Page 1

Feasibility Study April 2019


Contents 1. Introduction • Need for study • Methodology 2. • • • •

Location study There’s something about Kochi Kakkanad Kaloor Panampilly Nagar

3. • • • •

Market study Market segmentation Ownership/ leasing patterns Consumer base assessment Sales and business strategy assessment


1

Introduction


NEED FOR STUDY In light of the upcoming venture by TSOTE | Cha Company team, there is a need for a feasibility study across key neighbourhoods/ areas identified as possible locations for the Cha Company store/ commercial outlet in Kochi. METHODOLOGY The strategy for the feasibility study is comprised of two main components1. Secondary research on the real estate market in Kochi covering residential and commercial property profiles. The purpose of this research is to corroborate on-ground insights with regard to key neighbourhoods/ areas identified as possible locations for the Cha Company store/ commercial outlet in Kochi. Newspaper archives and reports establishing evidence about Kochi’s growing real estate market served as the source for this component of the study. 2. Primary research through business survey samples collected across key neighbourhoods/ areas identified through the secondary research component. The purpose of the survey is to give a fair assessment of the food & beverage retail market in Kochi including some insights into market standards and consumer preferences. This report is presented in two parts. The first part is a location study of Kochi and an assessment of three key neighbourhoods - Kakkanad, Kaloor and Panampilly Nagar. The second part is a market study presented as an analysis of the business surveys that were conducted as part of this study.

5


2 Location study


THERE’S SOMETHING ABOUT KOCHI In recent times, Kochi has been the cynosure of all eyes for more than one reason. Known historically for its cosmopolitan nature, Kochi has continually found ways to attract all and sundry to its shores. Picked in the very first list of 20 smart cities under the central government’s Smart City Mission, Kochi has the distinction of being the only city in Kerala with an international airport, a container terminal, a cruise terminal and a metro rail line that connects directly to the city’s central business district. In fact it is the first tier-two city to have a metro rail line. All of these factors contribute to its position as a leading centre of international trade while also enabling IT parks such as the Kochi Infopark and Smart City at Kakkanad to set up and diversify the city’s economy in the information technology sector too. This has resulted in the proliferation of educational institutions to cater to the needs of these new employment centres. Over the past decade, Kochi has also cemented its position as a hub for medical tourism with government funding to improve public healthcare facilities as well as by allowing private healthcare operators to set up large-scale facilities, thereby attracting national and international clientele. Apart from all this, Kochi’s already stable tourism economy has now received a major fillip from the KochiMuziris Biennale which has come to bear the distinction of being the largest contemporary art festival in Asia. It is only natural that Kochi is favoured for healthy investment from NRIs too.

7


EDAPALLY KAKKANAD

KALOOR

VYTILLA PANAMPILLY NAGAR

8


In the face of a booming economy, a closer look to identify real estate hotspots revealed that three neighbourhoods showed stable rental values with increased leasing activity for commercial properties- Kakkanad, Kaloor and Panampilly Nagar. In addition, the seven kilometre Edapally- Vytilla bypass road has some of the most expensive road facing properties in Kochi owing to the fact that it forms a key section of the National Highway 66 which traverses the entire the state of Kerala in the north-south direction. Even within Kochi, the bypass provides easy connectivity to residential and commercial stock in Kakkanad, Vytilla, Palarivattom and Edapally. Over time, many restaurants, shopping outlets and hotels have opened up along this stretch, making it a favoured stopover stretch for locals and outsiders alike. In other words, this stretch has come to be a real estate hotspot with commercial plots ranging between INR 40-45 lakh per cent and residential plots ranging between INR 20-25 lakh per cent. While Kaloor and Panampilly Nagar fall within Kochi’s extended Central Business District, Kakkanad makes up the Peripheral Business District (PBD). The Edapally- Vytilla bypass section is nestled in what can be called the Secondary Business District (SBD).

9


KOCHI - A REAL ESTATE PROFILE.

