Non-metro consumers drive high street growth, require different strategies

By

Isabelle Crossley

Published
Dec 20, 2017

The year 2017 has seen an array of Indian and international high street brands focus their attention on Tier 2 and 3 cities which have been identified as an untapped market but one that requires a different approach to metros.

One international brand that has been one of the first to tap into the more rural retail market is England’s Marks and Spencer. The brand currently has 19 stores in Tier 2 cities and this market is anticipated to account for 20 percent of the brand’s total revenue in the country in the financial year 2017 to 2018. Marks and Spencer has also started to adapt its stock and product ranges depending on the store location. For example, the brand’s Kochi store carried 15 percent more menswear in order to reflect that menswear is in higher demand. Linen is also stocked year round to accommodate for the climate there.

Another foreign brand that is currently expanding into non-metros is America’s Forever 21. The Aditya Birla Group has the domestic distribution rights for the retailer and they now have 21 stores across Tier 1 and 2 cities, with more store openings in Tier 2 cities planned for next year. “As far as non-metros are concerned, we are evaluating the key markets of India carefully in terms of their fashion readiness for the fast fashion western wear segment and then making strategic decisions to open stores,” said Rahul Jhamb, the Brand Head of Forever 21 India.

It is not just international brands that are paying attention to non-metros. The shoe brand Khadim’s is shifting their focus to non-metros and both Wildcraft and Jack and Jones have Tier 2 and 3 store openings planned for the coming year to name but a few. Myntra have stated that they expect a surge in sales from Tier 2 and 3 cities and they, along with most other e-commerce fashion retailers, are working to expand their distribution networks to reach more rural areas.

The IBEF’s Retail Industry in India has reported that the country’s retail market is estimated to grow at a compound annual growth rate of ten percent and will reach 1.6 trillion US dollars by the year 2026. As both fashion awareness and disposable income increases in non-metros, many brands are seeking new customers there as the metro market is fast becoming saturated with new brands.