Retailers turn to II & III tier cities for growth

04 Aug '09

4 min read

Apparel and home furnishings retailers, who have been impacted by the slowdown in the larger and big cities, are looking towards the tier II and III towns and cities to sustain their growth and expansion plans as well as business.

According to leading experts from the industry, the impact of the slowdown has not much affected the tier 2, 3 and 4 towns as of yet due to their dependence on agriculture and other small sustaining businesses.

For these companies, it also means making their products available in the whole Indian market spectrum and being able to cater to all classes and all segments which make up the Indian consumer arena.

Fibre2fashion spoke to Ms Dipali Goenka, Director of Welspun Retail Ltd who said, “We believe there is tremendous potential yet to be tapped in Tier 2 and 3 cities, and we would like to be amongst the first to do so in this category”.

“Also, in the first phase of our expansion, we had saturated our presence in the Tier 1 cities, and hence the logical choice of expansion would be the Tier 2 & 3 cities. The Tier 2 & 3 cities are witnessing tremendous growth and change in lifestyle patterns, and with this is a growing consumption of home related items which we would like to capitalize on”, she added by saying.

Continuing she said, “We are looking at tier II and tier III cities like Vishakhapatnam, Mysore, Mangalore, Cochin etc. The consumer in Tier 2/3 city is open to new ideas and loves to experiment since they do not have any preconceived notions ands also; this consumer is far more loyal since they have not yet witnessed choices in retail”.

“Their preferences while being traditional, are also surprisingly contemporary keeping in tune the exposure to TV serials and they are price conscious, but also quality conscious, which is something we never compromise on”, she concluded by saying.

Mr Umang Garg, Vice-President (Retail Business) of Alok Industries Ltd had this to say. “Well, the reason behind targeting tier 2 & tier 3 cities is H&A's focal point of the cost benefits such as lower real estate and operating costs. The low brand penetration in small towns makes it possible for “Value Format Retailers” to sell more of their private labels brands”.

“Today we have 8 in-house private label brands & planning to add more to the band. Also to specify once we reach the 300 store target, then our share coming from tier 2 and tier 3 cities will be about 75% and right now we are looking at volumes & these cities definitely meet up to our expectations”, he said.

“Speaking on a serious note, we plan to expand from the all angles. We have already opened stores in places like Rudrapur, Muzzafarnagar. Haldwani, Moga, Sangli, Muktsar, Hoshiarpur, Latur, Gandhidham, Roorkee etc, and will be opening shortly at Vizianagaram, Srikakulam etc. he said.

He explained by saying, “I would term that the consumers in these regions as “Curious buyers”, who display anxiety & excitement in their purchase behavior. The upcoming mall culture making its entry into the smaller towns has changed the consumer attitudes towards buying. Presence of brands & various sources of entertainments have created an open mindset of the consumers”.

“With various channels of marketing & promotions approaching these cities there is definite chances of these “curious buyer” being enthusiast about new products & developments. Various media channels have thrown open to the people new modes & ways fashion and no matter where these consumers are located, there is still hunger for new things”, he concluded by saying.

Fibre2fashion News Desk - India

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