The landscape of retail is evolving dramatically as supermarkets within shopping malls are downsizing their physical footprints. With some stores reducing their size by as much as 50%, this shift reflects the growing trend of quick commerce reshaping consumer habits. Once occupying 30,000 to 50,000 square feet in typical malls, these supermarket spaces are now being significantly scaled back, reflecting a new era of shopping.

The Impact of Quick Commerce on Supermarkets

Industry experts are observing a profound transformation in supermarket operations, largely driven by the surge in online grocery delivery services. According to Abhishek Bansal, Executive Director at Pacific Malls, the rise of digital shopping options has led to major changes within large-format supermarkets. He noted, “In the last five years, many supermarkets have adapted by reducing their sizes or closing down altogether,” highlighting the need to align with shifting consumer preferences.

Shifting Store Sizes and Consumer Preferences

Saurabh Shatdal, Executive Managing Director of Capital Markets at Cushman & Wakefield, points out that the average leasing size for supermarkets is now about 15,000 to 20,000 square feet. This adjustment mirrors the increasing popularity of rapid delivery platforms like Blinkit, Zepto, and Instamart, which entice consumers with fast service and promotional offers. Interestingly, groceries and household essentials still account for nearly 75% of transactions made through these quick commerce applications.

Opportunities for Premium Retailers

Despite the challenges faced by traditional supermarkets, there remains a silver lining. According to Pushpa Bector, Senior Executive Director at DLF Retail, premium supermarkets that offer curated products and unique shopping experiences are still catching the interest of consumers. “People are eager to engage in a differentiated shopping experience, particularly in the premium market,” she observed, suggesting that embracing experiential retail could be key for supermarkets aiming to thrive.

Reallocation of Mall Space to Trending Categories

As supermarkets reduce their presence or exit the scene, mall developers are seizing the opportunity to repurpose this space for more lucrative sectors. Categories such as food and beverage, beauty and wellness, and athleisure are stepping in to take advantage of the demand. A recent report from Cushman & Wakefield indicates that the presence of beauty and wellness brands in premium malls has surged, with their share expanding from 6-8% pre-pandemic to 15-16% by the end of 2024.

The Evolution of Older Malls

Not only are new spaces being allocated, but older malls are also adapting to the changing retail environment. Shatdal notes that malls established 10 to 15 years ago are undergoing significant renovations to meet the current demands of consumers. “Reconfiguring layouts is essential for older malls to remain relevant in this rapidly changing landscape,” he emphasized.

In conclusion, as the retail sector navigates the impact of quick commerce, supermarkets are rethinking their strategies. While some may be downsizing or closing, the opportunity for innovative and experience-driven retail remains robust. The future of shopping in malls will likely continue to evolve, driven by consumer preferences and market dynamics.