Tier 3 Cities & Rural India – Growth Drivers for Indian Businesses?
Blog: NASSCOM Official Blog
In today’s business scenario, this statement rings true repetitively. Almost 70% of India’s population lives in rural India, as well as tier 2, 3 and 4 cities. The wealth that lies here has been brought into the spotlight time and again. Businesses have been compelled to re-evaluate their products, services, marketing strategies, distribution channels, and every single spoke of the wheel.
In the last few years, the power of the digital medium has shown us the aspirations and needs of the consumers who live here. Consumers residing in the smallest towns have now moved online, are learning to shop and consume content online. COVID-19 has further accelerated the digital revolution by over a decade. This is a big opportunity for businesses to mobilise their forces.
Thanks to smartphones and easy internet access, consumers from tier 3 cities are now aware of brands available only in metros. Annual shopping trips to metros have now been broken down into regular shopping online. A Unicommerse report released recently showed that there has been a 53% growth in online shopping in Tier 3 and beyond cities, making it one of the fastest growing regions.
Continued and rising sales from these cities have also provoked business owners to open branches and expand their customer base. Lower land rates and major cost advantages on manpower, materials, etc., further catalyse the process.
Another factor that has been instrumental in motivating businesses to shift their focus is the saturation levels in metropolitan areas. Some of the choicest brands and services are available in the bigger cities. While the audiences are almost the same, the number of options has increased and hence, the growth rate is very slow. Standing out amongst the chaos of choices is tough and expensive. Conversely, in smaller cities, the interest is rising and availability is scarce. Building presence in these cities has proved to be beneficial to those who have taken the step.
What does this tell us?
How can you incorporate this information for your business goals?
There are many things that can be done. Firstly, it could be a good idea to assess the demand for your product / service in tier 3 cities and rural areas. If it exists, you could incorporate advertising and marketing strategies for the audiences that show interest. If it doesn’t, you can take steps to create a need in the minds of the consumers.
Secondly, the factor that is regularly discounted is incorporating a section of the budget towards smaller markets. In order to get returns from a region, there needs to be an investment made as well. Whether it is digital promotions, offline marketing, ATL or BTL activities, it is critical to create awareness before you see conversions.
However, an investment does not have to be in the form of a brick and mortar store. In today’s time, satisfying customers equals timely delivery, a variety of products and services, high quality and good customer service. Pick any e-commerce giant that is doing well – be it Amazon, Flipkart, Nykaa, Big Basket or any other, most of them do not have a store in all cities. Having a strategic hub that can cater to different markets and store your products well along with manpower that can be trusted is enough to keep customers happy.
To conclude, it is important to recognise that the trend to shop digitally is not going anywhere anytime soon. Youngsters and millennials in tier 3 cities and rural areas are willing to experiment with online shopping. For exponential growth, we need to ride this wave and shift our focus to these growth hubs.
- By Mr. Vikram Kumar, Co-Founder & Managing Director, SRV Media Pvt. Ltd.