In the first three quarters of 2023, thirty-six domestic and international brands extended their reach into tier-II cities due to strong demand from smaller urban centers, continuing even after the pandemic. According to CBRE data, brands like H&M, Marks & Spencer, GAP, and Tasva entered cities such as Indore, Mangalore, Patna, Ranchi, Mysore, and Coimbatore.
As of September 23, the total retail space in these 14 tier-II cities amounted to 29 million square feet. Notably, Jaipur, Lucknow, and Chandigarh individually featured retail spaces ranging from 3 to 7 million square feet. The retail landscape in these cities has evolved into a well-balanced combination of high streets and malls.
“The E-commerce boom, tech-savvy consumer base, growing aspirations and surge in discretionary purchasing are defining the retail growth in tier-II cities. Investment-grade developers are setting up large-sized contemporary malls in these cities, which are seen as an entertainment destination and not just as a place to shop,” said Anshuman Magazine, Chairman, India, Southeast Asia, Middle East & Africa, CBRE.
Most non-metro cities, serving as established trade and business hubs, are now witnessing the establishment of offices by multinational corporations and startups alike. The burgeoning population in tier-II cities is further driving demand for a diverse range of retail offerings.
“India’s first retail REIT has encouraged developers to aggregate and upgrade their existing facilities, apart from developing new malls. Moreover, domestic and international fashion brands are looking to expand in non-metro cities, fueled by a well-aware and well-travelled consumer set,” said Ram Chandnani , Managing Director, Advisory & Transactions Services, CBRE India.
A city like Chandigarh showcases a collection of well-known brands, including Zara, Uniqlo, Lifestyle, Shoppers Stop, Marks & Spencer, The Collective, Nike, Adidas, Skechers, Puma, among others.
Executives from companies like Shoppers Stop, Meena Bazaar, Soch, Mohanlal Sons, and Tasva have stated that they are strategically planning the highest number of stores in a year to meet the surge in demand, particularly in tier 2 cities.
Expanding its reach, Soch, an ethnic wear brand, has inaugurated stores in cities such as Kurnool, Muzaffarpur, Gorakhpur, and Jaipur. The brand has intentions to establish outlets in Udupi, Dehradun, Allahabad, Madurai, Ludhiana, Barnala, Faridabad, Jodhpur, Vellore, and Thrissur.
Out of the 11 department stores launched by Shoppers Stop in the previous fiscal year, merely three are situated in metropolitan cities.
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