While the trend in retail is to move down geographically from metro to tier

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II and then to tier III, fashion retailers find tier III cities not yet ready to embrace them fully. The experiments of Lifestyle International’s value fashion division Max with tier III citi­es have not been encouraging and hence it will limit expansion activities to the top 35 cities. Having entered India five years back, Max at presents operates 67 stores, mostly in tier I and tier II cities.

“We opened stores in Nanded and Jalgaon in Maharashtra. But the response has not been encouraging. These are rich cities with five to seven lakh population, but their aspiration towards fashion apparels and jewellery is not yet developed,” said Vasanth Kumar, executive director, Max.

Pantaloon Retail too has not ventured much into the tier III market apart from a couple of stores in Zirakpur and Siliguri. It has 65 stores, largely in the bigger cities.

According to Pantaloon officials, the customer segment that the retailer caters to resides in tier I and tier II cities, while those in tier III are still price sensitive. The merchandise offerings made available in these cities are also different.

Tier III cities are not well connected with the metros and people do not travel that often to big cities so as to be aware of the latest fashion trends. People also do not travel much abroad. Lack of good roads and airports too add to the connectivity problem. Further, the media penetration is not as deep as in tier I and tier II cities, said Kumar. However, Govind Shrikhande, managing director of Shoppers Stop, finds that mass media, especially television, has increased fashion awareness in these cities as well. But lifestyle differences in terms of apparels, still exists. Both Kumar and Shrikhande agree that employment level of women is a key factor determining fashion aspirations. When women go out and work, they have more money to spend on what is trendy.

The prime customer of Shoppers Stop are professionals employed in banking services, IT and investment services and they reside mainly in tier I cities.

“We have only one store in a tier III city- Lathur in Maharashtra. Eighty per cent of the stores are in tier I and the remaining are in tier II cities,” he said.

Max too will keep its tier III plans on hold for three to four years. Next year, it is opening 20 stores of which 12 are in metros and rest in tier II cities.