<p>One of the persistent myths in business is that consumers in smaller cities are simply metropolitan consumers with less money. According to this view, aspirations first emerge in Bombay, Delhi and Bangalore and then travel to Lucknow and Ludhiana. Companies, therefore, take a product that has worked in a large city, reduce the price if necessary, expand distribution and wait for demand to arrive. It is a nice enough theory, but it is also frequently wrong. </p><p><em><strong>Nykaa</strong></em> provides an appealing example of what businesses can learn when they look beyond this assumption. The company began as an online beauty retailer, which made eminent sense in a country where physical retail was fragmented and many consumers had limited access to established beauty brands. Digital distribution allowed it to reach customers far beyond the largest cities. Yet Nykaa did not conclude that the internet had made physical retail unnecessary. It continued opening stores and that decision is revealing because beauty is not purchased entirely through logic. Customers want to see shades and particularly when trying an unfamiliar product, receive reassurance. An app can offer convenience, but only a store can provide confidence. This matters because companies often confuse digital access with consumer understanding. A person may watch the same videos but that does not mean that she will make the same purchase. </p><p><em><strong>Titan</strong></em>’s experience offers another lesson. The company does not approach watches, jewellery and accessories as though every consumer is buying the same thing. A watch may be a functional product, or a fashion accessory. Jewellery may be purchased for everyday use, a wedding or a festival. Titan consequently operates through several brands and retail formats, serving distinct occasions and price points. The company’s recent expansion plans also illustrate how misleading the expression “smaller city” can be. Titan’s watch business has identified places such as Asansol and Siliguri as promising markets for premium retail. This does not mean that every product sold successfully in Calcutta, can simply be dispatched there. Ludhiana may support a premium proposition because of local wealth and conspicuous consumption. Coimbatore may possess similar purchasing power but respond to a different message. Each is a separate market. </p><p>There lies the real problem with much of the gobbledygook surrounding the 'next billion consumers'. The number is so large that it encourages managements to think in averages. Average income rises or average smartphone ownership expands. But no company sells to an average Indian. It sells to a particular person in a particular town who may be modern in one respect, traditional in another and distinctly wobbly about entrusting money to an unfamiliar company. The same distinction is important in financial services. A consumer who uses a smartphone for payments may still resist buying an investment product without speaking to another human being. A fintech company may possess a superb interface and a decent proposition, yet struggle because its advertising emphasises speed and independence when customers actually want reassurance. In such a market, assisted onboarding may be critically valuable. </p><p>Firms must therefore resist the temptation to regard regional markets as distribution territories. They are markets that require interpretation. India beyond the metros is surely a vast opportunity. Nykaa’s reach and Titan’s expansion demonstrate that aspiration is no longer confined to a handful of cities. But the opportunity will not necessarily belong to companies with the loudest advertising. It will belong to those that recognise that there is no single non metropolitan Indian consumer. There are many Indias and each must be understood on its own terms. </p>
<p>One of the persistent myths in business is that consumers in smaller cities are simply metropolitan consumers with less money. According to this view, aspirations first emerge in Bombay, Delhi and Bangalore and then travel to Lucknow and Ludhiana. Companies, therefore, take a product that has worked in a large city, reduce the price if necessary, expand distribution and wait for demand to arrive. It is a nice enough theory, but it is also frequently wrong. </p><p><em><strong>Nykaa</strong></em> provides an appealing example of what businesses can learn when they look beyond this assumption. The company began as an online beauty retailer, which made eminent sense in a country where physical retail was fragmented and many consumers had limited access to established beauty brands. Digital distribution allowed it to reach customers far beyond the largest cities. Yet Nykaa did not conclude that the internet had made physical retail unnecessary. It continued opening stores and that decision is revealing because beauty is not purchased entirely through logic. Customers want to see shades and particularly when trying an unfamiliar product, receive reassurance. An app can offer convenience, but only a store can provide confidence. This matters because companies often confuse digital access with consumer understanding. A person may watch the same videos but that does not mean that she will make the same purchase. </p><p><em><strong>Titan</strong></em>’s experience offers another lesson. The company does not approach watches, jewellery and accessories as though every consumer is buying the same thing. A watch may be a functional product, or a fashion accessory. Jewellery may be purchased for everyday use, a wedding or a festival. Titan consequently operates through several brands and retail formats, serving distinct occasions and price points. The company’s recent expansion plans also illustrate how misleading the expression “smaller city” can be. Titan’s watch business has identified places such as Asansol and Siliguri as promising markets for premium retail. This does not mean that every product sold successfully in Calcutta, can simply be dispatched there. Ludhiana may support a premium proposition because of local wealth and conspicuous consumption. Coimbatore may possess similar purchasing power but respond to a different message. Each is a separate market. </p><p>There lies the real problem with much of the gobbledygook surrounding the 'next billion consumers'. The number is so large that it encourages managements to think in averages. Average income rises or average smartphone ownership expands. But no company sells to an average Indian. It sells to a particular person in a particular town who may be modern in one respect, traditional in another and distinctly wobbly about entrusting money to an unfamiliar company. The same distinction is important in financial services. A consumer who uses a smartphone for payments may still resist buying an investment product without speaking to another human being. A fintech company may possess a superb interface and a decent proposition, yet struggle because its advertising emphasises speed and independence when customers actually want reassurance. In such a market, assisted onboarding may be critically valuable. </p><p>Firms must therefore resist the temptation to regard regional markets as distribution territories. They are markets that require interpretation. India beyond the metros is surely a vast opportunity. Nykaa’s reach and Titan’s expansion demonstrate that aspiration is no longer confined to a handful of cities. But the opportunity will not necessarily belong to companies with the loudest advertising. It will belong to those that recognise that there is no single non metropolitan Indian consumer. There are many Indias and each must be understood on its own terms. </p>
