Driven by the e-commerce and specialty segments, India’s apparel retail market is projected to grow by 15 per cent CAGR until FY30.
In FY25, apparel sales from India’s e-commerce segment are projected to increase by 17 per cent Y-o-Y, as per a report by India Ratings and Research (Ind-Ra). Meanwhile, brick-and-mortar (B&M) sales are projected to increase by 7 per cent Y-o-Y in FY25 while growing at 9 per cent CAGR till FY30. This growth will be supported by the enduring appeal of in-person shopping experiences.
Fast fashion, lux ury, ethnic wear, and value-focused segments in Tier-II and smaller cities will outperform the broader apparel market during this period, as per the Ind-Ra report. Fast fashion segment will gain momentum due to social media influence and Gen Z preferences, with major retailers doubling store counts by FY25. Ethnic and value segments are also set to expand as customers shift to organized retail.
Further, Ind-Ra forecasts, revenue growth in the sector will improve from 8.5 per cent in FY25 to 10.5 per cent in FY26. In H1FY25, revenue growth had slowed to 7 per cent Y-o-Y due to subdued consumer demand and lower same-store sales growth (SSSG). However, it is expected to rebound in H2FY25, supported by favorable monsoons, an increase in wedding events, and improving consumer financial health.
Retailers are expected to maintain steady profitability through cost optimization measures, keeping EBITDA margins at 16.5 per cent in FY25 and improving by 30 basis points (bp) Y-o-Y in FY26. Advertising spending is predicted to remain stable at 2.5 per cent-3 per cent of revenue. Number of inventory days are likely to decline slightly in FY25 but remain elevated due to controlled expansion and focus on shorter-cycle fast fashion.
Store expansion is anticipated to grow at 9 per cent Y-o-Y in FY25 and 11 per cent Y-o-Y in FY26, driven by fast fashion and ethnic-focused formats. Retailers are also adopting franchise models and targeting under-penetrated markets to optimize costs. Controlled capex and steady profitability are expected to sustain the capital structure and credit metrics, with improvements projected in FY26.
