As India’s retail market expands beyond metros, Tier II and III cities are emerging as the next growth engine, reshaping how brands approach scale, access, and relevance
Consumer brands such as Burger Singh, Yoho Footwear, Mila Beauté, and GO DESi are adapting products, formats, and channels to serve non-metro demand
As brands scale beyond metros, product design, packaging, and distribution, not just marketing, are emerging as the primary levers for building trust and relevance
India’s retail market, valued at $1.06 Tn, is projected to reach $1.93 Tn by 2030, growing at an annual rate of around 10%. However, the centre of gravity is shifting. Growth is increasingly being driven by smaller towns as a broader base of consumers comes online, reshaping how brands think about access, distribution, and relevance.
With Tier II and III cities now accounting for over 60% of ecommerce traffic, online retail is projected to grow from $75 Bn to $260 Bn over the next five years. In parallel, India’s offline retail market is expected to expand from $751 Bn to $1.5 Tn, underscoring the scale of consumption across channels.
Investors like Rukam Capital view Tier II and III markets as the next phase of ecommerce-led growth, markets that are digitally engaged, aspirational, and still shaped by local preferences and cultural context.
A recently unveiled research by Rukam Capital, “Aspiration of New India: How Consumers Select, Shop, and Shape Brand Connections”, brings this perspective to the forefront.
The split where Tier I was experiential and Tier II was restricted to legacy brands is disappearing, with Bharat not just adopting homegrown direct-to-consumer (D2C) brands, but also actively trading up within categories. This reinforces a core investment belief that when you build for Bharat, you not merely pave the way to scale, but also prove relevance and provide for aspiration through practicality.
This is the new playbook for creating breakout consumer companies in health and wellness, beauty, FMCG, agritech, education and financial services, where price-first has evolved into pride-plus-value, driven by 58% consumers from Tier II towns opting for homegrown brands rooted in local stories and community impact.
Meaningful interest in women-led businesses is also evident. Rising incomes, expanding digital penetration, and increasing willingness to explore categories are creating a consumer base that is aspirational yet grounded, value-conscious yet brand-aware.
“These dynamics form the guiding principles of Rukam Capital’s investment strategy and the kind of founders and businesses we choose to support,” Archana Jahagirdar, founder and managing partner at Rukam Capital, said.
The trend in smaller towns is not a desperate replication of metro-city preferences. It is a quest for quality, access and a sense of progress, all built on a foundation of local relevance and trust. This is reflected in Rukam Capital’s portfolio companies.
Burger Singh offers a clear example of how QSR brands are scaling in non-metro markets by localising menus and formats while maintaining operational consistency across cities. With 103 counters already operating in emerging cities and over 200 additional outlets planned, the expansion reflects growing acceptance of organised QSR formats in Tier II and III cities.
Yoho Footwear is another example of brands designing for India as a unified market rather than treating non-metro consumers as an extension of metro demand. Its focus on comfort, durability, and climate-appropriate design reflects everyday usage patterns across cities and smaller towns.
Jahagirdar offered a third example in Mila Beauté. It focuses on developing products that suit diverse Indian skin types and weather conditions, ensuring high-quality skincare is accessible even in smaller towns. Its vertical and horizontal expansion strategy embodies the understanding that aspiration is not uniform and that India’s diversity must be embraced rather than generalised.
“The common thread here is clear. Our founders are building brands that understand cultural nuances, solve real needs and offer high-quality products without compromising on an authentic Indian identity, meeting the market’s aspirational-yet-rooted demand head-on,” Jahagirdar said.
For consumer brands to capture the non-metro audience, a nuanced digital approach that blends technology with culture is critical, especially given that India’s cultural nuances vary every 100 km.
Mila Beauté leverages this through year-round content series from micro-influencers who create content in regional languages to sustain brand recall. Similarly, The Indus Valley, a cookware brand, uses digital-first advertising centred on health and festive consumption themes, with campaigns tailored to regional and seasonal contexts. These efforts are supported by AI-driven landing pages to enable more precise personalisation across markets.
Another example is GO DESi, a sweets and snacks brand that combines digital distribution with physical retail touchpoints to reach non-metro consumers. Its products are available across ecommerce and quick commerce platforms, supported by multichannel digital campaigns, while pop-ups and in-store presence continue to play a role in discovery and trial.
“The goal is to deliver modern, seamless digital experiences while ensuring that the messaging feels local, honest and relatable. When done well, this approach drives both awareness and meaningful engagement, accelerating adoption among non-metro audiences,” Jahagirdar said.
Rukam’s report shows how differently consumers across regions respond to the same brand cues. Bengalureans, for example, prioritise authenticity and transparency more than their counterparts in Hyderabad and Pune. Many of them gravitate to brands that offer innovative solutions to everyday problems, while others are keen on transparency in sourcing, and others are drawn to a compelling founder or brand story. Consistent delivery of quality also drives memorability, with many consumers attributing strong recall to storytelling paired with great product experience.
Again, consumers in Jaipur are far more influenced by social visibility, with 55% choosing brands that are popular or widely discussed on social media. In Kolkata, trust sits at the centre of purchase behaviour, with 36% consumers valuing strong customer centricity and 45% going for clear, reliable communication while choosing to buy from startups.
Rukam’s portfolio companies, such as Sleepy Owl and Indus Valley, have revamped their packaging to optimise their market strategy. While Sleepy Owl has adopted customisable sleeves to suit festive seasons, Indus Valley has opted for low-cost packaging for high-volume non-metro orders and cast-iron combos during festivals to stay culturally relevant. Both have optimised costs and strengthened customer connection without diluting their core brand purpose.
WiseLife exemplifies this by maintaining its earth-friendly ethos while introducing sustainable, attractive gift packaging and printed yoga mats that suit regional festival tastes. This authentic, hybrid distribution model, where offline channels like kirana stores drive trust and everyday purchases and D2C engines leverage quick commerce, ensures that brands meet consumers where they are.
“The purpose is not a marketing afterthought, but a product-level asset, as seen with The Indus Valley’s commitment to clean, safe and toxin-free cookware, leading to its highest sales on Amazon’s Prime Day Sale and AntiNorm’s minimalist, clean-science beauty approach designed for the Indian climate, targeting an ARR of INR 20 Cr by FY25-26,” she said.
Similarly, BECO scales its niche by offering eco-friendly and chemical-free home essentials, converting buyers into advocates through education-driven, practical utility.
Founder-led storytelling builds consumer trust, as seen in brands like AntiNorm and The Indus Valley. Aparna Saxena, founder of AntiNorm, became the face of the brand by addressing real-world beauty challenges and positioning the company as a minimal-step solution that delivers impact. On the other hand, The Indus Valley used its social channels, especially LinkedIn, to communicate the company’s mission of healthy, toxin-free cooking and to share how the brand is growing and operating.
“When companies stay aligned with these fundamentals, their brand stories become naturally rooted, relatable and resonant, whether in India’s smallest towns or its largest cities,” said Jahagirdar.
For investors like Rukam Capital, the next phase of consumer growth is increasingly defined by brands that are built with local context in mind from the outset. The focus is shifting towards companies that can combine cultural relevance with scalable operating models as India’s consumption base broadens beyond metros.