After a period of sluggish sales in the current fiscal year, the Indian fashion scene is preparing for a vibrant resurgence in the coming year, according to India Ratings and Research (Ind-Ra). Several factors are contributing to this optimistic outlook, including increased disposable incomes, a packed wedding calendar, and favourable monsoon seasons, all expected to boost consumer spending, especially in smaller cities and towns.
The industry finds itself at a pivotal moment, marked by significant structural shifts. Organised retail is gaining ground, the Gen-Z demographic is reshaping purchasing habits, and a clear division has emerged between budget-friendly and high-end fashion. This dynamic landscape presents both challenges and opportunities for brands.
Certain segments are predicted to outperform others. Fast fashion is experiencing explosive growth, fueled by social media trends and Gen-Z’s desire for trendy, quickly accessible clothing. Major retailers are responding by rapidly expanding their fast fashion store networks, with similar expansion anticipated next year. This surge in demand is also driving investment in India’s manufacturing capabilities, positioning the country as a potential hub for both domestic and international fashion brands.
Ethnic wear and luxury segments are also gaining popularity, driven by rising affluence and aspirations among middle and upper-class consumers. E-commerce, propelled by increased internet access, is expected to outpace brick-and-mortar store growth, although physical retail remains important for the premium shopping experience.
Retailers are taking a cautious yet strategic approach to expansion, prioritising store productivity and cost optimisation. Profit margins are expected to remain stable this year, with improvements anticipated next year as companies streamline operations. Adaptability will be crucial for success, requiring brands to balance efficiency with flexibility, sustainability with scalability, and speed with quality.
Projected revenue growth of over 10% next year, driven by fast fashion and premium categories, signals a transformative phase for the Indian fashion industry. This growth will require a delicate balance of innovation, scalability, and meeting evolving consumer desires.
Credit conditions are expected to remain stable this year, with improvements anticipated next year as the market recovers. However, high inventory levels pose a risk of obsolescence, requiring retailers to maintain careful inventory management practices. Advertising and promotional spending is expected to remain within a specific range, with some retailers investing heavily in brand building and customer engagement, while others are adopting a more conservative approach. Healthy prospects for fundraising are expected to bolster the financial strength of the sector. The overall outlook for the coming year is positive, driven by improving consumer finances, increased wedding-related spending, and the expansion of organized retail formats like fast fashion, luxury, and ethnic wear.
