Indian fundamentally solid apparel retail industry backed up by stable macros has leapfrogged from where it was just a couple of years ago which has surprised many, growing at a healthy compounded annual growth rate (CAGR) of 10.2 percent.
Robust tailwinds are supporting this growth traction in the form of propensity to buy, rising income levels, changing lifestyle and consumer preferences, demographics given India arguably has the best digital public infrastructure gives this sector leadership, reveals a recent study by financial advisory firm Centrum Research.
The study is very sanguine about the consistency of retail growth given that it has legs to grow in the apparel market witnessing growing demand for affordable fashion, particularly among Gen-Z consumers and given the width of the market ahead of it.
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The overarching theme of formalization of the economy and the global experts' commentary on Indian apparel retail sector validates how the organized retail sector pie keeps growing to make the size of opportunity immensely big, with major players in apparel retail market increasing their store footprint by 15.7 percent CAGR over the last five years and, many more dropping hats in the ring season in season out inducing the fence sitters to place the bet given that Indian retail Fashion sector is last frontier.
Playbook; One of the growth buckets is how the sector is building heft on the phenomenon of harnessing the power play of private labels not only filling in the gap line areas price points/product mix/product differentiation terms but also as tactical margin accretion terms.
Fashion Guru
Another area where the apparel retail sector is evolved and come of age recognizing the merit of the right segmentation and understanding the consumer buying sensibilities both of India and BHARAT (given there are many Indias in India), underpinning that affordable fashion has emerged as the dominant force in the market, accounting for 56 percent of the total apparel sales as per the report.
Growth and transforming for scale
Another interesting feature of the market is how the bottom of the pyramid opportunity is getting bigger and bigger given that India has pulled off millions from the poverty line in the last decade giving rise to neo middle class only gives berth to the burgeoning mass market segment to witness remarkable growth of whopping 28.4 percent in FY23 with an estimated CAGR of 13.7 percent for FY23-FY27 making it very resilient.
Likewise, the economy segment recorded an impressive 28.7 percent increase in FY23 and is projected to rise @ steadfast CAGR of 14 percent over the coming five years or so. Interestingly the report also outlines the growing eminence of the value fashion segment where the study is constructive on the consistency of this segment on the back of moderated inflation and expectations of easing of monetary conditions in the coming quarters also to gain out of a growing brand-conscious consumer base in this digitally evolving marketplace.
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Again, the good news is that mid-premium and premium segments have also shown the promise of steadfast robust growth and the showing is only a testimony with FY23 figures reflecting handsome increases of 37.9 percent and 45.1 percent, respectively which is phenomenal. The estimated CAGRs for these segments are 21.7 percent and 25 percent for FY23-FY27 again showing a broad-based rally.
Additionally, the Premium+ category benefitting from a growing brand-conscious consumer base grew by an inspirational 33.0 percent in FY23 and is well projected to rise by a CAGR of 35.9 percent by FY27 only to emphasize that growth has legs to run.
Considering the apparel retail market here is maturing to the copybook style of marketing model of the evolving market getting organized where premiumization is become a powerplay and, has witnessed segmentation broadly with strategic categories like western wear, ethnic wear, activewear, traditional wear, and athleisure experiencing phenomenal growth which is no less than tectonic shift in the evolving retail landscape.