmail.com Abstract Pune, one of the most vibrant markets of Western India has been experiencing a retail boom since the last 2-3 years. It has been ranked amongst top eight cities in India on the retail front. The inflow of IT/ITES companies has boosted the real estate sectors, with retail real estate being in the forefront. Established retail brands have already made a foray into this market in the last few years. According to the recent research, 4 million sq.ft built up retail space is in the offing in the Pune real estate market in the next three years. 5 million sq.ft is in the planning stage and will come up by 2010. Despite the recent developments our retail real estate experts feel that the organized retail market in Pune is still at the nascent stage. The growth of retail developments needs to be controlled in order to be sustainable. Also at the current fast pace of development, some observers feel that the supply may outstrip demand in future and result in many retail outlets lying vacant or getting lesser footfalls as the catchment’s area will get divided because of one retailer eating into the others’ market share. In this juncture, the state of the art technology Geoinformatics can play an imperative role in Business management. The use of information and communications technology and Business process management is becoming a core competency that every business must have in order to function in today’s global and highly competitive business environment. Retail real estate sector in Pune has a huge development potential. Hence an attempt has been made to identify the retail spaces of Pune and how far they are able to accomplish in their target. By using LISS IV image and Arc View Network analyst, the exercises have been carried out to find out rift in the service area which needs to be looked at. Only when these are taken care of, the development opportunities in the retail sector in Pune will be really fruitful. Introduction: India is one of the most attractive destinations for retailers from all across the globe. Cities are in the process of adapting new economic realities. The Indian retail industry has seen phenomenal growth in the last five years (2001-2006) and organized retailing has finally emerged from the shadows of unorganized retailing and is contributing significantly to the growth of the overall retail sector, according to “Booming Retail Sector in India” a new market research report by RNCOS. The Economic Census shows significant shifts in the country’s urban economic structure. Services contributed as much as 68.6% of overall average growth in GDP in the last five years between 2002-03 and 2006-07. As a result in 2006-07 while the share of agriculture in GDP declined to 18.5%, the share of industry and services improved to 26.4% and 55.1% respectively (Krishna A Goyal, 2006). This confirms that city-level economic development is slowly shifting away from industrial activities to more sophisticated knowledge base systems. Several cities have built on newly developed technologies to emerge as major financial services centers. The post-1991 period is marked by a significantly slower growth of formal sector employment. In line with the global trends, much of the new employment generation (73%) has taken place in the services sector. Compared to a 45 per cent increase in aggregate urban employment during 1990-98, employment in manufacturing rose by 22 percent. At the same time, retail trade has registered an extraordinary growth of over 180 per cent, with the result that from a relatively small share of urban employment in 1990, the share of retail trade has risen by nearly 25 per cent in 1998. In terms of the competitive global economy, locational characteristics are perhaps the most important factor in the investment decision. The forces which shape and determine the organization and allocation of space in cities are necessarily constrained by the existing built environment. The development and the flexibility with which changes can be affected in the built environment are crucial to the relative success or failure of the competitive position of cities in the emerging global economy. Cities in India are in the midst of restructuring space, in terms of both use and form. Residential areas in the central districts and sub-central of such cities as Delhi, Bangalore, Hyderabad and Pune are being transformed into commercial spaces. Shopping malls have sprung up replacing old the pattern of retail trading. Commercial and office space has been added to accommodate the branch offices of multinational and domestic companies and financing institutions. A strong economy, favorable, demographic, rising wealth levels and the rapidly changing life styles and consumer aspirations of an ever growing middle class all of these are reasons for the organized retail boom sweeping the cities and towns of India. Particularly foreign companies entered India because of its large urban middle class (Aiyar, S, 2003). There were around 90 malls (2006) totaling 9 million sq ft across seven cities. Other than Delhi and Mumbai, Pune, Bangalore, Kolkata, Hyderabad and Ahmedabad all have significant mall development in the pipeline (Times of India, 21 July, 2007). Need for Analysis: “Retail is a tough business and requires a lot of rich knowledge of consumer behaviour, which, in turn calls for