Tier 2 cities outpace metropolitan cities in retail quality, global brand presence: Report

New Delhi: India’s Tier 2 cities are rapidly emerging as major retail and consumption hubs, outperforming several larger urban centres in international brand penetration and quality retail infrastructure, according to a report released on Tuesday.

The report from Knight Frank India found that Tier 2 cities in India now have cleaner, more institutional retail stock with 61 per cent Grade A space compared with 45 per cent in Tier 1 cities.

Chandigarh topped the International Brand Penetration Rankings despite a population of about 1.3 million, outperforming much larger cities on consumption power, Grade A retail quality and international brand density.

Meanwhile, Mangaluru emerged as India’s most brand-dense Tier 2 city with over 102 international brand stores per million people, nearly double Chandigarh’s figure.

Moreover, Uttar Pradesh’s capital Lucknow hosts the highest concentration of unique international brands in Tier 2 India, with 112 brands across 5.6 million sq ft of shopping centre stock.

In addition, Surat, Jaipur and Nagpur, representing a combined population of approximately 16 million people and a sizeable consumption expenditure, international brand penetration is constrained not by space or consumption, but by the absence of Grade A retail infrastructure capable of housing it, the report noted.

The study analysed 24 Tier 2 cities using benchmarks such as Brand Breadth, Brand Intensity, Market Readiness and Consumption Power.

The report added that since 2020 Tier 2 India has added 5.9 million sq ft of Grade A retail space, over three times the equivalent addition in Tier 1 cities.

American brands dominated Tier 2 retail internationalisation, accounting for 46 per cent of all international stores and 91 per cent of international food & beverage presence (dominated by QSR).

UAE-based retail groups accounted for nearly 79 per cent of the department-store footprint across Tier 2 India.

The report highlighted the “marquee asset effect,” where a single institutional‑quality mall of 0.8–1 million sq ft can transform a city’s retail positioning.

“We are witnessing the emergence of a parallel retail economy across Tier 2 India — one that is younger, more aspirational, digitally connected and increasingly capable of supporting international brands at scale,” said Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India.

India possesses a retail expansion runway unmatched by any other major economy because it is simultaneously modernising two retail systems at different stages of maturity, he added.

IANS