New Delhi, Feb 28 : 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, a report showed on Saturday.

Decentralisation of demand and rapid premiumisation are accelerating Indiaâ??s retail transformation, according to a new report by ClarityX, an AI-driven data analytics and consulting firm supported by MapmyIndia founders and Mastercard.

Tier 3â??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 tradingâ??up behaviour, but the meaning of â??premiumâ?? varies sharply by geography â?? making hyperlocal product assortments increasingly important as massâ??premium offerings lose relevance.

With tier 1â??2 markets approaching saturation, highway and highâ??street retail corridors (2H) are emerging as new demand engines.

Fuel and food consumption along these routes indicate rising footfall, firstâ??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, said the report.

The seeping of retail demand and its premiumisation at lower demographics are strong markers of democratisation of purchasing power and inclusive economic growth.

â??The evolution of AI-enabled retail intelligence is bringing together multi-party datasets that identify highâ??potential geographies, shifting consumer demand and enabling precision-led expansion strategies,â?? said Rakhi Prasad, Co-founder, ClarityX and Non-executive Director, CE Info Systems Ltd (MapmyIndia Mappls)

According to the report, offline consumer spends grew 20 per cent between 2023â??25, while retail outlets expanded 25 per cent in the same period. Electronics, durables and jewellery are still in early growth phases, while footwear has reached maturity across tier 1â??5.

Grocery spending rose 74 per cent nationally, but growth was uneven â?? 32 per cent in tier 1â??2 compared to 104 per cent in tier 3â??5 cities.

â??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,â?? said Rajesh Chopra, Senior Vice President and Head, Advisors, South Asia at Mastercard.

/IANS