India’s consumption growth is increasingly being driven by Tier 2 and Tier 3 markets rather than large metropolitan centres, according to a new consumer study by venture capital firm Rukam Capital.
The report, based on a survey of more than 5,000 respondents across 18 states, stated that non-metro consumers are digitally mature, research-led and cautious in their spending behaviour, challenging long-held assumptions about impulse-led consumption outside metros.
WhatsApp dominates digital behaviour
The report further mentions that WhatsApp is the primary digital platform across non-metro India, adding that 90% consumers use it as the main interface for communication.
Furthermore, consumer discovery in non-metro markets is driven by video content and online research as compared to traditional advertising. 37% consumers rely on YouTube reviews, and 32% discover products on social media platforms. In addition, 35% of consumers use e-commerce platforms primarily for research before making a purchase.
Influence patterns have also shifted. As per the report, creator-led recommendations influence over one-fifth of consumers, while celebrity endorsements account for only a marginal share of purchase decisions, indicating the declining effectiveness of aspiration-led advertising in these markets.
Trust outweighs promotion in purchase decisions
Trust is the most significant factor influencing consumption decisions in non-metro India, the report shows. The report states that word-of-mouth recommendations influence 22% consumers, while 40% of tier 3 consumers check the official brand websites, and as much as one third consider customer service interactions before transacting.
Spending remains disciplined and value-focused
The report highlighted that Unified Payments Interface (UPI) has become the dominant payment method, used by 67% of consumers across Tier 2 and Tier 3 cities. Discount tracking is common in Tier 2 markets, while festival periods continue to drive discretionary spending in smaller towns, the report added. Quick commerce seems to have lower adoption rates in non-metro markets, especially Tier 3. Food delivery shows moderate penetration, while in-home services are still at an early stage.
Vernacular content drives media consumption
The report added that Media consumption patterns in non-metro India favour vernacular and mass-market content. JioHotstar has the most users in the OTT space, with over half of consumers across Tier 2 and Tier 3 markets using the platform. Nearly a quarter of Tier 3 viewers prefer vernacular OTT platforms. Music streaming apps and messaging platforms such as Telegram also show high adoption.
According to the report, more than half of consumers in Tier 2 and Tier 3 markets respond to in-game advertising.