Tier II & III Markets Emerge as Key Drivers of India’s Retail Growth: Report

India's retail revolution is moving beyond its metros, with smaller cities fast emerging as powerful growth engines for the country's retail real estate sector.

"Beyond the metros, India's smaller cities are quickly becoming important retail markets-Nandini Taneja, CEO of Bhumika Enterprises"

According to Cushman & Wakefield's Q3 2025 Retail Market Beat, leasing volumes in Tier II and Tier III cities have surged this year, signalling strong retailer confidence and shifting consumer behaviour.

The Colliers-CII report, "Real Estate @ 2047: Building India's Future Growth Corridors," also supports this shift. It projects India's real estate market could touch USD 10 trillion by 2047, with a major share of future retail development expected in these smaller cities.

The combination of rising incomes, better infrastructure, and increased brand reach is driving this expansion. Consumers in these cities are spending more on experiences and lifestyle, leading to retail formats that blend shopping with entertainment and dining.

-India's Retail Revolution: How Tier II and III Cities Are Driving Growth

-Fashion, food and beverage sectors lead leasing in emerging retail markets

-Rising consumer aspirations drive shift from unorganized to modern retail spaces

-Improved infrastructure and connectivity fuel retail expansion in smaller cities

-India's real estate market projected to reach USD 10 trillion by 2047

Nandini Taneja, CEO of Bhumika Enterprises, says, "Beyond the metros, India's smaller cities are quickly becoming important retail markets. Consumers in Tier II and Tier III cities are more aspirational today and are spending more on lifestyle and experiences. Because of this, retail in these markets is shifting from unorganised shops to modern, well-designed spaces."

Prakhar Agrawal, Director, Rama Group, highlights how cities such as Raipur, Vizag, and Bhubaneswar are now central to the sector's growth. He says, "As India's retail real estate sector expands beyond metros, these cities are emerging as key growth engines. Rising consumer aspirations, improved infrastructure and demand for branded retail and leisure experiences are driving this transformation."

Data from Cushman & Wakefield's Q3 2025 report shows fashion, food and beverage and entertainment continue to lead leasing momentum in emerging markets. These segments mirror how consumers are prioritising experiences over pure retail spending.

Adish Oswal, Chairman of Oswal Group, says, "India's retail story is changing fast, and some of the strongest action is now coming from Tier II cities. Places like Ludhiana, Indore, Jaipur, and Lucknow are seeing rising incomes, better connectivity and a new sense of aspiration, all of which are creating a real demand for modern retail and lifestyle spaces."

For developers, investors and brands, these cities offer exciting opportunities to reach new audiences innovate in retail experiences, and participate in India's next phase of organised retail growth. The sector's next chapter is multi-city, driven by the aspirations of consumers across the country and the confidence of investors in emerging markets.