Malls swap bulk buys for gourmet treats as hypermarkets struggle
Smaller basket sizes, driven by changing consumer habits and economic pressures, have further eroded the appeal of big-box formats.
Urban shoppers are steadily turning away from hypermarkets, once considered the anchor tenants of India’s malls, and gravitating towards gourmet and premium retail formats. Rising demand for speciality food, beauty, fitness and personal care is reshaping the tenant mix inside malls, forcing developers to rethink their leasing strategies.
Nexus Select Trust, which operates 19 malls across 15 cities and records over 131 million annual visitors, is already reallocating space from hypermarkets to categories that are drawing stronger traction. “Gourmet is doing very well. Hypermarkets, overall, have been impacted by quick commerce, but the gourmet segment within that is still attracting consumers,” said Pratik Dantara, Chief Investor Relations Officer and Head of Strategy, Nexus Select Trust. The REIT is also rebalancing space between multiplexes and family entertainment zones, and doubling down on jewellery, beauty, personal care, and fitness tenants.
The shift comes as hypermarket operators struggle with a combination of rising rents, high utility costs and intensifying competition from quick-commerce players that deliver groceries and essentials in minutes. Smaller basket sizes, driven by changing consumer habits and economic pressures, have further eroded the appeal of big-box formats. “Most hypermarkets are grocery-driven, and grocery is now available across quick commerce,” said Dantara.
Anuj Kejriwal, CEO & MD of ANAROCK Retail, noted that the old volume-driven model is losing relevance. “Indians often prefer buying smaller amounts of goods rather than stocking up in bulk, which reduces basket sizes. At the same time, complicated logistics, inventory shrinkage and differing state-level tax structures have also weighed on profitability,” he said.
The challenges are not new. Between 2013 and 2018, many hypermarket chains expanded aggressively, but their economics remained fragile. “Margins were thin at around 20–23 per cent, and if a competing hypermarket opened nearby, sales could drop by as much as 40 per cent, crashing profitability,” said Angshuman Bhattacharya, Partner and National Leader, Consumer Products and Retail, EY-Parthenon. By contrast, speciality and premium retailers generate much higher margins per square foot, making them a more attractive bet for mall operators.
As a result, malls are rethinking their anchors. While hypermarket footprints may shrink, the space they vacate opens up possibilities for food halls, entertainment centres, and even coworking hubs—formats that sustain both foot traffic and rental yields. “A diverse tenant mix and varied lease structures help keep mall valuations strong,” said Kejriwal.
The outcome is clear: India’s malls are evolving from value-driven, grocery-heavy formats into hubs for premium retail and experience-led consumption. For hypermarkets, the sheen may be fading, but for gourmet, speciality and lifestyle retail, the runway looks long.
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Published on October 3, 2025
