With the population in Tier-2 and Tier-3 cities almost at par with Tier-1 counterparts, brands are seeing increased opportunities to tap into this growing space.
According to Kantar’s TGI 2023, the population of consumers between the ages of 15 and 55 in these cities has reached 139 million. This is almost at par with the Tier-1 cities.
A range of factors are helping push up demand in Tier-2 and Tier-3 cities.
These include an almost-similar growth in monthly household income and an increasing number of graduates and postgraduates in these towns.
The proliferation of smartphones and access to the internet in smaller towns have also helped push up demand.
Speaking at a webinar organised by the Market Research Society of India (MRSI), Suraja Kishora, chief executive officer (CEO) at BBDO advertising company, said a reverse migration caused by the pandemic and the rising aspirations of people in smaller towns have helped bridge the gap between the smaller cities and the big ones.
Other factors for this are higher incomes and a growing access to goods led by a digital revolution.
“The aspirations of people in smaller cities are growing at a big scale and so is their appetite for life. Trends percolate quickly with the help of digital media. This has given brands an opportunity to scale up their presence in order to tap into the growing demand,” he said.
As this line between urban India and towns starts merging, brands have a range of challenges to iron out.
Aashish Shukla, consumer and market insights lead at ITC, pointed out that companies need to tweak their supply chains in order to cater to this rising demand.
“Earlier, they would limit their stock-keeping units (SKUs) in these cities. But, it is imperative for them to revise those figures to cater to the growing demand,” he said.
Small towns are increasingly developing an identity of their own, he said, adding that companies require them to acknowledge that.
Communication becomes important when it comes to tapping into this demand, he said.
“Sometimes communication does not have to be local. That would mean not catering to their aspirations. Instead, communication needs to be highly targeted. It should generate curiosity in the consumer,” he said.