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Business News/ Opinion / Columns/  Opinion | Of small towns, big cities and hopes of an economic revival

Opinion | Of small towns, big cities and hopes of an economic revival

The panic and fear induced by covid in metros seems to be missing in smaller cities

In the immediate term, smaller towns will do better solely because large urban areas are affected much more by covid-19. (HT)Premium
In the immediate term, smaller towns will do better solely because large urban areas are affected much more by covid-19. (HT)

In Lucknow, stalls selling street food are bustling with customers. People are eating out more at these stalls than at restaurants, probably preferring the open-air environment to air-conditioned spaces. There are reports of a similar trend in Patna, where people still congregate on roadsides, chilling and chatting. Often without masks. In Bareilly, too, the atmosphere is far more relaxed. Of course, shops in different markets are allowed to open on alternate days, so the crowds are not thick. Except in kirana stores that are packed. Again, masks are not as common as they are in, say, Mumbai or Delhi. From all accounts, the panic and fear induced by covid-19 in the metros seems to be missing in smaller cities, even though Lucknow and Patna are state capitals.

Lalit Agarwal, chairman and managing director, V-Mart Retail Ltd, which operates value retail chain V-Mart, admits that people in smaller towns are behaving differently from those in big cities. He should know as 50% of his 268 V-Mart outlets are in tier-3 and 4 towns. “Fear of covid-19 is less, especially in tier-3 and 4 towns," he said, adding that his stores in places, such as Bagaha, Gorakhpur and Darbhanga, are doing much better than those in bigger cities. Of course, that is not to say that it is business as usual, but there’s more buzz.

On any given day, the company manages to operate only about 180 stores owing to different state-wise restrictions. In June, some of his stores registered wedding-related purchases like sherwanis, formal trousers and shoes. Jewellery chain Tanishq, too, said store reopening and sales recovery were better in non-metros. At a roundtable by Shopping Centres Association of India (SCAI) late last month, P&M Mall in Patna reported a spike in wedding shopping, with saree retailer Meena Bazaar doing well. Pavilion Mall in Ludhiana, meanwhile, said personal care products, children’s wear and toy brands, as well as electronics saw an uptick in demand. Footfall, too, improved from a few hundred to a couple of thousand people per day. Executives of PRM Begraj Group, which operates a mall in Siliguri, confirmed improved sales and said that smaller towns were slightly ahead of the curve than tier-1 cities.

To be sure, in the immediate term, smaller towns will do better solely because large urban areas are affected much more by covid-19. “Also, with normal monsoon, and urban to rural migration, activity as well as demand are likely to stay relatively more resilient in rural markets and small towns. Large consumer product companies will divert some of their distribution and activation efforts to leverage this," said Amit Adarkar, CEO, Ipsos India.

He said the lockdown has presented businesses with a tremendous opportunity to leverage emerging consumer behaviour and changing consumer mindset.

“If all marketing interventions stay the same as what they were pre-covid, obvious categories like staples and hygiene personal care would do better. But how businesses and marketers leverage the opportunities may change the game," he said.

Ipsos has identified key trends based on emerging consumer habits. For starters, people’s priorities and schedules have changed, as has their purchase bucket which is less focused on experiences and more on tangibles. Home has become the new ‘nerve centre’, Adarkar said, with new family dynamics that will shape future consumption.

Besides, with the lack of a support system, the spirit of being ‘atmanirbhar’ has got a boost and consumers will rely more on do-it-yourself options and automation. What constitutes online sales will also change, he said. In addition to commonly understood online behaviour, there will be ‘shadow’ online sales driven by community WhatsApp groups, resident welfare associations and housing societies providing last-mile distribution. Adarkar said with the rise in coronavirus cases in May and June, expectations of a V-shaped recovery were replaced by a U-shaped one. Infections and mortality graph are not yet stable, and relaxations led to a spike in cases. “But relaxations have resulted in some positive news on economic activity and consumer sentiment. We observe a partial bounce-back in consumer sentiment and optimism. The recovery will play out depending on the interplay between these two factors," he said.

In the best-case scenario, Adarkar predicts a U-shaped recovery by the end of 2020. In the worst case, it may be a W-shaped recovery (short ups and downs) playing out till mid-2021.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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Published: 09 Jul 2020, 08:16 AM IST
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