Panamp

10


Edapally

Kaloor Kakkanad

pilly Nagar Vytilla

Secondary Business District Peripheral Business District

Central Business District and extended Central Business District

11


Civil station

Cochin SEZ Ernakulam

Kakkanad 12

500m


KAKKANAD Kakkanad comprises Kochi’s Peripheral Business District (PBD) with the setting up of the Civil Station, the Cochin SEZ, the Smart City office and the Infopark campus. This was followed by various other government as well as private sector funded developments in this area making it a major employment generation hub. The opening up of lands for development quickly led to a supply addition in the PBD and in turn increased leasing activity in newly completed developments. Kakkanad alone is reported to have 35 per cent of Kochi’s housing stock supply. The presence of a large working population in Kakkanad and an upcoming residential population makes it a choice area for setting up of commercial retail ventures that are willing to do the long run rather than those looking for quick and short term gains.

STRENGTHS • Stable catchment population generated by employment centres located here • Availability of real estate stock

OPPORTUNITIES • Availability of comparatively affordable housing stock can result in a stable residential population over the next decade

WEAKNESSES • Distance from CBD and core city areas • Demographic profile limited to working population and excludes <18 and >60 age groups THREATS • Heavy dependence on a single demographic and its lifestyle pattern for sales

SWOT Analysis 13


Jawaharlal Nehru Stadium

Kaloor Market Kaloor Metro Station Kaloor Private Bus Terminus

Kaloor Junction

Ernakulam North Station

Kaloor 14

500m

Stadium Link Road

IGNOU


KALOOR Located within a two kilometre radius of the Ernakulam North Railway Station, Kaloor is one of the oldest centres in Kochi and home to the largest stadium in Kerala, the Jawaharlal Nehru stadium. Kaloor Junction is a major intersection for two main arteries i.e. Banerji Road and Kaloor-Kadavanthra Road and the recently added metro station right at this junction greatly enhances its connectivity to other parts of the city. Kaloor also has Kochi’s only private bus stand besides Vytilla making it one of the best connected areas to all of Kochi as well as to neighbouring districts. The Regional Centre of the Indira Gandhi National Open University (IGNOU) is located here as are the head offices of Mathrubhumi and Deshabhimani, two of Kerala’s biggest media houses. Kaloor’s market is among the biggest in Kochi for fresh produce and meat. The area around the stadium in particular has become a favourite among the younger demographic with the opening of several boutique cafés, ice cream parlours and specialty restaurants. STRENGTHS • Public transport and road connectivity

OPPORTUNITIES • Metro station opening up for retail market

WEAKNESSES • Less variations in commercial property stock • Comparatively less availability of parking options

THREATS • Congestion due to increasing volume of privately owned vehicles

SWOT Analysis 15


Ernakulam Junction Railway Station

l

or Cana

Perando

Panampilly Nagar 16

250m


PANAMPILLY NAGAR Known for being possibly the greenest and calmest neighbourhood in Kochi despite its close proximity to MG Road and the Ernakulam Junction station, Panampilly Nagar quickly grew into a high-profile residential zone including schools and colleges. Since its inception in the 1970s, Panampilly Nagar has had a dedicated residents association here who have been responsible for the overall upkeep of the neighbourhood including maintaining its greenery. Over the years, Panampilly Nagar has evolved into a hub for commercial activity with specific prominence in the retail market owing possibly to the high spending capacity of the residents in this area. There are several shopping complexes, lifestyle stores, wellness centres, restaurants and banks here. Some of the older bungalows are also getting converted to commercial establishments here to make room for the growing demand and corroborating its position as a choice destination for specialty retail experiences. STRENGTHS • Strong neighbourhood image • Metro station under construction in walking distance

WEAKNESSES • Predominantly residential zone with less commercial real estate stock

OPPORTUNITIES

THREATS

• Perandoor Canal, if revived, can significantly enhance the nature of development along its edges

• Lack of visibility for commercial uses owing to residential character of streets

SWOT Analysis 17


3 Market study


In order to understand current trends in the food & beverage (F&B) retail sector, a survey targeted at all such businesses was conducted in the 3 neighbourhoods - Kaloor, Kakkanad and Panampilly Nagar identified through the location study. Surveys were also conducted along the bypass road linking Edapally and Vytilla based on current on-ground knowledge about clusters of F & B retail units emerging on this stretch. The survey was designed to understand various aspects of the F & B retail sector such as but not limited to• market segmentation • ownership or leasing status of the retail unit • amenities provided as part of the F&B retail experience • consumer base assessment • sales and business strategy assessment

19


Edapally Kakkanad

Kaloor

Vytilla Panampilly Nagar

Map showing distribution of survey sample set across Kochi.

