How And Why Demand For The Beauty Business Is Growing In Tier II And Beyond

Tier-II cities have a huge potential, yet an underdeveloped market that is waiting to be explored by the beauty space.
How And Why Demand For The Beauty Business Is Growing In Tier II And Beyond

Salons and spas have seen rapid growth over the last couple of years. Whether it’s in the form of beauty products or services, the demand for it has expeditiously increased, and so has the supply. 

The Indian beauty and personal care market is very evidently growing undeterred at a whopping $26.07 billion as per 2022 figures. The market is expected to boom annually by 4.64 percent (CAGR 2022-2025).

While it is a known fact that salons and spas in the metropolitan cities have been rapidly growing, with a plethora of options for consumers, the competitive market within these cities is now slowly hitting its saturation point. Hence, beauty and wellness now has a new address –– not within the rising skylines of Mumbai, Delhi or Bangalore, but within the tucked away tier-II cities and towns like Kochi, Bhopal, and Ambala.

This emerging markets in tier-II cities doesn’t come as a big surprise, as this very pattern is being witnessed globally too. In India itself, Surat and Ludhiana hold the title for leading sales in the luxury car market. And, the beauty and wellness industry doesn’t stand too far behind. As a matter of fact, approximately 38 percent of demand for beauty in terms of D2C products and services lie in tier II and tier III cities –– which makes it an extremely viable market.

This is one of the most interesting turns of the market that has been seen in the last two decades. The shift can be observed with the youth, in these smaller cities. The current generation of youth is more driven, they are self-aware and educated about the aspects of the industry, and they have a strong purchasing power. The perception is changing and these smaller cities and towns are rapidly evolving. You can no longer categorize them as people who are just drawn to the simple and basic needs of life. They are savvy entrepreneurs, travel enthusiasts, and trend-forward thinkers that consume the best and latest available in the market.

Tier-II cities have a huge potential, yet an underdeveloped market that is waiting to be explored by the beauty space. Research shows that consumers in Tier-II cities are quite aware of the latest trends, products, and hair services that are available not only in India, but also internationally. One of the biggest influences for this lifestyle change has been the invasion of social media, and its ability to affect the lives of the younger population. People don’t just want to look good, they also want the world to know that they’re living their best lives possible. And this outlook doesn’t just pertain to metropolitan cities only. 

Whether it's Bhopal, Kochi, or Vasai, everyone is on social media one way or the other. This allows people to have access to the latest trends in fashion, beauty, and technology. They see something trending and they want to try it too! 

It is a fallacy to assume that fashion awareness or the need for grooming is a priority that is only viable in larger, metropolitan cities. It won’t be long before people from the tier II and tier III cities desire and demand internationally renowned services that brands like ours offer.

An additional shift the beauty industry has seen over the last few years is the demand for online beauty. With the rise of e-commerce platforms, consumers have moved towards online shopping rather than sticking to the norm of brick-and-mortar stores. 

Another factor that makes these smaller cities and towns a profitable affair for the salon business, are its lower property prices. Although the real estate market in tier II and tier III are on the rise, it is relatively low compared with metropolitan cities, where rents and other overheads can skyrocket high. You’re essentially offering the same services with equally trained staff at similar, yet competitive prices, but are able to keep your continuing costs of operation lower than metropolitan states. Purely from a business perspective, this proves to be profitable as the return on capital tends to be higher due to the lower overhead costs.

Lastly, the scope of work in tier II and tier III cities is constantly growing. Consumers are open and excited to experiment with newer trends and a variety of products and services within the beauty and wellness industry. They are all about keeping up and being at par with the bigger cities, which in turn grows the demand for a range of in-salon services. Extensive services will require a rather large team that will of course be trained to fit into the brand’s technical language. Unlike metropolitan cities, recruitment within these smaller towns will be a lot easier –– more people to hire and more importantly, more people willing to learn and improve their skill set.

Grooming is now an essential part of everyone’s lifestyle, be it in the metropolitan cities or the smaller towns across India. Consumers are no longer reliant on just home remedies, and therefore want to reach out to professionals for their beauty needs. Smaller towns are opening up to gender-neutral salons, where even men can not only get their beards groomed and hair cut, but also opt for a facial or a manicure and pedicure.

Beauty has always been aspirational –– the young girl or boy who purchases smaller, local brands, sees themselves being able to afford an international brand in the future. Thanks to the global exposure available on the internet and social media, they are now able to envision their future and work towards achieving it. And for those who are at the precipice of change, we are here to lend a helping hand and make that crossover possible.
 

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