India’s smaller cities, once associated with quaint street vendors and dusty marketplaces, are rapidly evolving into thriving, high-end destinations. As the country’s middle-income households expand and consumer preferences shift, foreign brands are seizing the opportunity to tap into the burgeoning market. The likes of Marks & Spencer, Pepe Jeans India, luxury car manufacturers, and even fast-food giants are actively extending their reach into both metropolises and smaller towns, recognizing the potential for significant growth and profitability.
Diversifying Luxury Car Markets
Luxury car manufacturers, including BMW, Mercedes-Benz, and Lamborghini, are increasingly eyeing smaller towns like Ludhiana, Kanpur, and Surat to fuel their growth in India. While luxury cars constitute less than 2% of the entire passenger vehicle market, these brands are betting on emerging young entrepreneurs in non-metro cities to boost their sales. India’s smaller towns are becoming “fashion forward,” and these cities hold the promise of substantial sales volumes. The plan is to penetrate deeper into Tier-II and Tier-III markets, mirroring the success seen in larger cities.
The Fashionable Ascent of Smaller Cities
Global fashion retailers are making significant strides in smaller Indian cities. Marks & Spencer recently celebrated its 100th store opening in India, with an increasing focus on thriving Tier 2 cities. Pepe Jeans India, another UK-based fashion retailer, aims to open approximately 30 new stores annually, with a significant proportion in smaller cities. Exposure to the internet has transformed small-town consumers into fashion-savvy individuals whose fashion consciousness rivals that of their metropolitan counterparts. With an active online presence, these brands can cater to a broader audience.
Rising Incomes and Consumer Preferences
Over the past few years, the number of middle-income households in smaller cities has surged. Their incomes have grown significantly, and they exhibit a higher discretionary wallet share. Smaller city consumers are willing to spend more on experiences, consumption, and self-care. This shift in mindset has opened up new opportunities for brands targeting these smaller towns. The new generation, comprising millennials and Gen Z, prioritizes experiences and doesn’t hesitate to invest in premium products, be it apparel or other lifestyle choices.
Fast-Food Giants Find a Hungry Market
The trend isn’t limited to fashion and luxury cars; fast-food giants like Pizza Hut are also capitalizing on the growing smaller city market. With an expansion strategy targeting smaller cities, Pizza Hut India has seen significant growth, doubling its restaurant count in just two years. Around half of their new stores are in smaller cities. Recognizing that value is crucial in these markets, QSRs are crafting strategic offerings that cater to local tastes while also delivering value for money.
In summary, Bharat’s smaller cities have emerged as lucrative markets, attracting foreign brands seeking to harness their growth potential. These cities, characterized by rising incomes and evolving consumer preferences, offer a wealth of opportunities for businesses across various sectors. From luxury cars to fashion and fast food, foreign brands are investing in these smaller towns, recognizing the premium route to success in the evolving landscape of India’s smaller cities.