20


A total of 146 businesses were surveyed with an almost equal distribution of the sample set across the various locations.

23 %

25 %

23 %

29 %

Kakkanad

Kaloor

Panampilly Nagar

Others

Distribution of survey sample set across Kochi. Out of these, 57% businesses overall were owned by Kochi residents. In Kakkanad, 61% owners belonged to Kochi and in Kaloor, 67% owners were Kochi residents. Comparatively, Panampilly Nagar seemed to be the preferred location for outsiders with 44% business owners hailing from other cities. Thalassery

23%

Thrissur

14%

Kozhikode

12%

Kottayam

11%

Kannur

8%

Kollam

6%

Malappuram

6%

Place of origin of business owners who did not hail from Kochi. Source: Surveys conducted for the purpose of this study. 21


MARKET SEGMENTATION With regard to market segmentation based on the nature of retail experience, a majority offered a fine dining experience (52%). CafĂŠs and quick eats featured next with almost equal numbers. Franchisee/ chain outlets made up 10% of the survey sample. A little over 15% of businesses surveyed also reported offering more than one type of retail experience possibly to cater to a more diverse demographic. For example, businesses serving quick eats also had an elaborate dessert menu or a fine dining restaurant also served cafe style food. Exclusive

76

39

32 14 8 2

Fine dining restaurant

Cafe

Quick eats

Nature of retail experience offered. Source: Surveys conducted for the purpose of this study. 22

Delivery/ Take out

Franchisee/ Chain

Others


Kakkanad

Kaloor

6

2

10

13

15 Cafe

6

13

15

Panampilly Nagar Fine dining restaurant

5

17

Quick eats

Delivery/ Take out

8 Franchisee/ Chain

1 2 1

3

4

Others

Nature of retail experience offered filtered by location. Source: Surveys conducted for the purpose of this study.

delivery/ take out units did not feature anywhere indicating that Kochiâ&#x20AC;&#x2122;s F & B retail experience is yet to be disrupted by the digital era. In other words, eating out at an F & B outlet is still preferred over ordering food online or over the phone in Kochi. This is further corroborated by the survey responses regarding the primary source of sales and whether online food apps have affected sales in recent times. 98%

2% Primary source of sales

Online

Walk-in

Source: Surveys conducted for the purpose of this study. 23


Kakkanad

100 %

Kaloor

100 %

Panampilly Nagar

6%

94 % Online sales

Direct sales

Primary source of sales by location. Source: Surveys conducted for the purpose of this study. Overall I have greatly benefited from them

1%

I have mildly benefited from them

37%

There has been no difference to my business

58%

My business has been negatively affected by them to some extent I have lost a lot of sales because of them

3%

1% 3%

Kakkanad

42%

55 %

3%

3%

Kaloor

50 %

41 % 3%

Panampilly Nagar

38 %

62 %

How have online food app platforms affected your business? Source: Surveys conducted for the purpose of this study. 24


I

HOW INDIA’S BEVERAGE MARKET IS ENLARGING

– By Abhinav Biswas

With India’s population skewed towards younger consumers, the majority of Indian consumption of food and beverages is driven by people between the ages of 18 and 40, which opens the opportunity for manufacturers to come with more varieties.

ndia, with its population of 1.2 billion, is one of the largest consumer markets in the world. It is also demographically one of the youngest with about 50% of its population below the age of 25 and about 65% below the age of 35. The majority of Indian consumption of food and beverages is driven by people between the ages of 18 and 40. The appetite of the young Indian population has been a key driver in industry growth. At the same time, it opens the opportunity for manufacturers to come with more varieties. Also, they have to keep in mind that India is a price-sensitive market and prices will always have an impact on what products consumer buy and how often they buy them. As such, there may be scope for manufacturers to offer beverages at multiple price points to ensure there is accessibility for the nation’s wider audience. The Indian food and grocery market is the world’s sixth-largest, with retail contributing 70 per cent of the sales. The Indian food retail market is expected to reach INR 61 lakh crore (US$ 915 billion) by 2020, according to a sectoral report by Indian Food Resourcing. Beverages have proved themselves to be smart movers and manufacturers are continually developing innovative marketing techniques to penetrate modern retail.

