Tier 2 cities beat metros in retail quality and global brand presence: Knight Frank
Synopsis
India's Tier 2 cities are quietly rewriting the retail rulebook — holding more Grade A space than metros, adding nearly 3x more premium retail since 2020, and producing surprises like Chandigarh topping brand penetration rankings over far larger cities. Knight Frank India's latest report signals a structural shift, not just a cyclical uptick.
Key Takeaways
Knight Frank India report released on 12 May 2025 analysed 24 Tier 2 cities on brand penetration, retail quality, and consumption power.
Tier 2 cities hold 61% Grade A retail space , ahead of 45% in Tier 1 cities.
Since 2020 , Tier 2 India added 5.9 million sq ft of Grade A retail — more than three times the Tier 1 addition.
Chandigarh topped the International Brand Penetration Rankings; Mangaluru leads in brand density at over 102 international stores per million people .
Lucknow hosts the most unique international brands in Tier 2 India — 112 brands across 5.6 million sq ft .
American brands account for 46% of international stores and 91% of international F&B presence in Tier 2 India.
India's Tier 2 cities are rapidly outpacing their larger metropolitan counterparts in international brand penetration and quality retail infrastructure, according to a report released on Tuesday, 12 May 2025 by Knight Frank India. The findings challenge the conventional assumption that India's retail growth story is driven primarily by its biggest urban centres.
Key Findings at a Glance
The Knight Frank India report, which analysed 24 Tier 2 cities using benchmarks including Brand Breadth, Brand Intensity, Market Readiness, and Consumption Power, found that Tier 2 cities now hold 61% Grade A retail space — significantly ahead of the 45% recorded in Tier 1 cities. Since 2020, Tier 2 India has added 5.9 million sq ft of Grade A retail space, more than three times the equivalent addition in Tier 1 cities over the same period.
Chandigarh and Mangaluru Lead the Rankings
Chandigarh topped the International Brand Penetration Rankings despite a population of approximately 1.3 million, outperforming much larger cities on consumption power, Grade A retail quality, and international brand density. Mangaluru, meanwhile, emerged as India's most brand-dense Tier 2 city, recording over 102 international brand stores per million people — nearly double Chandigarh's figure. Lucknow, Uttar Pradesh's capital, hosts the highest concentration of unique international brands in Tier 2 India, with 112 brands spread across 5.6 million sq ft of shopping centre stock.
Where Infrastructure Remains the Bottleneck
Not all Tier 2 markets are keeping pace. Surat, Jaipur, and Nagpur — representing a combined population of approximately 16 million and sizeable consumption expenditure — are constrained not by demand or available space, but by the absence of Grade A retail infrastructure capable of attracting and housing international brands, the report noted. This infrastructure gap, rather than purchasing power, is identified as the primary barrier to further retail internationalisation in these cities.
American and UAE Brands Drive Internationalisation
American brands dominated Tier 2 retail internationalisation, accounting for 46% of all international stores and 91% of international food and beverage presence, driven largely by quick-service restaurant (QSR) chains. UAE-based retail groups accounted for nearly 79% of the department-store footprint across Tier 2 India. The report also highlighted the
Point of View
Jaipur, and Nagpur: these are not low-consumption markets, yet brands are staying away because the right real estate does not exist. That is a solvable problem — and one that developers and global retailers are likely reading closely right now.
NationPress
9 Jul 2026
Frequently Asked Questions
Which Tier 2 city topped India's International Brand Penetration Rankings?
Chandigarh topped the International Brand Penetration Rankings despite having a population of approximately 1.3 million, outperforming much larger cities on consumption power, Grade A retail quality, and international brand density, according to the Knight Frank India report.
How does Grade A retail space in Tier 2 cities compare to Tier 1 cities?
Tier 2 cities in India now have 61% Grade A retail space compared to 45% in Tier 1 cities, according to the Knight Frank India report released in May 2025. Since 2020, Tier 2 India has added 5.9 million sq ft of Grade A retail space — more than three times the equivalent addition in Tier 1 cities.
Why are cities like Surat and Jaipur lagging in international brand presence?
According to the Knight Frank India report, international brand penetration in Surat, Jaipur, and Nagpur is constrained not by consumer demand or available space, but by the absence of Grade A retail infrastructure capable of housing global brands. These three cities together represent a combined population of approximately 16 million.
Which international brands dominate Tier 2 India's retail market?
American brands lead Tier 2 retail internationalisation, accounting for 46% of all international stores and 91% of international food and beverage presence, largely driven by QSR chains. UAE-based retail groups account for nearly 79% of the department-store footprint across Tier 2 India.
What is the 'marquee asset effect' highlighted in the Knight Frank report?
The 'marquee asset effect' refers to the finding that a single institutional-quality mall of 0.8 to 1 million sq ft can significantly transform a city's retail positioning and attract international brands. The report identifies this as a key lever for cities currently lacking Grade A infrastructure.
