Urban Consumer Markets in India

The heterogeneity that characterizes the modern Indian consumer has created a maze that marketeers would like to unravel inorder to target their products and services precisely. In this blog,  we see the analytics presented by Indicus Analytics on the various facets of urban consumers, across geographies and socio-economic groups.

Despite visible growth in rural markets, it is in the teeming urban centres that most of the action takes place. Indian cities vary not only in size but also in terms of its economic activity. There are the bustling metropolises, towns dominated by manufacturing(Coimbatore – Tiruppur), towns that are basically transport hubs(Itarsi) and mining towns(Dhanbad). And then there are numerous small towns, most of which have no special characteristics and are overgrown villages whose markets attract people from the countryside now.

Urban centres can be classified into seven distinct sets:

– Metros with large populations – Mumbai, Delhi, Bangalore, Chennai and Kolkata – are, of course, a marketeer’s delight. They all have a good mix of people, the affluent, the middle class and the poor. Moreover, it is not that Mumbai and Bangalore have that cosmopolitan mix of people; even Chennai is shaking off its staid conservative image.

– Mini-metros are again five in number. These cities are growing so fast that they are straining at their edges to make it to the big league soon – Hyderabad, Ahmedabad, Pune, Coimbatore, and Chandigarh. On an average, mini-metros have a higher share of rich households than metros, a reflection of the smaller size and the higher density of professionals and skilled migrants.

– Tier 1 towns, with populations of more than 1 million, 33 in number, include most state capitals and cities such as Allahabad, Jodhpur,Visakhapatnam, etc.

– Tier 2 towns have populations between 6lakhs and 1 million. There are 28 in all, including upcoming cities such as Raipur, Ranchi, Bhubaneswar, Thiruvanthapuram, etc.

– Tier 3 towns, with populations between 2 lakhs and 6 lakhs are 152 in number and include Vellore, Sonepat, Siliguri, Shimoga, Agartala, Aizawal, etc.

– Tier 4 towns are the smallest with populations between 1 lakh and 2 lakhs. This category has 201, including  Shimla, Ambala, Dibrugarh, Wardha, etc.

– Add to these the peri-urban centres, 4600 in number, with populations less than 1 lakh, that surround big cities or lie on highways across the country, and we get a fairly good picture of the diversity in India’s urban markets.

For those looking to tap the most affluent, metros are of course the richest and are the largest consumer markets – these five cities have a per capita income of 92000 rupees per year, compared with the lowest rung of peri-urban centres, whose per capita income is 52000 rupees per year. Interestingly, while Mumbai has the largest share of richest households earning more than 10 lakhs per year, it is Delhi with is middle class, public sector image that has the highest number of such households. Among the mini-metros, Pune, Ahmedabad, Hyderabad, Chandigarh, and Coimbatore rank in that order for the highest number of affluent households.

What is most notable about India’s urban centres is that they are spread out all over the country and not just clustered in some zones. Gujarat is the leading state when it comes to rich households in tier-1 cities with Surat and Vadodara the hotspots here, while Kerala has the highest concentration of rich households among tier-2 cities. Thiruvanathapuram and Kochi rank among the top five here.

If we look at smaller cities, Noida, Gurgaon, Mangalore, Kolhapur have the highest number of affluent households among tier-3 cities, while in the smallest towns, it is West Bengal and Haryana that stand out for rich households among tier-4 towns – Bidhan Nagar, Panchkula, Haldia, and Thanesar.

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7 thoughts on “Urban Consumer Markets in India

  1. Hi,

    Very interesting article. We are a retail company with focus on Tier 3/4 cities in India. Can you please point me to the source of information – Kerala has highest concentration of affluent families in tier 2 cities etc.,

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