Carbonated Soft Drinks

Carbonated drinks are those drinks that bubble and ͤzz with dissolved carbon dioxide gas in it. Many people ͤnd the ͤzzy sensation to be pleasing and are fond of the slightly different taste that carbon dioxide provides. But health concerns by the consumers are leading the manufacturers to shape their corporate strategy, with diet and low-calorie varieties in the global market. The industry has moved far beyond simply offering low or reduced-sugar versions of their brands, reformulating their products to include natural rather than artiͤcial additives. The Prime Minister of India Narendra Modi has proposed that big players like Coca-Cola, Pepsi should add 2% of fruit content in the aerated drinks,

88 [ INDIA FOOD REPORT 2018 ]

Source: The India Food Report 2018-19 - A term report on the world’s most exciting food market; Published by India Food Forum 25


OWNERSHIP/ LEASING PATTERNS With regarding to the property where business was conducted, 93% businesses reported renting for business as opposed to owning or leasing the property. Close to 95% of businesses surveyed rent their space in Kakkanad and Kaloor, while Panampilly Nagar showed some variations with leasing models including even a mobile food truck in its sample.

93 %

5%

1%

Owned by the business Kakkanad

Rented

6%

1%

Leased

Others

94 %

5.5 % 94.5 %

Kaloor

3% 3% Panampilly Nagar

6%

Owned by the business

88 %

Rented

Status of the property where the business is located. Source: Surveys conducted for the purpose of this study. 26

Leased

Other


As for the duration of conducting business at that location, 48% respondents had crossed the 2 year mark at the same location indicating a stable customer base. However, 52% respondents being less than 2 years old at their locations is also an indicator of an increasing demand for F & B retail in these areas of Kochi. 100% 80%

60% 40

40%

46

36

17

7

20%

0 - 1 Year

1 - 2 Years

2 - 5 Years

Kaloor

Kakkanad

> 10 Years

Panampilly Nagar

27.27 %

30.56%

30.30 %

27.78 %

33.33 %

32.35 % 8.82 %

27.78 %

6.06 %

35.29% 17.65 %

11.11 %

3.03 %

0 -1 Year

5 - 10 Years

2.78 %

1 - 2 Years

3 - 5 Years

5.88 %

6 -10 Years

> 10 Years

Number of years conducting business at that location; overall and area-wise. Source: Surveys conducted for the purpose of this study. 27


AMENITIES PROVIDED AS PART OF THE F&B RETAIL EXPERIENCE In terms of amenities provided by businesses as part of the F & B retail experience, a visual assessment was conducted to check for parking provisions and toilet facilities. Overall, only 34% businesses had dedicated parking space for two & four wheelers; 36% businesses relied on on-street parking for their customers. Also, 25% businesses operated without any parking provisions at all. The area-wise split of survey responses revealed significant differences with regard to parking provisions. 61% of businesses in Kakkanad were able to provide dedicated parking space for their customers as compared to only 19% businesses in Kaloor. In fact, the majority of businesses in Kaloor (39%) did not have any parking provisions at all. Businesses in Panampilly Nagar seemed to rely mostly on on-street parking provisions (56%). 3% 61%

Kakkanad

27%

9%

3% Kaloor

19%

33%

6%

39% 2%

Panampilly Nagar

26%

5%

56%

Dedicated parking space for 2 and 4 wheelers

On street parking for 2 and 4 wheelers

Dedicated parking space only for 2 wheelers

On street parking only for 2 wheelers

No parking

Area-wise parking space provisions by F & B retailers. Source: Surveys conducted for the purpose of this study. 28

