Digital disruptor brands are projected to outpace India’s online fashion market growth with 35 per cent annual growth, to reach $10 billion by FY28 from its current size of $2.4 billion, according to a report released by Bain & Company and TMRW House of Brands. It said that the overall online fashion market is expected to grow to approximately $35 billion by FY28 with the digital disruptor taking approximately 29 per cent of the market share. This, the report stated, is being driven by shifting consumer preferences including increasing willingness to experiment with new brands, and the innovation from digital first brands.
The report titled ‘India’s Digital Fashion Disruptors: Navigating the Future of Fashion’ said that the digital disruptor brands (brands that begin by selling online) have grown at 33 per cent in the last 4 years and expected to increase their share of the overall fashion market. “Young customers, especially Gen Z, have a greater propensity to try and buy these brands. The best disruptor brands have also rewired their marketing, increased their share of wallet with buyers on the back of their product offerings, and streamlined their operations. Certain historically fragmented subcategories, such as ethnic wear and kids wear, are undergoing significant transformation with the growth and scaling of new digitally led brands and are expected to see outsize growth in the next five years,” said Radhika Sridharan, Partner, Bain & Company.
According to the report, the growth of digital disruptors is primarily driven by Gen Z and millennials. Website and app data analysis show that 70-80 per cent of the traffic to digital disruptors originate from these segments, with Gen Z accounting for 30-35 per cent and millennials for 40-45 per cent of the total traffic. Further, consumer spend analysis shows that 24 per cent of 18-24 year olds buy from digital disruptor brands, compared to just 13 per cent of 45+ year olds. Gen Z and millennials will account for approximately 75 per cent of spend on disruptors, up from approximately 70 per cent, today.
Meanwhile, Prashanth Aluru, CEO & Co-founder, TMRW House of Brands, said, “The next set of digital disruptors in the fashion and lifestyle space will be co-created with the customers. Gen Z customers are interested in a lot more than just the product and purchase experience. They like to associate with brands with a vision and purpose that aligns with theirs. They also want to be understood and represented. To build brands in line with this philosophy, insurgent brands have to build strong communities that bring like-minded consumers together.”
Commenting on the growth trajectory of disruptor brands, Prashanth Aluru added, “In fashion, while the threshold scale for hitting profitability is low, however brands need to address underlying inefficiencies during the growth phase. Not losing sight of core metrics such as gross margin and realized price, efficiency of customer acquisition & retention, addressing the complexity of assortment & inventory management, and building their own infrastructure over those of marketplace platforms can ensure robust growth in the long-term.”
Digital disruptors have been able to effectively capture a large share of wallet in some categories. These are typically categories where national brands and private labels have low share.
The report further stated that by FY28, approximately 50 digital disruptor brands are expected to scale beyond Rs 250 crore revenue. “Brands that successfully break out and achieve more than INR 200 crore exhibit disciplined product expansion, appropriate channel strategies, sharp marketing and structured supply chain management,” it said while adding that the sector’s massive potential will see an increased confidence from the investors in the India fashion sector, which will lead to an expected growth in funding and investments.