Surge in online demand for products and services in Tier II cities re-defining India’s growth story: Just Dial Consumer Insights

With strong signs of economic recovery supported by increasing vaccination numbers, India at large seems to be getting back to clocking overall economic growth with Tier-II towns and cities emerging as the new engine of this growth curve, reports Just Dial Consumer Insights.

As per latest Just Dial insights, right from the onset of the festive season till the year-end festivities, Tier-II cities have been driving consumption growth and are at par or in some instances have surpassed Tier – I in terms of overall demand cutting across products and services in various areas. Higher disposable incomes and a wider exposure coupled with deeper internet penetration and access, India’s Tier II cities seem to have taken a mammoth leap to grab the front-seat in steering the country’s demand surge and thereby trigger economic growth.

During the Navratras, Tier-II cities witnessed robust demand growth for demand for caterers compared to Tier-I cities. The ensuing Dhanteras also saw a high demand surge for precious metals – gold, silver, and diamond – in Tier-II cities vis-à-vis Tier-I.

Commenting on this interesting trend, Prasun Kumar, Chief Marketing Officer at Just Dial said: “Covid-induced lockdowns have increased online adoption of services across Tier-II cities as well. Hence, we are witnessing a demand growth on Just Dial across India’s Tier-II towns and cities for a host of services and products. This increasing demand growth across smaller towns and cities augurs well for India’s overall socio-economic growth.”

For the wedding season, demand rise for a host of services in Tier-II cities was almost 2X of India’s overall growth rate. Even for the holiday season, growth rate of searches across travel and tourism related categories have shot up by 51% across India but the rate remained higher in Tier-II cities vis-à-vis Tier-I cities. The demand growth in Tier-II cities was at 54% ahead of Tier-I cities, where the rate of growth was 49%. The rise in service sector across India’s smaller towns and cities benefits the flourishing gig economy and indicates that the overall economy is recalibrating well.

“There is an increasing online demand for a host of services in Tier-II towns and cities. This indicates that the gig economy in sectors like wedding, food delivery, and tourism is flourishing well. With access to quality education and internet, Tier II cities are increasingly becoming digital that also benefits big and small businesses alike. Just Dial looks forward to leading this trend by enabling local businesses to get online build the future discourse of the Indian economy,” said Kumar.

Tier-II cities witnessed robust growth during the festivities of Navratri and Durga Puja with demand for caterers registering a significant rise across Tier-II cities compared to Tier-I. Trivandrum, a Tier-II city, saw the maximum demand, while Tier-III cities Kangra, and Saharanpur were second and third respectively across the country.

Demand for wedding services across the country grew by 49.7% QoQ with most of this demand being generated by Tier-II cities that saw a growth of 106% benefitting the growing gig economy at large. The demand surge for precious metals too remained higher in Tier-II cities. In terms of gold, demand growth rate in Tier-II towns (24%) remained marginally ahead of Tier-I cities (22%).

For silver, Tier-II cities (40%) saw 2X growth rate vis-à-vis Tier- 1 (20%) while demand for diamond as well remained higher in Tier-II cities (38%) compared to Tier-1 cities (14%).

The demand growth for budget hotels, picnic spots, local tourist attractions and farmhouses have been on a rise as Just Dial witnessed a 51% YOY growth in searches for all travel and tourism related searches. This demand growth was higher in Tier-II cities at 54% ahead compared to Tier-I cities, where the rate of growth was 49%. Just Dial compared consumer trends for the Oct-Nov 2021 period vis-à-vis same period in 2020 when unlocking was taking place in a phased manner to analyse the demand trends in the domestic travel and tourism sector.

Similarly, Tier-II cities saw a tremendous growth over Tier-I cities during winter festivities. Demand for restaurants, pubs, food delivery service in tier-II cities have witnessed a surge of 95% over tier-I which saw 21%.

In Tier-II cities, Surat, Kozhikode, Kakinada, Malappuram, and Srinagar were the leading five cities with maximum demand for food delivery services while Lucknow, Bhopal, Visakhapatnam, Kanpur, and Jaipur were the top 5 cities that saw maximum demand for pubs in the Tier-II category.

The demand for sarees too witnessed a huge surge and Banarasi and Bengali Taant topped the maximum online searches for sarees in India. Banarasi sarees dominated almost 25% of the searches pan-India with Tier-II cities generating more demand (40%) than their Tier-I peers (26%).