Mint Explainer: Why half of urban consumers aged 15-55 now live in small towns
Real estate consulting firm JLL recently said most brands reported an increase in sales in tier 2 and 3 towns in the previous fiscal. In fact, it added that while tier 1 towns attract the most interest from real-estate investors, tier 2 and 3 towns are not too far behind.
New online shoppers are also emerging from India's smaller cities. Between 2019 and 2022, online commerce reported a CAGR of 37% in tier 2 and tier 3 towns, far ahead of the 20% CAGR reported in urban markets, according to Kantar.
Consumers in these markets are now expecting more premium products and greater variety, it said. As enticing as the prospect may be, smaller markets have their own set of challenges.
For starters, brands risk losing marketshare to local players that have emerged in these markets to service emerging consumer needs. This is especially true for makers of fast moving consumer goods.
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