New-age companies spot gold at the bottom of the pyramid

Executives and independent experts say the shift is driven by accelerating consumption power and a convergence of aspirations in Tier 2, 3, and 4 cities, which are now becoming key markets for electric vehicles (EVs), digital-first retail, quick commerce, and organized jewellery.

The trend underscores a strategic evolution for recently listed and venture-backed companies, including electric scooter maker Ather Energy and eyewear retailer Lenskart, which have seen growth plateau in saturated urban centres.

Tier-2 traction

Electric two-wheeler adoption has shown surprisingly strong traction beyond the top 10 cities, according to Ather Energy co-founder and chief executive officer (CEO) Tarun Mehta.

“Not the top 10 cities, but maybe the next 500 cities," Mehta said, noting these areas have achieved the "highest EV penetration and also the fastest" pace of adoption. “Smaller cities are embracing electric super fast. So, it's only obvious for us to go there really rapidly."

The accelerating demand forced Ather to tweak its strategy a year ago, shifting focus from adding stores in existing metro markets to rapidly opening new locations in emerging towns, a move Mehta credits for driving the "bulk of the growth."

Eyewear giant Lenskart is pursuing a similar blueprint. In its first letter to shareholders after its public listing, the digital-first company identified expansion into smaller towns as a core driver for future revenue.

Lenskart has mapped about 2,000 pin codes in “emerging towns across India where demographics, rising incomes, and improving infrastructure are creating viable markets for organized eyewear retail," adding to the 2,800 pin codes already covered in existing markets. The pivot is already visible in its expansion data: Lenskart added 93 stores in Tier 2 and smaller towns in the first half of fiscal year 2026, a sharp rise from just 14 during the same period a year earlier. CEO Peyush Bansal affirmed the economics, stating the new stores are trending at similar profit metrics to those 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.

Small-city forays

The strategy is being replicated across sectors. Executives at urban-centric digital firms like Myntra, Swiggy, and Urban Company have recently signalled similar expansion plans.

In the organized jewellery space, retailers like Senco Gold Ltd are using asset-light models to penetrate new markets. Senco Gold, which opened eight franchise stores this year with a pipeline for up to six more, is concentrating its efforts on Tier 2 to Tier 4 cities.

“We will continue to look at seeing the opportunities that are lying in the Tier 2, 3, and 4 towns and cities," managing director Suvankar Sen said during an analyst call last month.

Similarly, fashion and consumer goods retailer V2 Retail is aggressively expanding its store count, opening 71 stores in the first half of FY26 to bring its total footprint to 259 locations. The company is deepening its network not just in tier-1 and tier-2 cities but into much smaller markets too, whole-time director Akash Agarwal said in recent analyst calls.

Diverse base

“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 said last month.

Experts attribute the acceleration to more than just economic growth. Paras Jasrai, associate director at India Ratings and Research, points to the complementary rise of smartphone penetration and cheaper internet access.

“New trends become viral at a phenomenal pace which, along with a cheaper internet, gives demand boost in Tier 2 and 3 cities," Jasrai said. This digital shift allows brands to use social media marketing to quickly introduce the latest metro trends to smaller towns, creating a self-fulfilling cycle of aspiration and demand.