A significant strategic shift is underway in India's consumer market. A new generation of urban-focused technology and lifestyle brands is turning its attention to the vast potential of smaller towns, mirroring a path once charted by traditional auto and FMCG giants. This pivot is fueled by a powerful combination of rising disposable incomes and widespread digital adoption, creating a fresh growth frontier beyond the saturated metropolitan hubs.
The New Growth Frontier: Beyond the Top 10 Cities
Executives and industry analysts confirm that accelerating consumption power and a convergence of aspirations in Tier 2, 3, and 4 cities are driving this change. These regions are rapidly emerging as crucial markets for sectors like electric vehicles (EVs), digital-first retail, quick commerce, and organized jewellery. For many recently listed and venture-backed companies, this represents a vital evolution as growth in major cities begins to plateau.
Electric two-wheeler maker Ather Energy is a prime example. The company's co-founder and CEO, Tarun Mehta, revealed that EV adoption is showing surprisingly strong traction not in the top 10 cities, but in the "next 500 cities." He noted that these areas have achieved the highest EV penetration rates and the fastest pace of adoption. "Smaller cities are embracing electric super fast. So, it's only obvious for us to go there really rapidly," Mehta stated. This accelerating demand prompted Ather to overhaul its strategy about a year ago, shifting from adding stores in existing metros to rapidly opening new outlets in emerging towns—a move Mehta credits for driving the bulk of the company's recent growth.
Blueprints for Success: Profitable Expansion
Eyewear retailer Lenskart is executing a similar plan. In its first post-listing letter to shareholders, the company identified expansion into smaller towns as a core driver for future revenue. Lenskart has mapped approximately 2,000 pin codes in emerging towns where demographics, rising incomes, and better infrastructure are creating viable markets for organized eyewear retail. This is in addition to the 2,800 pin codes it already serves.
The results of this pivot are clear in the data: Lenskart added 93 stores in Tier 2 and smaller towns in the first half of fiscal year 2026, a dramatic increase from just 14 stores opened in the same period a year earlier. CEO Peyush Bansal emphasized the sound economics, stating that these new stores are achieving profit metrics similar to their counterparts in major metros. "With consistent Store Payback across Tier 2 and Tier 3 markets, we are reaching millions who previously lacked access to quality eye care," Bansal noted.
A Widespread Trend Across Sectors
This expansion blueprint is being replicated across diverse industries. Executives at other urban-centric digital firms like Myntra, Swiggy, and Urban Company have recently signaled similar forays into smaller cities.
In the organized jewellery space, retailers are adopting asset-light models to penetrate new markets. Senco Gold Ltd, for instance, opened eight franchise stores this year and plans up to six more, with a concentrated focus on Tier 2 to Tier 4 cities. Managing director Suvankar Sen emphasized the ongoing commitment, saying, "We will continue to look at seeing the opportunities that are lying in the Tier 2, 3, and 4 towns and cities."
Similarly, fashion and consumer goods retailer V2 Retail is aggressively expanding its footprint, opening 71 stores in the first half of FY26 to reach a total of 259 locations. Whole-time director Akash Agarwal explained that the company is deepening its network not just in tier-1 and tier-2 cities but also in much smaller markets. "Our strategic expansion into underserved rural markets, combined with deeper penetration in Tier 1 and Tier 2 cities is helping us build a large and demographically diverse customer base," he stated.
Experts point out that this acceleration is driven by more than just economic growth. Paras Jasrai, associate director at India Ratings and Research, highlights the complementary rise of smartphone penetration and affordable internet access. "New trends become viral at a phenomenal pace which, along with cheaper internet, gives a demand boost in Tier 2 and 3 cities," Jasrai said. This digital shift enables brands to use social media marketing to rapidly introduce the latest metro trends to smaller towns, creating a powerful, self-fulfilling cycle of aspiration and demand that is reshaping the Indian consumer landscape.
