India's apparel retail will continue to grow with rising incomes, increased demand for affordable fashions: Centrum

India's apparel retail industry has grown at a compounded annual growth rate (CAGR) of 10.2 per cent over the past decade.

This growth has been fuelled by rising disposable incomes and rapid urbanisation, leading to a shift from unorganised to branded retail.

As per a research report by the financial advisory firm Centrum, looking ahead, the apparel market is expected to continue growing, driven by rising incomes, favourable demographics, and increased demand for affordable fashion, particularly among Gen-Z consumers.

Over the past five years, store expansion by major players has grown at a CAGR of 15.7 per cent. Organised retail now accounts for 40 per cent of the market, with both domestic and international brands gaining a strong foothold. The rise of e-commerce, especially in tier-2 and tier-3 cities, has also played a pivotal role in this shift.

Another notable trend is the growing focus on private-label apparel, which offers price and product differentiation. However, customers in smaller cities tend to prioritise quality and value-for-money over brand names.

Affordable fashion has become the dominant force in the industry, particularly as value fashion, which makes up 56 per cent of the total apparel market.

The mass market grew by 28.4 per cent in FY23, with an estimated CAGR of 13.7 per cent for FY23 to FY27. The economy segment saw similar growth, with a 28.7 per cent increase in FY23 and a projected CAGR of 14.0 per cent over the next five years.

The mid-premium segment recorded impressive growth of 37.9 per cent in FY23, with a projected CAGR of 21.7 per cent from FY23 to FY27.

The premium segment grew by 45.1 per cent in FY23, with an estimated CAGR of 25.0 per cent over the coming years. Meanwhile, the premium+ category grew by 33.0 per cent in FY23 and is expected to grow at a CAGR of 35.9 per cent by FY27.

Segmentation within the organised market has also emerged, with categories like western wear, ethnic wear, and athleisure showing rapid growth.

Looking ahead, the apparel market is expected to continue growing, driven by rising incomes, favourable demographics, and increased demand for affordable fashion, particularly among Gen-Z consumers.

Value fashion is projected to bounce back as inflation eases, while premium segments will benefit from a growing brand-conscious consumer base.

Private brands are likely to see higher growth, capitalising on the latest fashion trends and evolving consumer lifestyles, says the report.