Indian retailers navigate margin compression amid 9% growth in February 2026
23 March 2026, Mumbai
The Indian retail sector recorded a measured 9 per cent Y-o-Y growth in February 2026, according to the latest Retailers Association of India (RAI) survey. While this figure indicates stable domestic consumption, it reflects a deliberate cooling from the double-digit exuberance of the previous festive quarter. Retailers are currently operating in a high-cost environment where top-line gains are increasingly offset by rising input volatility and overheads. Data suggests, the ‘valuation-volume gap’ is becoming more pronounced, as revenue growth is frequently driven by selective price adjustments rather than broad-based volume expansion. Consequently, the industry is transitioning from a period of aggressive footprint expansion toward a phase of operational consolidation and margin protection.
Regional performance and sectoral divergence
Regional data highlights a clear divergence, with West and South India leading growth at 10 per cent, while North and East India trailed slightly at 8 per cent. In the apparel and fashion segment, the demand for premium and occasion-led wear remains resilient, yet the mass-market category faces headwinds from inflationary pressures. The current growth trajectory is steady but requires a sharp focus on inventory hygiene, noted an industry analyst during the Retail Leadership Summit 2026. A significant challenge remains ‘The Ticking Shelf,’ where nearly 24 per cent of on-shelf apparel inventory is now classified as aging beyond its optimal selling window. To mitigate this, brands are leveraging AI-native supply chains to synchronize store drops with real-time demand, aiming to unlock efficiency gains of up to 40 per cent while reducing the reliance on blanket discounting to clear stagnant stock.
RAI is the unified body representing the $1.1 trillion Indian retail industry, encompassing over 2,300 members and 600,000 outlets. It focuses on modernizing the ‘phygital’ ecosystem through policy advocacy and technology adoption. Growth plans center on a ‘One Nation, One Retail Licence’ framework to streamline nationwide expansion.
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