Promising tier II Retail Destinations of India
TFW Bureau
Mar 20, 2024 -
7 min read
These 14 cities include Chandigarh, Jaipur, Indore, Goa, Mangalore, Kochi, Lucknow, Patna, Ranchi, Guwahati, Bhubaneshwar, Vizag, Mysore and Coimbatore.
Over the past few years, secondary cities in India have experienced unprecedented growth, with the retail real estate sector reaping significant benefits. Factors such as economic expansion driven by various industries, infrastructural development, and the establishment of new business centers have contributed to the emergence of a more affluent and consumer-oriented population.
This demographic not only has access to high-quality goods and services but also enjoys improved connectivity through enhanced infrastructure and logistics, making these offerings more accessible. The burgeoning aspirations and demand for diverse brands and experiences, fueled by exposure to social media, have increasingly attracted retailers to tier-II cities.
As these cities continue to flourish, CBRE has identified the top 14 tier-II cities in India. We aim to unravel the dynamics of these cities and provide insights into the growing retail sector in India's tier-II cities.
Nearly 35 major domestic and international retail brands entered 14 Tier-II cities in the January-September period of 2023, says a report by global property brokerage firm CBRE. According to the findings of the report, Tier-II Cities: The Time to Shine, these 14 cities include Chandigarh, Jaipur, Indore, Goa, Mangalore, Kochi, Lucknow, Patna, Ranchi, Guwahati, Bhubaneshwar, Vizag, Mysore and Coimbatore.
Among the domestic and international retail brands that have entered these cities are Croma, Armani Exchange, Malabar Gold & Diamonds, Reliance Smart, Tanishq, H&M, Marks & Spencer, GAP, Starbucks, Pizza Express, Under Armour, etc.
According to the report, the total retail stock in these 14 tier-II cities stood at 29 million square foot (msf) as of September 2023, with Jaipur, Lucknow, and Chandigarh each boasting retail stock ranging between 3 to 7 msf. The retail development in these cities has been a healthy mix of high streets and malls. The total retail supply recorded in these 14 cities has been over 2.4 msf during the period under assessment. Top cities dominating supply addition during this period include Chandigarh, Jaipur and Lucknow. The total absorption across the 14 cities stood at 2.4 msf in the 9-month period, led by Kochi, Jaipur and Goa.
Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, said, “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. Most non-metro cities are established trade and business hubs and are now witnessing multinational corporations and start-ups setting up offices as well. Growing population in tier-II cities are further propelling demand for a diverse range of retail offerings.”
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “Tier-II cities have recorded a massive surge in retail developments over the last three years. 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.”
Thanks to its affluent consumer base, meticulously planned infrastructure, economic prosperity, tourism attractions, and a diverse array of domestic and international retail brands, Chandigarh has evolved into a significant retail hub within Punjab. Alongside its neighboring cities such as Mohali, Panchkula, and Zirakpur, Chandigarh has established itself as a leading retail destination, providing ample opportunities for market expansion and advancement.
Prominent Retail Categories
Fashion & Apparel : UNIQLO, H&M, ZUDIO
Homeware & Department Store: Homecentre, DMart, Pantaloons, Westside
Consumer Electronics: Croma, Reliance Digital
Jaipur: Lower operating costs, a good talent pool, and proximity to Delhi-NCR have led to Jaipur becoming a prominent business hub. The city also houses an international airport and an air cargo complex, making it a reliable destination for facilitating exports.
Prominent Retail Categories
Fashion & Apparel : ZUDIO, Mango, Tasva
Homeware & Department Store: Lifestyle, Shoppers Stop, Westside
Luxury: Tasva
The Lucknow retail real estate market is witnessing robust growth driven by several factors, such as rapid urbanization and a growing middle class, increasing consumer spending, the emergence of new shopping malls and high-street retail formats and expansion of domestic and international retail brands.
Prominent Retail Categories
Fashion & Apparel : UNIQLO, H&M, Zara, Marks& Spencers
Homeware & Department Store: Shoppers Stop, Westside
F&B: Starbuck’s, Chilli’s, Tickled Pink
Located in the heart of Madhya Pradesh, Indore stands as a prominent commercial and financial hub in central India. A thriving residential sector and a bustling trade market have created a favourable ecosystem for the city’s retail sector in recent years. Firstly, the city’s burgeoning economy, driven by a growing population and rising incomes, creates a strong consumer base eager to explore diverse shopping experiences. Secondly, the retail landscape strikes a balance between traditional markets and modern retail spaces, catering to a wide spectrum of preferences and budgets, cementing its reputation as a thriving shopping destination in central India.
Prominent Retail Categories
Fashion & Apparel : Max, H&M & Zudio
Homeware & Department Store: Shoppers Stop, Westside, Pantaloons, Home Centre