experience and expertise, Plus, building business processes for each vertical as well as a supply chain isn’t easy,” (FE, 2008). Retail marketing has undergone a sea change in the last couple of years. Indian cities are witnessing a paradigm shift from traditional forms of retailing into a modern organized sector. Driven by changing lifestyles, strong income growth and favorable demographic patterns, Indian retail is expanding at a rapid pace (Oracle.com).In a market where brands are proliferating, shelf space getting rare and the customers multiplying, it has become imperative to assess whether the sales team and distribution network cover all the outlets in the city in an effective manner. Particularly in a situation where the workers layoffs are the latest in a series of setbacks faced by the organized retail sector as the global meltdown affects the Indian economy. Despite the recent developments the retail real estate experts feel that the organized retail market in Pune is still at the nascent stage. The growth of retail developments needs to be controlled in order to be sustainable. Also at the current fast pace of development, the supply may outstrip demand in future and result in many retail outlets lying vacant or getting lesser footfalls as the catchment’s area will get divided because of one retailer eating into the others’ market share. Indeed this is the idea induced to investigate the share of retail outlets and brought out some interesting inferences based on the GIS analysis. The future success of retail, real estate, and restaurants will be determined to a large degree by the competitive advantages of investing in and implementing smart technology like GIS that will give this competitive advantage. In today’s fiercely competitive environment, retailers must use every advantage to acquire and retain customers, plan market expansion and contraction, locate profitable sites, stay abreast of changing consumer tastes, and act faster than the competition. Study Area: For this retail analysis, Pune city has been taken as study area. Pune is experiencing a retail boom since the last few years. With an increase in GDP, income levels and higher disposable money in the hands of the middle class, there is a huge market to tap. Established retail brands have already made a foray into this market. The mall culture has come into Pune in a big way and Pune is going to be the next mall-capital of India. International Convention centre, Central Mall from Pantaloons, Shoppers’ Stop, Nucleus mall, Kakade Magnum mall and BigBazar are to name a view. According to the recent research, 5 million sq.ft built-up retail space is in the offing in the Pune real estate market. Last year has seen a drastic transformation in the brands/Retail occupier typology in Pune with well-known national brands not only entering but quickly expanding with multiple outlets into the Pune retail market and making Pune as a Retail City. The esteemed Business Magazine “Forbes” has rated Pune as the 3rd best Business Hub. Even though, Pune is the eighth largest city in India, it has the sixth largest metropolitan economy and the highest per capita income in India, with the least income disparity between the rich and poor (Indian Express, 24 March 2007)(Figure 1).  Figure 1: Study Area IRS P6 LISS IV image (2004) was used as a base map and it was complemented by Wikimapia Images of 2008 (a kind of collaborative mapping) to prepare the database. Different kind of retail activities such as Departmental stores of popular brands, shopping malls, Pharmaceuticals etc have been taken as samples and their service area was found out by using Network analysis module. While selecting samples the following points had been kept in mind in order to understand the rift in the retail service area. Based on these assumptions, the data was collected and added as attributes for developing the database. By using GPS, the retail outlets data was collected and mapped as point theme in Arc view 3.2a environment. The road network was digitized in the Arc View as a linear theme and by using Network analyst extension in Arc view, the analysis was carried out. Results: Geography is critical to the commercial real estate market. A less than optimal business location can make or break a business, no matter how good the service or product. An analysis of the amount of retail space, by category, that is supportable in a given location, based on market factors and trade area expenditure potential for each retail category; how much space is ultimately supportable and how should it be staged to come online. In that the most notable thing is Shops serve a “certain area” around their location. When the “certain area” (trade area/ retail space) is divided by other competitors, that will obviously affect the trade of the particular shop. In order to understand the retail space of a particular shop, the retails maps are extremely useful. Maps unlock many of the answers deep inside the database and help discover its richness. With finite space available and fewer opportunities for organic growth, Retail map helps retailers understand their existing range and space utilisation in order to identify areas for improvement. Retailers are often concerned with a truly profitable location for their stores, especially when land rent is so high in this highly urbanized commercial