Don't dismiss the small towns. That's where the big pockets are, when it comes to quantifying the purchasing power of the country. Recent research has shown that cities such as Chandigarh, Ahmedabad, Jaipur, Lucknow, Indore and Pune have three quarters or more of the affluence levels of Mumbai.
This is precisely why marketers are rushing towards smaller towns. Their enthusiasm, according to a MART study, is also triggered by the availability of adequate land at a reasonable price. These towns have the advantage of low construction costs and lower rentals.
As per the Mckinsey Urbanisation report of 2010, small towns hold much importance thanks to their impressive economic growth in the last 15 years, despite the low municipal spending. “It is assumed that tier III and IV towns will account for 50 per cent of the urban GDP and add 70 million consumers by 2030,” says the report. Small towns will become self-sufficient in times to come, with the provision of basic services, leading to a reduction in the migration load on larger cities. Small towns also have the added advantage of being windows to bigger cities, a bridge between the urban and the rural.
Small towns are defined as urban centers with population of less than one million. They currently comprise around 60 per cent of total urban population, with the number increasing by the day. According to estimates 91 million urban households will be middle class by 2030, up from the current 22 million, presenting a vast opportunity across all sectors. A recent research report by Ernst & Young shows that the small town urban India is an attractive destination in terms of both product consumption and investment opportunities for marketers. With big urban centers getting saturated, small towns with their potential demographic dividend, increasing awareness and higher disposable incomes present a perfect opportunity for investments in the next level of economic growth.
For the study, E&Y divided the country into three sectors - the six metros , key urban towns including 22 cities and the rest of urban India. They found that the recent investments and developments in infrastructure and connectivity have increased the physical reach to small towns. The movement of organised retail into smaller towns has made things easier and more cost effective for marketers.
The MART study went one step further. It said that product penetration to these towns will not only benefit the local population, but help a massive rural population which lives in their proximity holding the promise of India's inclusive growth. In order to witness the growth of small towns first hand, MART representatives visited four towns across different population category and geography -- Rudrapur, Ahmednagar, Mangalore and Vapi. Based on the study the rural research organisation identified five sectors where there was great of opportunity for marketers -- retail, education, healthcare, infrastructure and agribusiness.
