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Retail in the small towns

Facing the issues of high rentals and low footfalls, one-third of retailers at shopping malls in large cities like Mumbai, Delhi-NCR, Chennai, Bengaluru and Kolkata are moving to Tier II and III cities, according to an Assocham survey.

This clearly shows that in order to make the most of the golden opportunities present in these cities, brands are planning their strategies well to move into these markets. Urban India accounts for 30 per cent of the population, which currently accounts for 64 per cent of its consumption.

As markets in metro cities mature, retailers are gradually moving into non-metros to make the most of changing behavioral patterns. These changes are mainly brought about by increased earnings, western influences, increased number of working women and a growing desire for luxury items. Despite the current inflation, Tier II and III towns are showing strong momentum with an improved demand appetite. In terms of market size, it is expected to grow from US$ 5.7 billion today to over US$ 80 billion in value by 2026.

Its not surprising that luxury cars sell more in small cities than in the metros. Big Bazaar’s single largest bill till date comes from its store in Sangli, a little known town in Maharashtra, and not from metropolitans like Mumbai and Delhi. Many specialty and evolved categories such as hair conditioners, air fresheners, prickly heat powder and cheese rank quite high on the the shopper list in smaller towns and cities. Even fashion products, watches, and apparels are showing signs of growth in smaller towns.
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