Media & Entertainment

The rise of the Indian consumer - looking beyond metros 

The rapidly growing Indian economy is witnessing the emergence of new economic centers of consumption. So far the country’s metros and tier-I cities were the hubs of economic activity; however, the focus is now shifting to the next 40 cities1 that are experiencing rapid urbanization and economic growth.


A surge in consumerism, the desire to experience superior lifestyles and own global brands are creating opportunities for both national and international brands to establish a presence in these centers. As brick and mortar players build a presence, e-commerce players have gained a firstmover advantage by catering to this unmet demand. It is estimated that nonmetro cities generate around 40–45 percent of business for e-commerce portals 2.


Jones Lang LaSalle India’s 2011 study highlights the retail attractiveness and market potential of some of the emerging centers of consumption.


Media & Entertainment

City Attractiveness
  • It’s the eighth-most populous city in India.
  • It is the sixth-highest office in terms of stock per
  • capita.
  • It is home to the highest number of cars per person in the country.
  • It ranks second in terms of per capita expenditure of TIG (Target income group).
  • Amritsar ranks seventh on the retail stock per capita parameter.
  • It accounts for the highest percentage of India’s young population due to large-scale migration.
  • It ranks sixth in terms of mall space per capita.
  • The city accounts for the highest expenditure per capita among 20 cities.
  • Nagpur is the ninth-most populous city in India.
  • It has the second-highest supply of office space per capita.
  • Ludhiana has higher migration rate to keep its retail spaces in demand.
  • Lucknow has the second-highest proportion of graduates after Kolkata.
  • It ranks sixteenth in terms of per capita expenditure of TIG.
  • Despite a high SEC A population, Jaipur has the secondlowest number of TIG households.
  • It has a high percentage of youth to drive consumption
  • Indore already has operational high-quality malls.
  • The city ranks high on the young population parameter as well as existing office stock.
  • Kanpur is the tenth-most populous city in India.
  • It has a low rating on consumer preferences due to social and cultural factors.
  • Kanpur is the tenth-most populous city in India.
  • It has a low rating on consumer preferences due to social and cultural factors.
Note: TIG represents households with income exceeding INR 500,000.


The media industry is recognizing this potential and increasingly focusing on these centers of economic activity. Tier-II and tier-III cities such as Jaipur, Indore, Ranchi and Vadodara are now on the ‘must cover’ list of film distributors as part of their promotion strategies for any big-budget Indian film 4. Leading multiplex chains are also moving to these cities, and despite offering affordable tickets priced between INR50 and INR120, they are able to earn healthy margins on the back of low real estate rental costs 5.


The TV industry is also witnessing strong growth from tier-III cities. TAM data suggests that among all TV platforms, growth in 0.1–1 million-population cities exceeds that in the metros and other 1 million+ cities 6. The pace of cable digitization is expected to be much faster in Phase II, III and IV cities than in Phase I cities. The penetration of the digital C&S platform has already exceeded 40 percent 7 in Phase IV cities, driven by rising DTH penetration.


Competition among English print media players has now moved into tier-II and tier-III markets with leading English-language dailies launching their editions in cities such as Coimbatore, Madurai, Bhopal and Indore. Some players are also setting up printing facilities near these markets to manage their printing operations.


With the radio market saturating in metros and advertisers seeking to expand their reach, the next phase of growth in FM radio is expected to come from the tier II and tier III cities. The effectiveness of radio in these cities is expected to be much greater than in metros. A surge in the number of FM-enabled handsets has increased the consumption of radio in small towns. The radio measurement survey conducted by RAM indicates that the average time spent listening to the radio daily is 244 minutes in Nagpur and 206 minutes in Jaipur, as compared to only127 minutes in Mumbai and 124 minutes in Delhi8. The potential of these emerging centers will be further strengthened once Phase 3 comes into play.


With growth being witnessed across almost all industry verticals, national advertisers are increasingly flocking to tier-II and tier-III markets, focusing their marketing spend and campaigns on these cities. Players are tapping heavily on out of home (OOH) advertising in these markets due to their relatively low degree of dependence on electronic media. Due to low OOH media clutter in such markets, innovations are easily highlighted and effectively reach target groups. While hoardings, buses and mall media are popular OOH campaign formats in cities, wall paintings (graffiti) command the most attention in small towns.


KPMG in India’s point of view

 The playing field in emerging cities is quite different from their urban counterparts. Urban centers observe high media penetration, the rapid adoption of technology, extensive reach of the internet and mobile platforms and rapidly evolving consumer behavior and media consumption patterns. On the other hand, tier-II and tier-III cities are emerging as attractive markets due to their heightened affluence and a consumerist outlook.


As such, the industry will have to connect with the consumer in these markets by establishing strong relationships through local language content, quality service, innovative business models and bringing comfort of familiarity. If the industry pulls the right levers to extend its market reach, these cities could play an increasingly pivotal role in the economy in the not-so-distant future.



1. Digital Dawn – The metamorphosis begins, KPMG-FICCI, 2012

2. E-commerce cos eyeing small cities to expand biz,,

metros-e-commerce, accessed May 2012

3. Retail Attractiveness Index, JLL India, 2011

4. KPMG in India analysis

5. Watch, eat, play, spend,,, accessed May 2012; KPMG in India analysis

6. “TAM Annual Universe Update - 2012”, TAM’s survey, January 2012, p18.

7. Digital Dawn – The metamorphosis begins, KPMG-FICCI, 2012

8. FM players expect boom in small-town India,,, accessed May 2012



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