While local brands are also cashing in on the market potential of these opportunities, global ones like Zara, H&M, Adidas, Nike, Starbucks, Uniqlo and Marks & Spencer are fast expanding their footprint in non-metros, a recent study by CBRE showed.
Cities like Jaipur, Chandigarh, Patna, Lucknow, Kochi, Goa and Coimbatore are seeing an influx of fashion and food & beverage (F&B) brands.
In fact, Jaipur, Lucknow and Chandigarh individually had retail stock ranging between 3-7 million square feet as of September 2023. “Most of these non-metros are established trade and business hubs, and are also witnessing a healthy traction in commercial office space take-up… retail supply has matured, moving away from vanilla stores on high streets to the entry of investment-grade developers who are setting up quality retail spaces, which serve as both entertainment and shopping destinations,” analysts at CBRE said.
Tata Group owned CaratLane is betting big on tier-2 markets and has doubled its store footprint in places like Lucknow and Indore over the past year. “To give a sense, CaratLane started FY23 with 22 stores in tier-2 cities and now has 39 stores in these cities. There are a host of other smaller towns like Kochi, Guwahati, Ludhiana, and Mysore where we have seen strong demand and have increased our store footprint in the last one year,” chief operating officer Atul Sinha told TOI.
E-commerce has had its fair share in boosting the retail play in smaller cities. Wider adoption of e-commerce in these areas, helped in parts by the pandemic-led spurt in digital subscriptions, has enabled people to explore and try new brands, creating scope for retailers to expand their presence in these cities. For perspective, about 50% of online shoppers from urban India were residing in tier-2, -3 cities in 2021 – a percentage which is projected to reach nearly 60% by 2030. “These e-commerce dynamics point towards the presence of a high aspiration consumer base, thereby propelling the influx of quality retail supply,” analysts at CBRE added.
Manyavar recently opened a 17,000 square feet store in Ranchi and is about to launch another 20,000 square feet store in Gorakhpur, explaining retailers’ growing appetite for smaller cities. “Tier-2 and -3 markets are becoming what we call mini metros. As more and more small medium businesses grow in these markets, that gives a lot of opportunities for people to grow in the corporate ladder, giving them higher levels of income, and leading to higher discretionary spending,” said chief revenue officer Vedant Modi, adding that close to 40-50% of the company’s business today comes from tier-2 and -3 cities.