Decentralization and rising non‑metro demand are reshaping India’s retail sector

Decentralization and rising non‑metro demand are reshaping India’s retail sector

Multi‑party data and hyperlocal playbooks as key market differentiators, reveals a report by ClarityX and Mastercard, co-powered by MapmyIndia data

New Delhi, India, Feb 28: Decentralization of demand and rapid premiumization are accelerating India’s retail transformation, according to a new report published by ClarityX, an AI-driven data analytics and consulting firm supported by MapmyIndia founders and Mastercard. The report, “Winning in India’s Retail Sector–Harnessing Next‑Gen Analytics to Drive Transformative Growth”, leverages MapmyIndia data and examines demand and supply trends from 2023–2025 and highlights how multi-party data and hyperlocal decision-making are becoming essential in an increasingly diverse retail landscape.

“The ClarityX Mastercard India Retail report highlights how the 2Hs (Highways and Highstreets) are emerging as the new demand engines and the 3Fs (Fuel, Food and Fashion) are driving tier 3- 5 towns to grow twice as fast as their metro peers. The seeping of retail demand and its premiumization at lower demographics are strong markers of democratisation of purchasing power and inclusive economic growth. The evolution of AI-enabled retail intelligence is bringing together multi-party datasets that identify high‑potential geographies, shifting consumer demand and enabling precision-led expansion strategies,”said Rakhi Prasad, Co-founder, ClarityX and Non-executive Director, CE Info Systems Ltd (MapmyIndia Mappls)

“India offers extraordinary growth potential for retailers, but real success lies in understanding how consumer behaviour is evolving. Aggregated and anonymized payments data can tell us who customers are, how they shop and what they value. When this is combined with traffic patterns, POI (point of interest) intelligence and search analytics, it creates a powerful, holistic view of the market. The retailers who turn this intelligence into decisive action will be the ones who lead,” said Rajesh Chopra, Senior Vice President & Head, Advisors, South Asia at Mastercard.

Non-metro India powering the next phase of growth

Tier 3–5 cities are growing almost twice as fast as metros, driven by higher disposable incomes, rising aspirations and a lower starting consumption base. Categories from dining to apparel are seeing clear trading‑up behaviour, but the meaning of ‘premium’ varies sharply by geography—making hyperlocal product assortments increasingly important as mass‑premium offerings lose relevance.

With Tier 1–2 markets approaching saturation, highway and high‑street retail corridors (2H) are emerging as new demand engines. Fuel and food consumption along these routes indicate rising footfall, first‑time brand adoption and the formation of new retail hubs. Future growth will depend on category mix, micro-marketing and the ability to understand consumers at a highly granular level.

Brands that can tailor their product, pricing, promotion and distribution strategies to local nuances will lead India’s next retail chapter.

Key findings from the ClarityX–Mastercard Retail Report

• Offline consumer spends grew 20% between 2023–25, while retail outlets expanded 25% in the same period.
• Electronics, durables and jewellery are still in early growth phases, while footwear has reached maturity across Tier 1–5; F&B and apparel are now nearing maturity.
• Grocery spending rose 74% nationally, but growth was uneven—32% in Tier 1–2 vs 104% in Tier 3–5 cities.
• Premiumization varies by income, exposure and city tier—making it a relative, not universal concept.
• Spending above Rs 25,000 saw the highest growth across categories, indicating unprecedented up‑trading.
• Among organized retail categories, F&B grew the fastest at 89% over three years.