Recession Impact: Indian Apparel Industry Targets Tier 2 cities

ET reports in an interesting story that Consumer Demand is estimated to have dropped by 20-30% during September-December in metros for Apparels despite the use of sales and huge discounts. Roughly, organized retail brands and unbranded apparel have proportional market share of almost 50:50 in metros while this ratio varies from 80:20 to 90:10 in smaller markets. Branded majors are now hoping to cash in on this potential of Tier 2 cities at a time when consumption has dipped in metros.
Benefits of Catering to Tier 2 Cities:
Unlike metros, consumers in small towns are less concerned about the global upheaval and have been also boosted in government sector by the coming of 6th pay commission.Tier-II cities have some additional advantages like prime space and lower rents which make them attractive
Strategy:

Jones Lang LaSalle expects that the demand would be higher for stand-alone high street locations rather than mall-based locations so most of brands in metros are focusing there. Meanwhile, many of the brands are relying on franchisee models for expansion and are reassessing their business plans. While some premium brands will look at tier-II cities, luxury brands would only focus on metros.

ET also has some interesting Stats about Plans of Apparel Majors

1. Provogue is planning to open 65 retail stores in B- and C-grade cities. “Provogue would have some specific ranges with rational prices for these cities.
2. Raymond is planning to come up with at least 100 retail stores, mostly in tier-II and tier-III cities
3. Other Companies following suit are Levis and Madura garments

Related Read:
Indian Luxury Goods Market Hit by Recession
Impact of Recession on India Study By Indian Labour Dept