city. With the construction of manylarge shopping plazas in recent years, many retailers receive long lists of vacant stores from the land developer everyday. For retailers’ consideration, the different store locations will greatly affect their sales performance even if these locations are on the same level inside the same plaza. Retailers who select a good location enhance the chances of success. There are indeed many factors affecting the success of retail location. In particular the competing and complimentary effects of other shopping centers located in the same service area. Although there are also large domestic retail companies, the proportion of retail chains was only around 3% in 2004 and 96% of this organised retail is clustered in the ten biggest cities. In some locations supply might rise faster than demand, as a result of rising predatory competition. This could occur shortly in the suburbs of the larger cities. These locations are intended to cater to the middle- and upper-middle classes, so that they can shop near to where they live. Locations that are currently well-accepted could also suffer from competition in the future. This was the fact confirmed in this paper. For this analysis Departmental stores of three popular brands have been taken and for analysis purpose they have been named as Shop A, B and C. The three shops are located in Aundh, which is one of the fast developing residential areas in Pune. Very close to IT park, concentration of upper middle class people are the factors attracted these three brands to this location. All these three branded shops are selling same time of goods including fresh vegetables, Non- vegetarian items, groceries and other household items. The all three have entered in this retail activity very recently. With the help of Network analyst Module, the service area of these shops was calculated. First two of those three shops, located very closely within 500m service area were taken for analysis. Which shows that 44% of Shop ‘A’s service area is overlapping with Shop ‘B’ and Shop ‘B’s 70.4% of service area is already under the service area of shop ‘A’.( As shown in figure 2) 
 Figure 2: Service Area analysis of Shop A and B (500m) Again out of these three shops, Shop A and Shop C also have share in their service area. The 1000m service area was shared almost half by shop C i.e., 51% and 55% of Shop A. This shows that all three shops are having a rifted retail space. They have to be more cautious and plan very carefully to attract the consumers to their shops. Otherwise they have to face lesser foot falls in near future.( As shown in figure 3)  Figure 3: Service Area analysis of Shop A and C (1000m) This analysis has been verified at ground level by visiting these three shops personally and interacting with the customers as well as shop keepers. 
 Figure 4: Service Area analysis of Shop D and E (500m) In another sample study, two popular shopping malls of city have been taken for the analysis. The two are located in a busy location with lots of varieties for shopping. When drawing the service area of shop D and Shop E for 500m. It was found that 30% of Shop D’s service area was taken by Shop E. At the same time Shop E shares 31% of its service area with Shop (As shown in figure 4)  Figure 5 :Service Area analysis of Shop F and G (1000m)  Figure 6 :Service Area analysis of Shop H and I (500m)  Figure 7 :Service Area analysis of Shop J and K (500m) Conclusion: “GIS, a Tool That Means Business. Approximately 80 percent of all business data are related to location. No matter what industry you are in, business success means making wiser decisions faster than your competition. Being able to understand the market and obtain information quickly so you can take fast action is key. The intuitive power of maps often reveals trends, patterns, and opportunities that may not be detected in tabular data alone. Maps are the key to success in business.” (www.esri.com). The retail space analysis in GIS obviously proved this fact. The results are showing that Pune is attracting more and more retail activities of popular brands; MNCs which will further lead to more rifting and divide the catchment area. Using State of the art technologies not only helping in site selection and store the customers details, maintaining sales data base but also help to be aware of the competitors and try to improve the situation before it goes worse. In today’s fiercely competitive environment, retailers must use every advantage to acquire and retain customers, plan market expansion and contraction, locate profitable sites, stay abreast of changing consumer tastes, and act faster than the competition. GIS is one of the smart technologies that will give this competitive advantage and to help companies achieve these goals. Reference: http://www.gisdevelopment.net/application/business/bus0014.htm http://www.rncos.com/Report/IM112.htm, http://www.financialexpress.com/ http://www.oracle.com/applications/retail/mp/space_opt.html http://www.indianmba.com/Faculty_Column/FC812/fc812.html http://news.indiamart.com/news-analysis/foreign-banks-eye-re-14715.html http://www.commercial.exclventures.com/retail-chains-brand-stores.asp http://www.retailmap.com/visual-reviews.htm http://www.retailfocus.com/services.html#tenant#tenant http://www.gisdevelopment.net/application/business/bus0019.htm |