The Booming Fast Fashion Market in India
Exploring the Growth Drivers, Challenges, and Future of India's Fast Fashion Industry.
Hi there,
This week on Eximius Echo, we’re diving deep into India’s booming fast fashion industry. Fueled by a youthful demographic, digital transformation, and the growing influence of social media, this sector is experiencing unprecedented growth. From the rise of e-commerce giants and creator-led commerce to the impact of sustainability concerns, let’s unpack the trends that are defining this dynamic landscape.
India's fast fashion industry is on a meteoric rise, growing at a staggering CAGR of 30-40%, far outpacing the overall fashion market's growth of 6%. Currently valued at approximately $10 Bn, this sector is poised to reach a staggering $50 Bn by FY 2031. To put this in perspective, while today's market is less than one-fifth the size of SheIn, it's projected to match SheIn's current scale within the next decade.
Key Growth Drivers
Youth Demographics and Consumer Behaviour: India’s youthful population is at the core of the fast fashion boom, with two key groups, Gen-Z and Millennials, driving the demand.
Gen-Z (born 1997-2012): This group influences 43% of household consumption, contributing $860 Bn annually to the economy, of which $200 Bn stems from their direct earnings. By 2030, Gen-Z’s contribution to the economy is projected to reach $1.4 Tn, with 36% of them joining the workforce. Platforms like Instagram, used by two-thirds of Gen-Z, are instrumental in influencing their fashion choices.
Millennials (born 1981-1996): Comprising 34% of India’s population and 46% of its workforce, Millennials wield a collective spending power of $330 Bn. They prioritise spending on necessities, entertainment, apparel, and electronics, making them a critical segment for fast fashion brands.
Digital Transformation and E-Commerce: India’s fast fashion brands benefit significantly from the country's growing digital infrastructure. With 606 Million smartphone users, 80% of whom belong to Gen-Z, online platforms have emerged as a primary channel for engaging consumers. E-commerce provides accessibility to diverse styles, enabling brands to meet the demand for affordable, trendy clothing.
Cultural and Social Media Influence: The integration of global fashion trends into Indian culture has resulted in a rising demand for diverse, casual styles. Social media platforms such as Instagram and TikTok amplify these trends, with influencers playing a pivotal role in shaping consumer preferences.
Current Trends in Fast Fashion and E-Commerce in India
E-commerce giants are reshaping strategies to capture the Gen-Z market. Amazon Fashion launched its "Next Gen" store, while Flipkart’s Spoyl and Myntra’s Fwd target the "swipe-up" generation with app-focused, trend-driven offerings. Myntra has doubled its Gen-Z customer base, growing from 8 Million in mid-2023 to 16 Million in 2024, with Fwd achieving over 150% GMV growth in 2023.
Meanwhile, creator-led commerce is transforming how brands reach consumers. Over 55% of users now discover products through influencers. Platforms like Wishlink enable creators to monetise this impact, driving rapid growth, with its GMV doubling to ₹10 crores in just two months. As India’s $120Bn+ e-commerce market scales 2-3X in the next five years, this trend is set to redefine consumer engagement.
Key Strategies for Success
Trend Identification
To succeed in the fast-paced world of fashion, brands must identify and adapt to emerging trends swiftly. Effective strategies include:
Trend Forecasting: Leveraging platforms like WGSN or monitoring global fashion weeks to predict upcoming styles.
Social Media Insights: Using platforms to monitor viral trends and engage with influencers for trend propagation.
Consumer Engagement: Real-time feedback through surveys and polls helps brands align offerings with market preferences.
Trend Scouting
Tracking social media platforms for viral trends.
Observing fashion hubs like Paris, New York, Milan, and London.
Shadowing celebrities and influencers to anticipate shifts in preferences.
Conducting frequent shopper surveys.
Challenges Facing the Industry
Despite its growth trajectory, the fast fashion sector in India is not without hurdles:
Sustainability Concerns: Increasing awareness about environmental issues has led to scrutiny of fast fashion’s sustainability practices. Consumers now demand transparency and ethical production methods.
Market Saturation: A crowded market necessitates constant innovation to differentiate brands.
Supply Chain Complexity: Fast production cycles require efficient supply chain management to avoid delays in delivering trending products.
Funding Trends in Indian Fast Fashion
Investor interest in Indian fast fashion isn’t new. Between 2012 and 2017, several companies such as Zovi, Freecultr, and YepMe attracted venture capital. However, these brands struggled against established Western players, highlighting the need for robust differentiation and execution strategies.
Again, since 2021, Newme, Urbanic, Bewakoof, The House of Rare, Styched, Fable Street, FabAlley, The Label Life etc. have been funded.
Case Study: Newme
Launched in 2022, Newme demonstrates how innovation and strategic focus can create a competitive edge in India’s fast fashion market.
Technology and Supply Chain: A proprietary tech stack optimises supply chain efficiency, reduces waste, and ensures timely delivery of trendy apparel.
Focus on Smaller Cities: With 70% of orders coming from Tier 2 and Tier 3 cities, Newme caters to underserved markets with affordable and trendy styles tailored to Indian preferences.
Data-Driven Operations: By analysing consumer data, Newme identifies trending designs and manages inventory to avoid overstock.
Trend-Centric Approach: Introducing 500 new designs weekly, the brand rapidly adapts to consumer demands with a two-week inventory model.
Offline Expansion: Following the successful online-to-offline model seen with brands like Nykaa, Newme has prioritised building a strong offline presence.
Success Blueprint: Zudio
Zudio, a fast fashion brand under Trent Limited, exemplifies the success of strategic focus and operational excellence. The brand has scaled rapidly, with 545 stores as of 2024, primarily in Tier 2 and Tier 3 cities. This focus on smaller markets has allowed Zudio to minimise rental costs while addressing growing demand.
The brand’s operational model is built on efficiency. Zudio maintains a two-week inventory turnover cycle, ensuring the latest trends are always available. Its no-discount policy preserves margins while encouraging immediate purchases, fostering a sense of urgency among consumers. By focusing solely on offline sales, Zudio avoids the logistical complexities and high return rates associated with e-commerce.
Zudio sells an impressive 90 T-shirts every minute, showcasing its mass appeal and strong demand.
Conclusion
India’s fast fashion market represents a dynamic and lucrative opportunity for investors and operators alike, driven by younger demographics, the rise of e-commerce, and global fashion trends. However, the landscape is evolving rapidly, with challenges such as sustainability concerns, Shein’s high-profile return, and potential market saturation. Brands that can innovate, adapt quickly, and optimise their operations will likely emerge as leaders.
But what will the future hold? Will Shein’s return disrupt established players, or will it simply spark a wave of innovation? Can the market sustain a handful of dominant companies, or will there be room for broader competition? As "Make in India" policies gain momentum, could they redefine supply chains and tackle longstanding issues like those in footwear manufacturing? And with India still dependent on China for specific fabrics and materials, how sustainable is this reliance in a fast-changing global economy?
Building or planning to build the next big thing in India's fast fashion industry? Let's connect. Reach out to us at pitches@eximiusvc.com to chat.