18 December 2024, Mumbai
After a phase quick growth fast fashion industry in India, is experiencing a chill. Major players like Zara, H&M, and Levi's are witnessing a significant slowdown in sales growth. This trend is due to factors like inflation and stagnant income, raises questions about the future of fast fashion in the Indian market.
Slowdown and what led to the chill
High inflation has led to reduced spending forcing consumers to prioritize essential spending, impacting discretionary purchases like apparel. Limited income growth, particularly among the urban middle class, has further constrained spending on non-essential items. And uncertainty in the job market, especially in sectors like IT and startups, has led to cautious spending behavior.
Table: Falling sales
|
Brand |
FY23 Growth (%) |
FY24 Growth (%) |
|
H&M |
40 |
11 |
|
Zara |
40 |
8 |
|
Levi's |
54 |
4 |
|
Uniqlo |
60 |
31 |
Source: Regulatory filings with the Registrar of Companies
As Devangshu Dutta, Founder, Third Eyesight opines, there is a visible slowdown led by the urban middle class who buy branded products... The situation is not hunky-dory at all, and this will continue over the next few quarters. And falling sales has led to a dip in profits for many fast fashion brands. Consumers too are becoming more price-sensitive and selective in their purchases. And the slowdown has intensified competition among brands vying for a shrinking market share.
For example, Forever 21, once a prominent fast fashion player in India, faced significant challenges and eventually exited the market in 2019. What led to its exit is the high operational costs, increasing competition, and an inability to adapt to changing consumer preferences. This is a reminder of the challenges faced by fast fashion brands in a dynamic market like India.
Thus to succeed in a market like India, is very important for brands to focus on value and affordability. They need to offer greater value to attract price-conscious consumers. Also, growing awareness about the environmental impact of fast fashion is pushing brands to adopt sustainable practices. A strong online presence and seamless integration with offline channels are crucial to reach a wider audience.
The slowdown in fast fashion sales growth signals a shift in the Indian retail landscape. Brands need to adapt to changing consumer behavior and economic realities to thrive in this evolving market. While challenges persist, opportunities remain for brands that can innovate, offer value, and resonate with the evolving needs of Indian consumers.
