Aurora Magazine

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The scope of retail in Pakistan

Published in May-Jun 2017
The changing trends in Pakistan's retail industry, and why Government's support is essential to enable growth.

The combination of shopping possibilities, eating opportunities, family entertainment, easy parking, central air-conditioning and conducive environments have proved irresistible to urban Pakistani families. As a result, shopping malls and department and flagship stores are springing up across different neighbourhoods in our metropolitan and second-tier cities.

Yet, this retail ‘revolution’ (if it may be called that) has taken time to gain traction. The mall and department store-cum-supermarket formulations started to make their appearance as long ago as the late 90s. It was, however, a rather slow and uphill progression – and for a long time, spaces were empty and customer footfall low and slow. To a large extent, this was a matter of habit and perception. Customers apprehended that prices in these larger establishments would be higher compared to those on the street and retailers were worried that locating themselves away from the hustle and bustle of the street would lose them business. Yet today, malls and department stores are buzzing with shoppers and spaces are at a premium. So what changed?

Firstly, the economy improved and the middle class grew (accounting, according to some estimates, for 35% of the population). Secondly, younger families with better media and travel exposure (and more money) shifted their preferences to the convenience and overall experience of the mall. Thirdly, and perhaps most importantly, technology and the start-up culture has reshaped entrepreneurship in Pakistan, leading to the emergence of a generation of retailers, willing to invest and experiment with new business models – the most obvious example was the lawn revolution, which started out with designers producing fabric to sell at three day ad-hoc exhibitions; today, these ventures have turned into versatile design houses with flagship stores in multiple malls.

In tandem with these changes in the retail paradigm, new employment and career avenues have opened up. Just as the entry of fast food franchises in the mid-90s led to better-trained and dressed and friendlier wait staff, retail is now creating employment with long-term career opportunities in store sales, management, operations and customer service, both at the front and back end. Even five years ago, working in a shop was considered akin to being a dukaandar; today, this perception has changed.

Despite the buzz and boom, retail in Pakistan is still at an early stage of development – and scope for expansion is there, although heavy investment is required to build, operate and market such malls, added to which, managing such large enterprises requires considerable expertise, especially in terms of matching the right footfall with the right brand offering at the right location. Globally, retail is said to be experiencing hiccoughs, partly due to overcapacity and partly because of the influence of online shopping. In Pakistan, too, online retail is catching on, albeit at a slower pace. However, as the global experience is currently demonstrating, for many people, there is no substitute to the ‘let’s go out to the shops experience’. What has changed is that customers also want access to the convenience of online shopping; hence the rising popularity of the omni-store model, whereby customers can move seamlessly between off and online according to their preference of the moment. This model too will begin to surface in Pakistan and coexist with the current retail landscape.

There is much to look forward to in terms of the further evolution of retail in Pakistan. However, if retail is to grow as it should, it will require government support given its increasing role as a big employer in both the services and manufacturing sectors. So far the Government’s attitude to retail has been largely as a source of taxes and while legitimate taxes must be paid, the Government must be encouraged to create enabling policies that will sustain and grow what has now become a key driver of the economy.