11%


An alarmingly high percentage of businesses overall did not have toilets within their premises (35%). Among the 3 neighbourhoods, Kaloor scored lowest with only 56% businesses having toilets and Panampilly Nagar was the highest with 67% businesses having toilets. Additionally, it was observed that fine dining restaurants contributed most to the count across all neighbourhoods. 37%

35%

27%

1%

0% Yes; for men, women and disabled

Yes; for men and women

Panampilly Nagar

Yes; unisex

No toilets

3% 27%

35%

Kakkanad Kaloor

Yes; unisex and disabled

44.5%

36%

19.5%

41%

24%

35%

32%

3% Yes; for men, women and disabled

Yes; for men and women

Yes; unisex and disabled

Yes; unisex

No toilets

Availability of toilets within business premises; overall and area-wise distribution. Source: Surveys conducted for the purpose of this study. 29


CONSUMER BASE ASSESSMENT The consumer base assessment provided no surprises with the 19 to 35 age group featuring as the single largest clientele across the sample set and patronage from the above 60 years of age category being the lowest. 142

67

11

Kakkanad

Kaloor

Panampilly Nagar

2%

2%

7% < 18 years

2

64%

34%

65%

33%

74%

19%

18 - 35 years

36 - 60 years

Clientele segmentation; overall & area-wise distribution. Source: Surveys conducted for the purpose of this study. 30

> 60 years


Around 50% businesses reported that customers spent an average of 20 to 40 minutes at their outlet. Area-wise, 85% businesses in Kakkanad and 79% businesses in Panampilly Nagar had its customers spending more than 20 minutes in their premises on an average. This data corresponds with the data on parking provisions of businesses in these two areas. Kakkanad had the highest percentage of dedicated parking space for two and four wheelers and this could be a significant reason why customers spent more time at businesses located here over and above the retail experience provided.

Kakkanad

Kaloor

15% 28 %

19 %

Panampilly Nagar

21 %

30 %

41 %

55 % 39 %

50 %

Less than 20 minutes

20 - 40 minutes

40 - 60 minutes

More than 60 minutes

30%

33 %

38 %

Average time spent by customers at the F & B outlet. Source: Surveys conducted for the purpose of this study. 31


SALES AND BUSINESS STRATEGY ASSESSMENT Overall, none of the businesses in the entire sample set recorded less than 10,000 rupees or more that 1 lakh rupees per day. More than 50% earned between 20,000 to 50,000 rupees per day. One-third of the businesses in Kakkanad earned between 50,000 to 1,00,00 per day.

0%

19 %

57 %

24%

0%

< 10000 INR

10000 INR to 20000 INR

20000 INR to 50000 INR

50000 INR to 100000 INR

> 100000 INR

Kakkanad

6%

61 %

Kaloor

22%

Panampilly Nagar

20.5%

< INR 10,000

INR 10,000 to 20,000

33 % 50 %

28 %

59 %

INR 20,000 to 50,000

20.5 %

INR 50,000 to 1,00,000

> INR 1,00,000

Average earnings per day; overall and area-wise distribution. Source: Surveys conducted for the purpose of this study.

73% of businesses surveyed also stated that they would need between 50 to 100 customers per day to make a profit. Only 19% said that they could make a profit with 21 to 50 customers. The area-wise distribution revealed that 85% of the businesses in Kakkanad needed between 50 to 100 customers per day. 32


In contrast, one-third of the businesses in Panampilly Nagar could make do with 21 to 50 customers per day to make a profit. These figures correspond well with the real estate values for renting commercial properties across the three neighbourhoods; Kakkanad had an upper range of 75 rupees per square feet despite sharing the same lower range of 30 rupees per square feet with both Kaloor and Panampilly Nagar.

8%

19 %

73 %

Kakkanad 6%

85%

9%

Kaloor 19%

75%

6%

Panampilly Nagar 32% 10 - 20 Customers

62%

21 - 50 Customers

51 - 100 Customers

6% > 100 Customers

Minimum number of customers needed per day to make a profit. Source: Surveys conducted for the purpose of this study.

