Retail brands head to smaller towns to cash in on growing aspirations, rise in discretionary spends

Nearly 35 major retail brands entered 14 tier-II cities from Jan to Sept 2023

Several domestic and international retail brands have expanded their retail footprint to tier-II cities. Several domestic and international retail brands have expanded their retail footprint to tier-II cities

Move over mega cities, it's the small towns that are becoming attractive for big retail brands. Metros like Mumbai, Delhi and Bengaluru are home to swanky malls and high streets with top retail and fashion brands from India and abroad jostling for space. Now, many of these brands are also tapping smaller markets.

Nearly 35 major domestic and international retail brands entered 14 tier-II cities between January and September 2023, according to a study by real estate consultants, CBRE South Asia. These cities included Chandigarh, Jaipur, Indore, Mangaluru, Kochi, Lucknow, Patna, Ranchi, Guwahati, Bhubaneshwar, Visakhapatnam, Mysuru, Coimbatore and the state of Goa.

As income levels rise and more Indians travel abroad, demand for top fashion and retail brands is on the rise even in smaller towns and these Indian and international brands are looking to cash in by expanding in these markets to tap the "well-aware and well-travelled" consumer set, according to CBRE.

The study noted that several domestic and international retail brands, including Croma, Armani Exchange, Malabar Gold and Diamonds, Tanishq, H&M, Marks & Spencer, GAP, Starbucks, Pizza Express, Under Armour, among others, have expanded their retail footprint to tier-II cities.

The e-commerce boom, tech-savvy consumer base, growing aspirations and surge in discretionary purchasing are defining the retail growth in tier-II cities, said Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE.

"Most non-metro cities are established trade and business hubs and are now witnessing multinational corporations and startups setting up offices as well. Investment-grade developers are setting up large-sized contemporary malls in these cities, which are seen as an entertainment destination and not just as a place to shop," noted Magazine.

The total retail stock in these 14 cities stood at 29 million square feet as of September 2023, with Jaipur, Lucknow, and Chandigarh each boasting retail stock ranging between 3 to 7 million square feet, said CBRE.

While Chandigarh, Jaipur and Lucknow dominated supply addition, Kochi, Jaipur and Goa led the total absorption.


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