Online fashion markets set to grow into a $10 billion industry by 2028

With India continuing to have one of the youngest populations in the world, most digital-first fashion and lifestyle mid-market online brands being steered forward by Gen-Z and millennial shoppers, is all set to grow into a $10 billion industry by 2028 from the current $2.4 billion.

A joint report by leading management consulting firm, Bain & Company with TMRW – an Aditya Birla Group venture with a large number of disruptor Indian brands in the fashion & lifestyle space- have together pointed out the overall online fashion market will grow to around $35 billion at a rapid CAGR of 25 per cent by FY28.

The rise of e-commerce has opened up access to the mid-level fashion category pan-India, which has seen 30 per cent growth annually since 2019, as online shopping increased drastically over the Covid years and later. Easy delivery to smaller towns along with a variety of payment modes has helped international as well as domestic brands on e-marketplaces become household names.

The next phase of growth for these brands will be led by premiumization and growing customer preference for branded clothing. The Gen-Z and millennial consumer segments will ensure that 70-80 percent of online traffic will be for digital-first brands with their growing desire to wear new and more aspirational brands.

Digital disruptor brands will drive the fashion segment

The report highlighted the key factors driving growth in the global and Indian online fashion and lifestyle market, especially for digital disruptor brands. It also aimed to identify changes in consumer behavior over rapid digitization in the last four years along with understanding how to make the best profitability from current brands in this space.

Digital disruptor brands will rapidly grow in the next phase of market evolution -- especially in certain fragmented categories -- to a $2.4 billion market over the next few years. The focus will be on including more remote markets with a digital-first operating model that enables speed and data-led decision-making.

Developments

This will greatly help big fashion houses who have many sub-brands such as TMRW, who have recently increased their brand portfolio with a tie-up with eight more brands across fashion sub-categories, including Berrylush, Bewakoof and Juneberry and is set to include some more brands in coming months to make a more complete portfolio.

Bain and Company expects over 40 digital-first fashion and lifestyle brands in the Rs 50 - Rs 100 crore revenue range to join the e-commerce bandwagon by FY28, as this segment gradually becomes more lucrative.

“If today there are only 25 such brands over Rs 100 crore, within five years there could be 50 brands over Rs 200 crore in value. I think this is quite meaningful in the context of the broader fashion market in India that has historically been super fragmented," opines Radhika Sridharan, Partner, Bain’s and Co.

National brands expect $2.5 billion in online business in FY23

In order to seize the moment, many national brands have now invested in growing their e-commerce website businesses and have almost doubled their online share constituting a $2.5 billion online business in FY23, having grown at 34 percent in the last four years.

However, the good times are slowing down as the comfort of online shopping habits are waning in post-pandemic times with a more balanced growth pattern with mall shopping and offline channels becoming more popular once again.

Bouqut; Mega retail companies that form a house of brands rather than individual brands will do better as they ride on physical and digital marketplace infrastructure and have better shared horizontal investments and capabilities in technology and data science.

A more well-developed e-commerce infrastructure that helps brands to run lean and mean operations with lower overheads is paving the road ahead for the fashion and lifestyle Indian segment.

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