Home Retail Tier I and II cities to be the future retail destinations: Experts

    Tier I and II cities to be the future retail destinations: Experts


    The fresh and future retail destinations for the Indian retailers will be the tier II and III cities in 5 years as of now.

    Debating on the topic ‘The next urban frontier: Twenty cities to watch’ on the third day of India Retail Forum 2008, experts emerged with the opinion that as the metros and the mega cities are a bit saturated now, the future retail market lies in the domain of the second and the third grade cities.

    According to a research conducted by Future Capital Holdings in collaboration with National Council for Applied Economic Research (NCAER) on the Indian consumer to find out the future target for retail business, as many as 20 cities were identified and are categorised as mega cities, boom towns and niche cities. The cities like Pune, Mumbai, Delhi comes into the first category, while Surat, Nagpur, Ahmedabad comes into the second category and Amritsar, Jalandhar and Chandigarh comes into the third category respectively.

    Rupa Purushothaman, chief economist, Future Capital Holdings put her comments saying: “By 2016 more than half of the Indian households will be from middle class. Thus high income segment will be tripled by 2016 with the four times increase in the boomtowns.”

    R Shukla, director, NCAER, said, “These 20 cities make up less than 10 per cent of India’s population but generate more than 3o per cent of household income.”

    The research says that all these 20 cities in future band of destination will be dominated by the middle class who will be the potential buyers with a high amount of disposable income and in the effort to graduate in the standard of their lifestyles.

    The research also says, change in the asset ownership pattern and the spending properties span with a dramatic change will trigger the growth of the retail investment in terms of returns. For instance, Nagpur leads in the insurance sector and Jaipur and Coimbatore have the highest credit card income group.

    Supporting the findings of the research, Manoj Chandra, vice-president-marketing and customer service, Bata India, put forth his comment as: “Growth is higher in tier II and III cities nowadays. The trend has already shown its picture for the days to come. We have actually grown in the small cities and that comprises 70 per cent of our sales growth from new stores from the small cities as per our latest financial finding. We have opened 200 plus stores in the metros and tier II and III cities recently .”

    Manish Kalani, managing director, EWDPL Group summed up saying: “we have already foreseen the trend and started eying on the markets from 2003 onwards in the cities like Bhilai, Bhopal, Amravati. Our predictions come true and we will continue with that.”

    The research was done based on the data available from around 4,500 house holds, covering 50 per cent each from urban and rural areas.

    – Sangita Ghosh