How Fast Fashion Boom & Premiumisation Will Supercharge India’s 2024 Festive Sales

The Indian fashion market was somewhat in a pickle in the first half of the ongoing year due to subdued discretionary spending since late last year. Not to mention, the big fish, including Reliance Retail’s fashion and lifestyle division, Raheja Corp’s Shoppers Stop, Pantaloons of Aditya Birla Fashion and Retail and Tata Enterprise’s Westside, felt the sting of the visibly muted demand.

In the first two quarters (Q1 and Q2) of the financial year 2024-25 (FY25), major retail players reported weak fashion demand due to a prolonged heat wave, elections, and inflation.

While Shoppers Stop recorded a consolidated net loss of INR 22.72 Cr for the June quarter (Q1), attributing it to low consumer spending, Reliance Retail saw only a 6.6% YoY increase in Q1 revenue and a 3.5% drop in Q2, driven by weak demand in its Fashion & Lifestyle division. Similarly, Aditya Birla Fashion Retail Ltd (ABFRL) reported sluggish sales in its Pantaloons business during the first quarter.

Notably, there was no respite for ecommerce players, too. For instance, Nykaa’s second-quarter updates highlighted weak fashion sales during the first half of the financial year.

However, things are starting to look up. The ongoing festive season has sparked renewed demand, with both industry players and experts reporting an uptick, largely driven by festive cheer and a preference for premium products.

Supporting this is SaaS startup Unicommerce’s data, which shows that the gross merchandise value (GMV) across fashion and accessories grew by more than 18% during the first 10 days of the festive sale season (from September 26 to October 5) compared to last year.

Notably, during the first leg of this year’s ecommerce festive sale season, which ran from September 26 to October 6, fashion emerged as the top-performing category, driven by strong demand for ethnic wear, according to a RedSeer report.

Fast Fashion Witnessing Rapid Growth

Amid the changing demand trends, senior vice president of Elara Capital, Karan Taurani, expects the overall fashion segment to grow in early double digits. He is, however, more bullish on the fast fashion segment, which he sees growing in the mid to late teens.

“Emerging trends clearly indicate that consumers are spending more aggressively on fast fashion due to the appealing styling of the products, their desire for frequent changes in fashion, attractive prices, and an improved user experience. A substantial shift is happening from the unorganised sector towards fast fashion, which is expected to see robust growth in the fashion industry,” Taurani said.

Taurani’s thesis aligns with the fast fashion sector’s strong performance in India, especially in online shopping, with Gen Z leading this growth.

It is crucial to note that fast fashion was one of the few outperforming sectors in India’s retail market last year. While the broader fashion market in India saw flat year-on-year growth of around 6% in FY24, fast fashion grew at a much faster rate of 30-40%, according to the RedSeer report.

This trend is dominating this festive season. A case in point is fast fashion brand NewMe, which saw growth across the board in order volume, offline revenue, walk-ins at its stores, and online retention rates. According to founder Sumit Jasoria, the brand experienced 35% growth in September compared to the previous month.

“Our festive season starts in October and runs through December. We are not listed on marketplaces like Flipkart or Amazon, so we rely solely on our direct channels. Last month was actually the best month in the company’s history, so we’re feeling very positive. We’re confident that the next two to three months will be excellent for growth,” Jasoria said.

Demand Tsunami From Tier II, Tier III Cities

Neck and neck with the fast fashion surge, the growing number of online shoppers from Tier II and Tier III cities is making this year’s festive season worth remembering.

Increased exposure to fashion trends and rising disposable incomes of individuals from these regions are the key factors driving demand in favour of established brands and new D2C players offering high-quality, trendy clothing.

According to Unicommerce, Tier III and smaller regions (in the first 10 days of this year’s festive season) saw the highest growth in order volumes (a 21% increase) while Tier II cities experienced a 20% rise. In Tier I cities and metros, order volumes grew by more than 18%.

During this festive season, Myntra reported strong activity from cities like Jaipur, Lucknow, Patna, Guwahati, Surat, Indore, Bhubaneswar, Bhopal, Ranchi, and Nagpur, as consumers in these regions “shopped to their heart’s content,” the company said.

In Tier II and smaller markets, the unbranded or value segment in women’s apparel, daily-wear jewellery, and kids’ fashion also experienced significant growth across marketplaces, the RedSeer report has revealed.

The Flavour This Festive Season Is Premium

Speaking with Inc42, a Unicommerce spokesperson said that this year’s festive season is being driven by categories like ethnic wear, travel accessories such as neck pillows, travel pouches and kits, waist pouches, kids’ accessories, jewellery, earmuffs, bows, and watches.

According to Zeba Khan, director of fashion and beauty at Amazon India, there has been a discernible trend towards premiumisation, particularly in categories like watches, luggage, shoes, and beauty.

“Smartwatches saw a 10X increase, while premium watches grew 6X, reflecting strong interest in premium lifestyle products. Men’s sneakers witnessed over 7X growth, trolley sets soared by 23X, and luggage sales jumped 6.5X,” she said, adding that premium brands such as Seiko, Mathey Tissot, Tommy Hilfiger, Guess, Swarovski, Satya Paul, and Laneige are selling like hot cakes.

This spike in premium product demand can be attributed to both the ongoing festive season and the delayed wedding season, which has now shifted to October, November, and December, Elara Capital’s Taurani highlighted.

As the festive season commenced with celebrations like Onam, Ganapati, and Durga Puja, fashion retailers witnessed an initial boost in demand across various states. However, the true demand surge is expected to come during Diwali and the upcoming wedding season.

While offline growth is anticipated to be around 8-10%, the online fashion segment is projected to outpace this with a growth rate of 18-20% in the October-December quarter.

To sum it all up, industry experts believe that while spending discretion is driving the demand of value-based categories, premiumisation is keeping the game interesting for fashion and lifestyle players (both online and offline) this festive season. 

[Edited By Shishir Parasher]

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