India has seen a major resurgence in luxury and fashion retail in recent times. We use the word “resurgence” since India used to be the hub of luxury and opulence before the colonial times. For the longest time after that, during and after the British colonial period, India had lost its luxury forte. Naturally, it also stopped being charming and appealing to luxury brands worldwide.
During its luxury heyday, India enjoyed such affluence and splendor in almost every city. There was no Tier I or Tier II at the time. Almost every major city that was founded, ruled, and had an administrative system, enjoyed some, or the other, level of richness.
Post-colonialism, when India started the redevelopment and restructuring of its cities, some cities naturally got the cream of the crop. Most major developments, infrastructure, and other opportunities started cropping up in certain cities specific to each region of India.
Chennai (erstwhile Madras), Mumbai (erstwhile Bombay), Kolkata (erstwhile Calcutta), and Delhi became the designated Tier I cities in India. Because of this division between cities, Tier II cities, for the longest time, stayed oblivious to luxury developments.
Now, in the third decade of the 21st century, several luxury brands are looking to the Tier II cities of India. Once overlooked for the metropolitan hubs of the nation, these smaller urban areas are now capturing the attention of the global media as well as domestic luxury brands.
Rising Wealth and Economic Expansion in Tier-2 Cities
There are a multitude of reasons behind this not-so-sudden shift. One of the reasons is the rise of UHNWI (Ultra High Net Worth Individuals) in India. With the improvement in the economy, better financial positions, and more rich people in the country than ever before, the natural demand for luxury products has increased manifold. This demand has topped off the few Tier I cities of India and is now spilling into Tier II cities.
The average local economy of a place was always higher in Tier I cities. While that is still the case, there is a marked improvement in Tier II cities’ economy. This automatically led to more spending on prosperity. Expanding economies bring changing consumer behavior, and that brings advancements in infrastructure. This chain of events makes Tier II cities ripe for high-end retail expansion.
Lots and lots of people today have disposable income in the smaller cities. To shell it out publicly, they are buying luxury items, that was propped up their demand. Cities such as Vadodara, Surat, Indore, and Chandigarh are experiencing this marked shift in Indian consumerism. They are in tune with cities such as Hangzhou and Qingdao in China, as they are witnessing a steady increase in wealth.
Changing Consumer Preferences and Lifestyle Aspirations
People in such Tier II cities are no longer satisfied with mass-market offerings. Instead, they seek premium products that symbolize success and bring a level of social clout. Rising demand for bespoke furniture, designer lighting, curated decor, sleek bathroom fittings, and premium sanitaryware is increasingly common in these cities.
Another big factor behind this gradual shift is ‘Digitalization.’ With easy access to the Internet, people from everywhere get exposed to a global lifestyle. And with the money available to spend, people in Tier II cities also desire an aesthetic living standard.
Homeowners start viewing their living spaces as extensions of personal identity and status. This creates an opportunity for brands to offer customized, regionally tailored designs.
Digital Influence and Localization Strategies by Luxury Brands
Digital marketing strategies that are tailored to regional tastes are helping luxury retailers bridge the gap between aspiration and action. Audiences are eager to align themselves with global luxury brands, thanks to easy digital access to living standards worldwide.
And for that specific reason, brands can connect with that audience in a much more effective manner by showcasing the exclusivity and craftsmanship of their products. Shopping malls, retail complexes, and everything else associated with a metropolitan area are coming up in these regions, providing a perfect setting for luxury brands to establish a physical presence. The sales numbers aren’t just high, they are often skyrocketing.
But the Luxury brands have realized that they need something more than just presence to thrive in these Tier II cities for a prolonged period of time. That’s why they adopt localization strategies. Understanding the unique cultural preferences and expenditure habits of these consumers is pivotal to building loyalty.
From hosting exclusive events during local festivals to partnering with influential figures in certain regions, luxury brands pull all sorts of strings to try to stay relevant.
Despite all its success, luxury brands in Tier II cities can become a challenge in the long term.
