Domestic Commerce: Out of City Retail Parks

Domestic Commerce:

Out of City Retail Parks

Dr Nasir Javed

As per the Bureau of Statistics Economic Survey 2018-19, the whole sale and retail services contribute around 18 percent of the GDP, almost as much as agriculture. It still has great potential for growth. A number of interventions can accelerate this growth.

While export oriented growth and foreign exchange reserves are vital for the economy, a much less emphasized & discussed sector is that of domestic commerce. A country with more than 220 millions of people offers a great opportunity for producing and selling domestically that would lead to value addition in goods & services and significant job creation.

Success of shopping malls like The Forum, Dolmen mall, Centaurs, Packages & Emporium etc in the large cities of Karachi, Lahore, Islamabad and now even in smaller towns[1] (For example the Mall of Mandi Bahuddin… a 14 story complex in a town of less than half a million) is a proof of the growing demand for this kind of ‘shopping / eating / entertainment combo’. However, almost all of these malls are located on the most precious commercial city center areas, mostly occupied by top brands, that need to be air conditioned and have challenges of car parking & congestion in the neighborhoods.  Let’s take this ‘shopping / eating / entertainment combo’ to the open areas.

Pakistan is blessed with at least three strong factors for rapid growth in domestic commerce. One, a very large consumer base of 220 m with at least 50% living in rapidly growing urban areas. Secondly, for most regions of the country our population centers are located close by; forming clusters. The 3^rd factor is the 2000 km of functional Motorways & another 2000 km in the pipeline. These three factors, put together, make a strong case for a flourishing opportunity of domestic retail. This is how it can be leveraged: 

The motorways’ and the population clusters around Motorway interchanges offer a golden opportunity for establishing ‘Out of City Retail Parks’. The US, UK and many other countries have developed such parks which offer good attractions, especially over weekends. (The Cribbs Causeway Retail Park Bristol;  https://en.wikipedia.org/wiki/Cribbs_Causeway). Compared to the west, we still have an advantage of the higher population densities and a large potential to reach a saturation point.  

http://www.cushmanwakefield.co.uk/en-gb/case-studies/2017/10/sainsburys-west-end-retail-park 

Along most of the built Motorways, we can have this kind of Retail Parks at almost every 200km.  The concept is that it should be located close to a Motorway Interchange, within a ‘days trip’ of the major cities / towns.  What we need is around 100-300 acres of land close to an interchange. Needed would be basic development of road network and plotting, into 1-3 acres plots, with ample paved surface parking, (paved with pavers like we have on the M2 interchange areas).

Development & Services: Connect the park area to the motorway. There would be large surfaces available for solar panels to generate local electricity. In most areas ground water can be provided. We can easily establish a small waste water treatment plant to make it fit for agricultural purposes for surrounding lands. Rain water could be saved and used for non drinking purposes, making the park a completely environment friendly green facility.

To reduce the ‘entry & exit barriers’, we can offer plots on 10-30 years lease to the retailers, provided they construct within a year. Sale and purchase of plots needs to be banned, to avoid getting investors and speculators into the market. Since it is usually single or double story construction, it could be pre-fabricated and quick to install.

The kind of stores: Clothing stores, factory outlets, furniture shops, handicraft stalls, door/windows and bathroom/kitchen accessory stores, super markets, farmer markets/ itwar bazaar, used car sale markets, car boot sale areas are some of the businesses that would jump to these places, being much less expensive than city center malls. Added would be food courts with outdoor (shaded & open) sitting areas. Even marriage halls can be built for nearby towns & villages.

In addition to the food court areas, there is a need to develop attractive public spaces, with ample free parking and free seating, where people can just sit & relax. On weekends and holidays; there could be other outdoor entertainment opportunities, like Street theater, Musical concerts, Outdoor movies, and much more. The entry would need good controls to provide security and avoid beggars and drug addicts. Shopping addicts would be welcome…. The architecture of the park and especially the entrance gates etc should be reflective of the regional & local culture and not bland western style.

For people who don’t have cars, comfortable buses could operate on regular basis from selected points of the cities in the region.  

Each park could generate up to 10,000 direct jobs and many more indirect jobs, with a significant contribution to taxes and GDP. Interestingly, most of the investment is private investment, with minimal burden on the public funds, with much higher returns.

Site selection is a bit of issue that requires careful planning. A spatial analysis using satellite imagery would help in locating the most appropriate sites. Criteria should be that the region (a circle of around 100km radius) should have adequate population; land suitability in terms of water source, cost of land and flood vulnerability etc. Roughly speaking we can have one between Lahore & Islamabad, and one between Islamabad & Peshawar. A very rough estimate has shown that there is around 15-25m population that would be benefited by each of these retail parks…..what a consumer market. Similar areas can be planned for rest of the motorways.

Who would do it: The federal Ministry of commerce has just one bullet point on domestic commerce, which says:

Domestic commerce reforms and development in collaboration with other Ministries, provincial and local governments.[3]

At the provincial level, the Board of Investment and Trade could be made responsible for this kind of intervention that requires a fair amount of fast track processing and management. Local governments would need to be taken on board, for provision of services, master planning and land use governance.

This proliferation of organized retail markets would have a trickle-down effect into smaller towns and rural areas, where retail marketing would be benefited, in terms of the quality of services.

In due course of time, there would be developing small private housing schemes for the people who would have jobs in these parks. Therefore it is important that planning for these areas around the parks be made in the original plan, to avoid mushrooming & slums.

All these interventions can be managed within 2-3 years, and we don’t need any IMF, donors or any huge public sector investments.

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[1] http://www.alasarmallmbdin.com/

[3] Government of Pakistan Rules of Business 1973