India's Festive Frenzy: Affordable fashion drives apparel sector boom this year
28 October 2024, Mumbai
India's festive season is in full swing with Diwali and the accompanying festive season buying is at an all time high. Early reports indicate a record-breaking increase in consumer spending. And it’s being driven by affordable fashion, particularly in Tier II and III cities.
Affordable fashion leads buying frenzy
While the initial phase of the festive season saw strong sales of premium electronics, the focus has now shifted to affordable fashion. Redseer Strategy Consultants reports sales of women's apparels, jewellery, and kids' fashion in the unbranded and value segments have unexpectedly grown. Ethnic wear is proving particularly popular, with a significant portion of demand originating from Tier II, III cities.
This trend underscores a broader shift in consumer behavior. "The dynamics are shifting," says Kushal Bhatnagar of Redseer. "While high ASP (average selling price) products dominated early on, affordable fashion is now driving growth." This change is attributed to increasing disposable incomes and growing fashion consciousness in smaller cities.
Table: Festive season boom
Metric Value Source Festive season sales (First Week) Rs 54,500 crore Redseer & Datum YoY growth (2023 vs. 2022) 19% Redseer E-commerce growth (First Week) 26% Datum Intelligence E-commerce festive season GMV Rs 100,000-120,000 crore Redseer Quick commerce growth (YoY) 100% Redseer
Smaller cities fuel growth
One of the most striking trends this festive season is the significant contribution of Tier II and III cities. Improved internet penetration, increased exposure to fashion trends, and rising disposable incomes are driving demand in these regions. Many brands are actively targeting these markets to expand their reach and cater to the growing aspirations of consumers in smaller towns.
An interesting aspect is that e-commerce platforms are playing a crucial role in this festive boom, especially with the rise of quick commerce. Consumers are increasingly seeking instant gratification, leading to exponential growth for platforms offering rapid delivery of essentials like groceries, beauty products, and even mobile phones.
Datum Intelligence reports a 26 per cent year-on-year growth in e-commerce sales during the first week of the festive season compared to 2023. Mobiles, electronics, and home merchandise accounted for 75 per cent of total sales. Redseer predicts that quick commerce will contribute around 8 per cent of the total festive season GMV.
Growth fuelled by rising income, digital penetration
Studies suggest, increased disposable incomes in smaller cities are empowering consumers to spend more on festive apparel. What’s more e-commerce platforms are giving a boost as they reach out deeper into smaller towns, providing access to a wider range of affordable fashion options. The rise of quick commerce platforms offering rapid delivery of fashion and accessories is also helping in instant gratification. Meanwhile consumers especially in smaller towns are prioritizing value and affordability, seeking stylish ethnic wear without the premium price tag.
However, even though the festive season presents a lucrative opportunity for apparel businesses, it also brings challenges. One major challenge is inventory management. Meeting growing demand requires efficient inventory management and logistics to ensure timely delivery. Also, the apparel market is highly competitive, with brands vying for consumer attention through discounts, promotions, and innovative offerings. Therefore, staying ahead of emerging fashion trends and consumer preferences is crucial for sustained success.
Indeed, the 2024 festive season is proving to be a watershed moment for India's apparel industry. The huge rise in demand for affordable fashion, coupled with the rise of e-commerce and quick commerce, is reshaping the retail landscape. By adapting to these evolving dynamics and embracing innovation, apparel businesses can unlock significant growth opportunities and solidify their position in this vibrant market.
