In recent years, India has witnessed a sharp increase in the demand for retail stores, even as the broader urban economy shows signs of slowing down. Retail companies, developers, and property consultants have noted a significant expansion of shopping spaces, especially in urban centres, driven by consumer demand and strategic investments.
According to market trends, physical retail stores continue to be an important part of India's shopping landscape. Real estate consultancy firms such as Knight Frank and JLL India have reported a steady rise in retail leasing activities across the country. For instance, data from Knight Frank shows that physical stores saw a 46 percent increase in leasing in 2024 compared to the previous year. This trend appears to be resilient despite concerns related to inflation, reduced urban income, and other economic slowdowns.
Retailers are focusing on expanding their presence across Tier 1, Tier 2, and even Tier 3 cities. Major brands such as Adidas, Puma, Reebok, and Skechers are increasing their footprints. The footwear brand Bata, for example, opened over 200 stores in the previous year and is aiming to open 100 more in the current year. Similarly, wellness and fitness chain Cult.fit has expanded its network of gyms. Other companies like TCNS Clothing Co. and Aditya Birla Fashion and Retail Ltd are also expanding their stores under brands like Pantaloons and Lifestyle.
One key factor driving this expansion is the steady demand for branded physical stores among Indian consumers. Experts suggest that while online shopping continues to grow, many shoppers still prefer visiting stores to physically inspect and experience products before making a purchase. The touch and feel factor remains an important element of the retail experience.
Real estate developers are responding to this demand by increasing investments in shopping complexes and malls. New malls and shopping centres are being developed in both metro cities and smaller towns. According to JLL India, nearly 6.5 million square feet of retail space was leased in 2024, with expectations of similar growth in 2025.
Cities such as Delhi-NCR, Bengaluru, Hyderabad, and Pune are leading the retail leasing activities. In Delhi-NCR alone, retail leasing rose by over 60 percent in the past year. Several large shopping centres are being constructed or expanded to accommodate the growing number of retail tenants.
Despite an urban economic slowdown, experts believe that the retail sector remains resilient due to strong consumer demand and the rise of organized retail. Organized retail refers to large retail chains and branded stores, which are gradually replacing smaller, unorganized shops in many parts of the country. This shift has created new business opportunities for developers and investors in retail infrastructure.
Another reason behind the rapid growth of retail spaces is the diversification of product offerings. Retailers are not just focusing on clothing and footwear but also expanding into wellness, health, food, beauty, electronics, and home essentials. This variety has helped draw a broader customer base to physical stores.
The emergence of new business models is also contributing to the sector’s growth. Many retailers are adopting an omnichannel approach, where physical stores are integrated with online platforms. This means that customers can place orders online and pick them up at the store or try products in-store before buying online. This hybrid model is gaining popularity as it combines convenience with the traditional shopping experience.
Analysts believe that the trend of expanding physical retail stores will continue in the coming years. While online shopping remains important, the role of brick-and-mortar stores in building customer trust and loyalty is still crucial. Additionally, shopping malls offer more than just retail—they have become spaces for entertainment, dining, and leisure, attracting families and young customers.
Overall, the Indian retail sector is showing strong growth despite economic challenges. The increase in leasing activity, the entry of new brands, and the construction of new malls reflect the long-term confidence in the sector. As urban areas continue to grow and consumer expectations evolve, the retail industry is likely to adapt and expand even further.
Finally, the current race for retail store space indicates a positive outlook for the Indian economy’s consumption sector. The ability of retailers and developers to innovate and invest even during a slowdown shows the importance of retail in India's urban economy.
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