Indian Apparel Market Set for Strong Sales is expected to grow by a healthy 8-10 percent in revenue in FY25 and, it is anticipated to be driven by demand tailwind from a healthy monsoon, inflation having come off from an elevated level, and early festivity this season and a longer wedding seasons with more number of marriage days and, supported by anticipation of a good winter season. Performance metrics
A Crisil Ratings report highlights that retailers are gearing up for the better half of the year which typically contributes to bulk of the annual business adapting their strategies to improve supply chain efficiency and respond to the shifting consumer trends and rising preference for fast fashion and discounting to come down this season.
A value fashion segment to see incremental growth as spend is not as much we require and same is expected in standalone stores. The store space also may not grow in tune with the growth registered in the previous year.
Key trends; Fast fashion is gaining popularity and interestingly more than 25% buying happening through online channels as these garments too have lower price points and yet the margins we see are pretty similar to what we see in normal garments.
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Unlocking the potential; Also as per the study retailers are focused on building capabilities and efficiencies heft at existing stores and using cost management tools to make it a sustainable business model while keeping a close eye on limiting external debt to sustain operating margins between 7.2 percent and 7.4 percent to have a tighter business control.
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Make no mistake, today the mass market segment now constitutes 60 percent of total sales, significantly up from 56 percent pre-pandemic, underpinning the secular trendline that fast fashion fundamentally is a key revenue driver.
Interestingly, besides the phenomenon of brands increasingly going for premiumization and the consumer has started to well respond it in the apparel sector specifically during festive periods, the report notes a prevalence of durable shift in consumer spending toward travel and luxury goods in urban India.
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Consequently, regarding BHARAT where retailers are circumspect/cautious about expansion in these regions more particularly while targeting tier 2 and 3 cities, organized retail is on the rise and it is there to stay.
However, a notable observation is all said and done on the whole area expansion is expected to be lower this year, with an anticipated/projected addition of 2.2 million square feet compared to 3.6 million of last fiscal.