Consumer Affordability in Tier-1, Tier-2 and Tier-3 Cities of India – An Empirical Study

Majority of brick-and-mortar retailers in India assume that; (a) price/product/brand assortment must be differentiated among stores located in different type of cities, (b) consumers cannot afford to purchase high-priced products/brands in tier-2 and tier-3 cities, (c) it is easier to sell high-priced products/brands to consumers in tier-1 cities. Such assumptions and misconceptions have resulted in increasing challenges with respect to maintaining retailer's original and principal price-positioning across different cities in India which could possibly put consumers into a quandary. Brick-and-mortar retailers need to understand the importance of overall store image, overall store price image, target consumer group and its implications on the overall store profitability and consumer perceptions. In this research, we have analysed twelve months actual sales data by twenty price bands across tier-1, tier-2 and tier-3 city stores of a select retailer and drawn insights to recommend ideal price/product/brand assortment strategies for brick-and-mortar retailers in India across their stores present in tier-1, tier-2 and tier-3 cities