India’s Tier II Cities Emerge As New Growth Centres; Nearly 35 Major Brands Enter 14 Urban Areas In 2023, Says Report
Mumbai: It’s time for Tier-II cities to shine now and emerge as the new growth centres in India. Nearly 35 major domestic and international retail brands like Nike, Zara, Skechers, and Adidas entered 14 tier-II cities including Chandigarh, Jaipur, and Lucknow between January-September 2023.
According to a report released by CBRE South Asia Pvt Ltd, a leading real estate consulting firm, titled Tier-II Cities: The Time to Shine, these new market entrants have expanded their retail footprint, attracted by the well-aware and well-traveled consumer base in non-metro cities. The report reveals that top brands such as Croma, Armani Exchange, Malabar Gold & Diamonds, Reliance Smart, Tanishq, H&M, Marks & Spencer, GAP, Starbucks, Pizza Express, and Under Armour have successfully established their presence in these emerging urban areas.
The report also highlights the tremendous growth in retail developments in tier-II cities over the last three years. Developers have taken advantage of this trend by aggregating and upgrading existing facilities as well as constructing new malls. The increase in retail development is significant, with an overall retail stock of 29 million sq. ft. in the 14 cities analyzed. Notably, the cities of Jaipur, Lucknow, and Chandigarh stand out, with retail stock ranging between 3 and 7 million sq. ft. in each city.
Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, attributed this growth to various factors including the e-commerce boom, a tech-savvy consumer base, increasing aspirations, and discretionary purchasing power. He emphasized that investment-grade developers are establishing contemporary malls in these cities, transforming them into entertainment destinations rather than mere shopping destinations. The increasing population and the presence of multinational corporations and start-ups setting up offices in these cities further contribute to the demand for a diverse range of retail offerings.
Chandigarh, with its affluent consumer base, well-planned infrastructure, economic growth, tourism, and the presence of major retail brands, has emerged as a thriving retail market in Punjab. Major brands such as Zara, Uniqlo, Lifestyle, Shoppers Stop, Marks & Spencer, Nike, Adidas, and Puma have established themselves in the city. Prominent upcoming developments in Chandigarh include HLP Galleria, Jubliee Junction, Central Street, and Mohali Citi Center.
In addition, Jaipur has become a significant business hub, thanks to lower operating costs, a talented workforce, and its proximity to Delhi-NCR. The city is also equipped with an international airport and an air cargo complex, making it an appealing option for export operations.
Lucknow’s retail real estate market is experiencing robust growth, driven by rapid urbanization, a growing middle class, increased consumer spending, the emergence of new shopping malls and high-street retail formats, and the expansion of domestic and international retail brands.
Overall, the rise of Tier-II cities as new growth centers in India presents immense opportunities for both domestic and international retail brands. As these cities continue to develop and grow, they are expected to attract more major brands and contribute significantly to the country’s retail sector.
The expansion of retail brands in Tier-II cities signifies a shift in focus from metro cities and reflects the changing dynamics of consumer preferences and market potential. With these latest developments, Tier-II cities are proving that they are no longer in the shadows of their metro counterparts but are ready to shine brightly on their own.
