Trent, the retail arm of the Tata Group, is accelerating its expansion into Tier III and IV cities, banking on stronger growth prospects in emerging markets over the coming years, a senior executive said.
The company’s leadership also noted that urban consumption is gradually recovering following the GST 2.0 reforms, although the long-term impact on small-ticket discretionary spending remains measured.
"We are opening a lot more in Tier III and IV cities now, as opposed to what we used to do in the past. What we are seeing is, very clearly, the young customer in those markets is super clued onto what trends are playing out," P Venkatesalu, Managing Director, Trent said in a news report.
According to Venkatesalu, while consumers in smaller towns and cities may not yet display the same maturity levels as those in metropolitan markets, this gap is expected to narrow over the next few years.
"We do bet in a very significant way that the customer will be more interesting," he said.
Highlighting the long-term opportunity, he emphasised that macro markets are likely to become increasingly attractive. Drawing parallels with the company’s earlier metro strategy, he said, "but that's the same approach that we took to metros, If you went back five years, in terms of densification, in terms of opening far more presence in individual micro-markets. So, we are doing the same thing, broadly speaking, in tie-3, tie-4 markets now," he stated.
The retailer is also placing a strong emphasis on expanding into new geographies and micro-markets.
"A substantial portion now, maybe about two-thirds of our stores that we are increasingly opening is in new towns, new cities, new micro-markets within the periphery of cities. So, clearly, new micro-markets is a focus area for us," Venkatesalu said.
Speaking about the impact of GST reforms, he observed that following the shift implemented after 21st September, consumer spending initially tilted toward high-value purchases.
"But that said, over the medium term, we do think small-ticket discretionary will also benefit from the changeover," he said.
He further explained that categories such as electronics and automobiles, which witnessed notable GST reductions, temporarily drew greater consumer attention.
"As of today, he said, the initial blip that came through from a focus on high-ticket categories such as electronics and auto, which had significant GST drops I do think there was a bit of focus from the customers to that, which took away focus from small-ticket discretionary," he said.
However, he added that the overall direction of GST reforms remains favourable for consumers and is likely to support consumption recovery in the coming months and quarters.
"Having said that, the direction of GST is completely in the interest of consumers, the changes that have happened, and I do see that helping consumption gradually improve in the months and quarters ahead," he added.