A majority of businesses also reported that the maximum sales occurs at the dinner time slot followed by the evening tea time slot. Business appeared dull during breakfast hour and only gradually picked up during lunch. 33


53 %

28 %

18 %

1%

Morning/ Breakfast 3%

Afternoon/ Lunch 27% 8 % 9 %

Kakkanad

Evening / Tea Time

Night/ Dinner

24 % 31 % 41 %

48 % 61 % 47 %

Kaloor

The time at which most sales was made. Source: Surveys conducted for the purpose of this study. 34

Panampilly Nagar


Businesses in Kaloor in particular had the highest sales during dinner time which could be attributed to its proximity to the private bus terminus where people preferred a quick dinner before embarking on a journey. Businesses in Kakkanad and Panampilly Nagar most likely cash in on the residential population that falls within a 5 kilometre radius of these centres. Surprisingly though, despite the need for 50- 100 customers per day, 97% of all businesses stated that they had not altered their business strategy to retain or attract clientele. This could be an indicator of a stable consumer base within these neighbourhoods. Subscription models or loyalty schemes did not seem to feature in business strategies across the entire sample set. 2%

97 %

1%

Overall

100 %

Kakkanad 3%

97 %

Kaloor 3%

3% 94 %

Panampilly Nagar

Yes

No

Maybe

Have you changed your business model/ strategy since you started out at this location? Have you customized anything for your target audience? Source: Surveys conducted for the purpose of this study.

In conclusion, the surveys reveal a rather stable scenario for Kochiâ&#x20AC;&#x2122;s food & beverage retail sector across the three neighbourhoods- Kakkanad, Kaloor and Panampilly Nagar- with scope for experimentation in terms of business strategy as well and hence making them ideal locations for any upcoming business ventures in the near future. 35


REFERENCES From Marine Drive to Panampally: The

The changing face of Panampilly Nagar

hottest real estate destinations in Kochi-

https://www.thehindu.com/pp/2005/08/20/

Looking to invest in Kochi? Hereâ&#x20AC;&#x2122;s a list of its

stories/2005082000770300.htm

prime real estate neighbourhoods https://www.thenewsminute.com/article/

Why Panampilly Nagar and Kadavanthra Are

marine-drive-panampally-hottest-real-estate-

So Popular With Property Investors

destinations-kochi-61165

https://www.abadbuilders.com/blog/whypanampilly-nagar-and-kadavanthra-are-so-

Kochi: A sought-after property market

popular-with-property-investors/

among Indians and NRIs https://housing.com/news/kochi-sought-

Kochi all set to make big strides in

property-market-among-indians-nris/

healthcare https://timesofindia.indiatimes.com/city/

Apartment trend losing sheen? Industry

kochi/kochi-all-set-to-make-big-strides-in-

experts think so

healthcare/articleshow/63540384.cms

http://www.newindianexpress.com/cities/ kochi/2018/jul/25/apartment-trend-losing-

KOCHI- Indiaâ&#x20AC;&#x2122;s Emerging Real Estate Hub-

sheen-industry-experts-think-so-1848596.html

Published by CBRE Research in 2017

Report puts Kakkanad at the centre of real

Unravelling Kerala Real Estate:

estate boom

A study on Kochi, Trivandrum and Thrissur;

http://www.newindianexpress.com/cities/

Published by Credai and JLL in November

kochi/2018/nov/24/report-puts-kakkanad-at-

2018

the-centre-of-real-estate-boom-1902460.html Sales in real estate sector up by 40% in 2018 https://economictimes.indiatimes.com/ wealth/real-estate/sales-in-real-estate-sectorup-by-40-in-2018/articleshow/66772016.cms

TEAM Content, design & layout: Vidhya Mohankumar Graphics support: Srivardhan Rajalingam Business surveys: Peter Sharath


Prepared by

Profile for Urban Design Collective

Cha Company- Feasibility Study- April 2019  

A concise feasibility study for a new F&B retail venture in Kochi covering a location assessment and a market study component.

Cha Company- Feasibility Study- April 2019  

A concise feasibility study for a new F&B retail venture in Kochi covering a location assessment and a market study component.

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