–Contributed by Vivin Wason

Smaller towns await organized retailers as the neighborhood stores try to prevent their entry. According to today’s article in livemint on the smaller towns being the next destination for all the leading retail brands. The article says that while larger tier III cities such as Chandigarh will get 15-18 malls, smaller towns such as Aurangabad and Nashik will get six to ten malls, while Chhattisgarh’s capital Raipur will get at least four.

The question here to be asked is, are these towns ready for the big retail? Is the spending capacity of the population in these smaller towns sufficient to good enough revenue for all these big brands? As far as tourist centers such as Mysore, Amritsar and Agra go certainly these places are potential markets for a number of international brands. But, how about having ten malls in Kanpur or Allahabad. If there is really a potential in these towns why are the organized players not entering it just yet. Two of the prime areas of focus for the players today are – consistent returns and sustained consumer loyalty.

With consumers not habitual of sopping at malls once a large retailer comes to town it does attract heavy crowds but over a period of time the sales begin to flatten.

Retailers need to understand the differences in the mindsets of urban and semi-urban consumers. What might be value for money for an urban consumer might not turn out to be a very good deal for a consumer located in a smaller town. Consistent returns come once the brand manages to build a strong relationship with its customers. Retailers in smaller towns maintain healthy relations with their clients in order to develop a level of trust. Along with this they also offer discounts which might not give them great margins but assure them a repeat customer. Thus, a first mover strategy with a localized approach should be topmost priority for any organised retailers looking at expanding in the smaller towns.