Reliance and Other Retail Giants Explore Emerging Opportunities in Divided Andhra Pradesh

The recently truncated 29th state of India, Andhra Pradesh,is attracting attention from a number of large domestic as well as global retailers. Giants such as Wal-Mart, Reliance Retail, Future Group and Aditya Birla Group have already begun exploring opportunities here.

According to various property consultants and industry executives, international single-brand players such as Adidas and Nike are also scouting for available commercial real estate with an aim to expand their presence in Andhra Pradesh.

Current Concentrations of the Retail Sector

Andhra was recently condensed to 13 districts right after the creation of Telangana, a new state with 10 districts, including the city of Hyderabad. This motivates Andhra Pradesh to create a large new capital city along with a number of smart cities, consequently paving way for new retail opportunities.

Most large players, such as the retail wing of Reliance Industries Limited, have their outlets located in and around Hyderabad. This city is currently a part of Telangana even though it will remain the joint capital for both states for the next decade.

Positive Sentiments in the Retail Industry

Wal-Mart India, which operates its 20 cash-and-carry stores under the brand name Best Price Modern Wholesale, is optimistic about the emerging opportunities that are made available with the new capital and cities planned in Andhra Pradesh. Rajnees Kumar, Vice President of Corporate Affairs, said,”We plan to open 50 more cash-and-carry stores in India in the next four to five years.” However, he refused to disclose the exact number of stores planned for Andhra Pradesh. Wal-Mart currently has 1 store in Hyderabad and 3 in Andhra Pradesh.

On the other hand, a senior executive at Future Group cited political uncertainty and regional agitations in the then undivided state as reasons behind not expanding base there in spite of business potential. While Future Group has 21 stores in Karnataka, 17 in Tamil Nadu they only had 9 in undivided Andhra Pradesh.

The change in the state’s political scenario since June 2014 has encouraged Future Group to aggressively plan for 6 big-format stores. “Apart from signing agreement for stores at Guntur, we are on the verge of signing agreements for Rajahmundry and are looking for suitable property in Kurnool,” said a company executive.

Under the Chairmanship of Mukesh Ambani, Reliance RetailLimited already has about 50 stores in undivided Andhra Pradesh. Working under brands such as Reliance Fresh, Reliance Super, Reliance Mart, Reliance Trends, and many more, the Group’s future plans for Andhra Pradesh are still unclear.

Sandip Patnaik, Managing Director at Jones Lang La Salle India says, “Thanks to end of uncertainty over state bifurcation, now most of the large-format players are aggressively exploring business opportunities in truncated AP.” He adds, “Though the real-estate prices and rentals now in most cities of AP are no less than Hyderabad, retailers are attracted by over five lakh populated locations with presence of higher spending population.”

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