Gold retail in India is no longer limited to big cities. Gold jewelery and other retail brands are now expanding rapidly in tier-2 and tier-3 cities as well. The main reason for this is lack of good space in metros and tier-1 cities and rising rents. In such a situation, small cities are becoming a big market for opening new stores for brands.

According to a report by Knight Frank and industry body CII, 59 lakh square feet of Grade-A retail space has been added in Tier-II cities after 2020. At the same time, around 19 lakh square feet of space was added in Tier-1 cities. That means the supply of new retail space in smaller cities was three times higher than in tier-1 cities.

Opening a store in a metro is expensive

This does not mean that retail brands are moving out of metro cities. Metros and tier-1 cities are still important markets for big brands. But finding a new and better place here is becoming difficult. Apart from this, the rent of prime location is also very high.

According to Devarajan Iyer, CEO of Lifestyle International, saturation is increasing in the metro market and real estate prices are also very high. In such a situation it is becoming expensive to run a business with constant profit.

Big scope in small towns

The organized retail market in tier-2 cities is currently smaller than that of metros. This is the reason why more space is available for new stores here. According to the report, the organized shopping center stock in Tier-1 cities is around 9.8 crore sq ft, while it is 3.6 crore sq ft in Tier-II cities.

Notably, the quality of retail space in smaller cities is also improving. Grade-A properties account for 61% of the shopping center stock in Tier-2 cities, compared to 46% in Tier-1 cities.

E-commerce also boosted confidence

The growing penetration of online shopping in tier-2 and tier-3 cities has also given brands the confidence to open physical stores here. This means that customers are connecting with the brand online first and now stores of the same brand are opening in smaller cities as well.

According to Knight Frank, there are 1,720 international brand stores of 255 brands in 37 countries in 24 tier-2 markets. Of India’s 41 crore active internet users in 2025, an estimated 60-70% will be from Tier-2 and Tier-3 cities.

However, the importance of metro cities still remains. Over 80% of Lifestyle’s revenue still comes from metro and tier-1 markets. This means that retail gold and other brands are looking for new opportunities in smaller cities, but big cities are still the core of their business.