Targeting Tier-2 and Tier-3 cities: Opportunities for Businesses

Small cities, post pandemic, are appearing to provide a canopy to corporate world in the scorching times when many businesses are melting away. Metros have always enticed businesses but can tier-2 and tier-3 cities be a game changer?


As rightly said by Warren Buffet “opportunities come infrequently…” so beware when they come and where to find them. If not rightly seized, businesses can lose their game. Pandemic has changed online buying, consumer behavior and purchasing equations in tier-2 and tier-3 cities.

Fulfillment Centers (FCs) in small towns

Both Flipkart and Amazon, have their FCs and warehouses in small towns like Dankuni (WB) and are adding more FCs in small cities of India1.  To cater to post-Covid online demand in small cities and towns, Amazon has opened one of its largest FC in Bhiwandi (Maharashtra).  

Strong Retail Potential

According to Kearney Retail Index, 20 tier-2 and tier-3 cities (like Kanpur, Kozhikode, Vijayawada, Rajkot, Nasik, Nagpur, Madurai etc.) will drive the next retail growth and show strong retail potential. Smaller towns like Udaipur, Chandigarh are ready to kick in luxury retail spending2.  

Back to Home (BTH)

Kochi, Jaipur, Indore, Mysore are acting as Talent hubs3 with work from home option almost looking as permanent feature for many tech enterprises and other companies. Employees are returning to native places as it offers cheaper cost of living and provides comfort and safety. Zoho, software-as-a-service (SaaS) company plans to open satellite offices in rural areas and post pandemic it aims to move aggressively ahead with this initiative4.

Affordable prices and clever promotion

To cater to small towns, companies must offer products at competitive prices and lure them with right promotional strategy. JSW paints came up with a “any colour, same price” campaign to target tier-2 cities5. Meesho, an online shopping platform, introduced a new campaign to target price conscious customers from small towns – showing how women spend smartly and are better planners6.

Surge in real estate

Real estate is seeing a surge in demand in tier-2 and tier-3 cities with aspiration of owning a home going strong in 2021. Anarock and No broker’s real estate report indicates high demand in rental and housing purchase in small cities due to macro-economic and life-style changes7.

Targeting specific needs

 Onsitego provides aftersales services and maintenance/repair services of all electronic gadgets like mobile, laptops, AC, etc. It is adding a greater number of customers from tier-2 and tier-3 cities successfully by acting upon customers’ pain points. There is a huge demand of wellness, self-grooming products post pandemic. Grandslam Fitness is seeing high demand of gym equipment and will be opening more gyms in tier-2 and tier-3 cities.


Post pandemic, as more customers are getting online, 85%8 of new customers for Amazon are from tier-2 and other cities. Small towns can turn out to be a treasure chest for businesses with spot-on targeting, affordable pricing and creative promotional strategies. Tier-2 and tier-3 cities are next growth engines and can act as a catalyst in V-shape recovery.

Learners’ Opportunity

Leadership is not about merely surviving a harsh environment.  Winners are those who can quickly adapt and discover new directions. The Online MBA program from IFHE provides you the best tools to get adapted to the changing business environment. Need to know more?  Check out @

Discussion Question

Should all the businesses focus on tier -2 and tier 3 cities?  Which type/ category of businesses should definitely target tier -2 and tier -3 cities?

Source Articles

  1. Nandy, M. (2020, August 17). E-tailers boost warehouses, logistics in smaller cities. mint.
  2. The Hindu Business Line. (2021, March 18). Tier 2-3 cities will drive the next wave of retail growth:
  3. Singh , N. (2021, May 18). Work From Anywhere promotes tier-2 towns as talent hubs: India Business News – Times of India. The Times of India.
  4. Kashyaap, S. (2021, April 22). From rise in income to community development, how Sridhar Vembu’s Zoho is transforming rural India.
  5. Dilipkumar, B. (2021, January 25). JSW Paints extends ‘any colour one price’ campaign to Tier II market. The Economic Times.
  6. Meesho targets small town consumers in new ad – ET BrandEquity. (2021, July 10).
  7. Katiyar, S. (2021, July 7). Road ahead in 2021: Lifestyle changes and policy decisions propel housing demand in Tier-II cities. Times of India Blog.
  8. Sharp rise in Amazon customer base in tier II, smaller towns: Bhasin. The Economic Times. (2021, July 18).

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