Emerging Markets, Changing Paradigms
The nature of design and the business of doing business in China, India and Dubai.
Scott Kilbourn AIA, Anubhav Gupta, and John Robertson AIA

Economic liberalization, rapid urbanization and unprecedented growth. Seemingly unlimited investment potential. Shifts in industry, and massive populations equipped with fast-rising disposable incomes. All of these issues have retail developers and designers racing, time-tested concepts and success formulas in hand, to the emerging markets of China, India, and the Middle East.

In some ways, these emerging markets are blank slates ripe for the same types of projects that have succeeded in established markets like the United States and Europe. Yet, not surprisingly, it’s not that simple, and retail developers and architects from established markets are quickly learning that paradigms can — and should — adapt based on cultural, social and economic factors.

To better determine how we can best deliver viable projects in these countries, we will take a closer look at three emerging markets to determine what’s working and what’s not. We will analyze how the design and development process is taking shape — and why — and determine how the experience of working in emerging markets has helped to shape those markets. 

China

Design is helping international anchor stores adapt to cultural and economic conditions. Pictured is Life Hub at Daning Retail Center, Shanghai, China. Photo courtesy of RTKL.

As China’s cities grow at the rate of six million new residents per year, an increasingly well-educated, well-traveled public is seeking retail environments akin to what they’ve seen elsewhere in the world. Many foreign firms who have responded to this exploding need are familiar with the risk of sacrificing quality and sustainable architecture to meet local demands for immediate results. Consequently, many designers and developers are now creating and nurturing long-lasting partnerships with local design institutes, who must stamp construction documents by law, to help to ensure high quality and responsible development.

As these changes have occurred, the product specific districts that have traditionally characterized Chinese urban retail environments have given way to new, more diverse retail formats, such as enclosed centers and commercial spines of masterplanned developments. While these new formats are similar to their counterparts abroad, they differ as a result of cultural and economic factors. For example, stacking residential units above ground-floor retail — a mainstay in European mixed-use — is less feasible in China, where cultural preferences dictate that upscale living is separate from commercial uses.  

Retail centers have become important elements of China’s rapidly modernizing cities. Shown is Life Hub at Daning Retail Center, Shanghai, China Photo courtesy of RTKL.

Because there are few large format or big-box retailers in China, the design of an enclosed retail center must innovate to compensate for a lack of anchors. While cinemas anchor retail developments elsewhere in the world, in China, this solution is challenging because of the film industry’s wariness of state owned industry controls and the high availability of cheap pirated DVDs. In addition, the Chinese cultural perception of the cinema is a place for eating, smoking, and socializing.

For international retailers looking to succeed in the Chinese market, design can help tailor or enhance business strategy to adapt to social and economic conditions. For example, the hypermarkets operated by France’s Carrefour have succeeded by adapting their floor plate sizes to urban and suburban locations. The Shanghai flagship of American retailer Best Buy, while uncharacteristically large for the market, departs successfully from traditional Chinese sales models by using an interactive design scheme that allows Chinese customers to get closer than normal to the products. 

Finally, while transit-oriented development is just beginning to catch on in the United States, it’s a requirement in China, where the car ownership ratio is 5.6 cars per 1,000 people. The new high growth corridors of China’s rapidly growing public transit system are having a strong and positive influence on smart retail design and development even beyond China’s borders. 

India

Retail environments in India often emphasize an inward-facing configuration. Pictured is Kolkata Retail Centre, Kolkata, India. Photo courtesy of RTKL.

In India’s nascent real estate market, the short-term investments considered high risk in established markets are paying off. While this trend has attracted international interest, it has also had larger implications for design quality and the nature of the development process.

While Indian laws do not require an architect of record to be of Indian descent, partnerships between international and local design firms are still the most effective means to design quality, and can assist in the navigation of complicated land use requirements. Given India’s lower construction and labor costs, a local design firm overseeing design development and construction helps to meet client budgets and is more cost-effective overall.

At present, organized retail comprises only 6 percent of India’s $300 billion retail market, which is largely made up of small, family-run businesses. This figure is predicted to grow at an annual rate of 30 percent, largely due to the arrival of retailers from abroad — an exciting proposition but one that must be tempered by cultural considerations. Shop sizes in new retail centers remain small, and overall retail schemes tend to be choreographed around social interaction. 

The need for social interaction helps to shape the design of retail centers in India. Pictured is Kolkata Retail Centre, Kolkata, India. Photo courtesy of RTKL.

