Everyone is talking big town. But the gaze of the organised retail industry is penetrating into secondary locations. More than 13 million square feet of development is taking place in such cities, consuming around 9% of the entire retail industry.

More than 25% of the retail industry will be located in secondary cities by 2007, which will see an investment of Rs 15,800 crore. Cities like Ahmedabad, Chandigarh, Ludhiana, Jaipur, Indore, Lucknow, Baroda, Pune and many more are seeing frenzied development.

?Retailscape is rocking and several new malls are coming up across the metros. But the question of viability and sustainability is beginning to surface. A large number of developers and retailers are increasingly looking at regional exposure to reduce their single city risks,? Vivek Kaul, associate director, and head of retail and leisure advisory, Jones Lang LaSalle, told DNA.

Most players with national aspirations are actively looking for quality opportunities in secondary and tertiary locations in order to capitalise on cheaper land values, thereby offering potential higher returns on investment as well as gaining from first mover advantage. Most of these malls will be operational by 2007, said Chanakya Chakravarty, joint managing director of global real estate consultants Cushman & Wakefield India.

Most large developers and retail giants have already taken position in Tier II cities. To name a few, MGF is concentrating on Jaipur while DLF has undertaken projects in Chandigarh and Cochin. Ahmedabad is keeping the Thakkers and Sarda Group busy.

In fact, in Chandigarh, the 123-acre Chandigarh Technology Park has acted as a catalyst, triggering huge investment opportunities for retailers and private developers. Ebony, Nirulas, Fun Republic are waiting in the wings.

To the west, in Ahmedabad, mall mania is at a fevered pitch. A score of properties, each boasting Rs 20-50 crore of investment are in various stages of development. The total investment in malls in Ahmedabad alone would amount to Rs 700 crore over the next couple of years, said Anuj Puri, managing director of property consultants Trammell Crow Meghraj.

At Pune, Pantaloon Retail India moved in early with its Central Mall but other large-format stores like Shoppers? Stop and Piramyd are eying opportunities, the latter especially through its TruMart supermarket chain. ?Around 5 million square feet of built-up retail space is in the offing in Pune,? said Puri.

Move down a little towards central India and the mallscape is burgeoning on MG Road, Palasia, and Race Course Road in Indore. Globus has already set up shop while lifestyle stores like Nike and ITC?s Wills Lifestyle are making their presence felt.

?Retail percolation to smaller cities happened faster in southern India compared to other regions. Retail organisations like Foodworld, Subiksha, Vivek?s, Margin Free, Trinethra, Witco, Nalli?s, etc, have spread strategically into tertiary towns like Coimbatore, Madurai, Vizag etc. The same trend is now being replicated fast across India,? Gibson Vedamani, CEO, Retailers Association of India (RAI), told DNA.

Source : Madhumita Mookerji, DNA Finance