India’s class conscious consumers have demonstrated a preference for exclusive retail environments. While in other parts of the world, enclosed retail centers are being redesigned with street-fronting retail, Indian retail centers are more likely to appeal in their seclusion. Also, as the infrastructure surrounding many retail centers in India is still being built — for example, sidewalks are uncommon — synergizing with the surrounding environment is typically not a design objective.

This exclusivity extends to the value placed on brand. New retail centers are bringing once out-of-reach international brands closer to India’s growing middle class, and by creating retail environments that strengthen the connections between customers and the brands they desire, designers can capitalize on this cultural value.

Despite some success, restrictive government policies that require international retailers to operate in conjunction with local partners have been prohibitive for many retailers looking to enter the Indian market. Although those regulations are expected to be relaxed in the coming years, the retailers that have successfully entered the market are currently challenging developers to compete for their leases with stronger, better projects. 

Perhaps to compensate for a lack of big-box anchors, dining and entertainment are typically important components of Indian retail environments. At present, food comprises an estimated 44 percent of the country’s FMCG sales, and while the convenience-based food court seen in U.S. retail environments is common in India, the most successful retail environments also offer leisurely dining and accommodate the Indian tendency to shop and dine as a family.

Middle East

Innovative design is bringing an adapted version of the popular town center format to the Middle East. Pictured is Bahrain Commercial Centre, United Arab Emirates. Photo courtesy of RTKL.

Like China and India, the Middle East is undergoing a dramatic economic shift. Yet the nature of this shift, in which Middle Eastern countries are seeking to reduce their dependence on oil and reposition themselves as attractive leisure and business destinations, presents a different set of issues to retail development and design.

Again, the success of the development process in the Middle East is contingent upon the formation of strong relationships with local design firms, as the onerous registration process for international design firms limits the services they can offer. In addition, the family-oriented nature of many leading clients in the Middle East requires designers and developers to carefully navigate complex relationships and ownership structures. Like China, the Middle East is eager to prove its worth, so expectations and the pressure for rapid results are high. While Middle Eastern clients tend to have larger budgets for high-quality materials, designers must remain dedicated through later stages of the design process to ensure that the concept (and quality) is upheld.

Innovative mixed-use design, like that at Al Ghurair City Centre, Dubai, United Arab Emirates, is influencing Middle Eastern retail environments. Photo courtesy of RTKL.

Given the area’s climate, the enclosed center is the dominant retail format. As the region continues to evolve into a premium tourist destination, retail centers are becoming attractive components of dynamic, large-scale mixed-use developments. By way of Dubai (an important commercial corridor between the Middle East, Europe, and Asia), many international retailers have already penetrated the Middle Eastern market, so retail developers have little difficulty populating their tenant rosters. Instead, they are challenged to differentiate themselves with innovative sports, dining, and entertainment offerings supported by distinctive design schemes.

Even as the Middle Eastern cities continue to evolve into world-class business and tourist destinations targeting a global demographic, retail design must still respect the longstanding cultural conditions that have always influenced the local lifestyle. For example, elements like breakout spaces for prayer areas and floors separated by gender will remain mandatory components of many schemes.

Middle Eastern retail environments, like Bahrain Commercial Centre, United Arab Emirates, are being designed to function as extensions of everyday living. Photo courtesy of RTKL.

Similarly, designers and developers are finding ways to handle the region’s other unchanging conditions, such as the harsh climate. Innovations in mixed-use design, such as residential access points and lobbies that are securely integrated into enclosed retail centers, keep residents indoors as they move between their homes and convenience or destination-based retail options. In addition, they strengthen the viability of a retail environment by positioning it as an extension of everyday living.

Looking Forward

China’s newest retail centers, like the proposed Sichuan Culture Center Concept Design, in Chengdu, China, are a departure from traditional product-focused retail environments. Photo courtesy of RTKL.

In the coming years, China, India and the Middle East will continue to be volatile grounds for new retail development. The rapid pace of development in these markets is raising larger questions about sustainability and long-term growth. Ultimately, one thing is for sure: as international designers and developers continue to work in these emerging markets, they’ll discover new ways of thinking that will help write the next chapter in retail design and development.

J. Scott Kilbourn AIA is a vice president and co-director of RTKL’s Shanghai office. Anubhav Gupta is a business development associate focused on India, based in RTKL’s London office. John Robertson AIA, is a principal in RTKL’s London office who has acted as project manager of various projects in the Middle East and around the world.


©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.