TMRW and Bain & Company release India’s ‘Digital Fashion Disruptors: Navigating the Future of Fashion’ report
Digital disruptor brands are projected to outpace India’s online fashion market growth with 35% annual growth, to reach $10 billion by FY28 from its current size of $2.4 billion. The overall online fashion market is expected to grow to approximately $35 billion by FY28 with the digital disruptor taking approximately 29% of the market share. Shifting consumer preferences including increasing willingness to experiment with new brands, and the innovation from digital first brands are the factors driving this. These are among the findings of a new report “India’s Digital Fashion Disruptors: Navigating the Future of Fashion”, released by Bain & Company and TMRW House of Brands.
“Digital disruptor brands are creating a new fashion playbook. They have grown at 33% in the last 4 years, and expected to increase their share of the overall fashion market, said Radhika Sridharan, Partner, Bain & Company. “Young customers, especially Gen Z, have a greater propensity to try and buy these brands. Digital disruptors are targeted under-served niches of the market, with brand values to speak to their customers’ needs, including confidence, fun and selfexpression. 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.”
Says Prashanth Aluru, CEO & Co-founder, TMRW House of Brands, “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. In addition, build a tech and data science led operations that will enable them to innovate their playbook nimbleness and agility.
Today’s disruptor brands will be tomorrow’s leadership brands-built on a unique consumer insight and disruptive proposition.” Commenting on the growth trajectory of disruptor brands, Prashanth 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. Houses of brands further create significant leverage through shared horizontal investments and capabilities (including in technology and data science) that can help brand blitz scale.”
Digital disruptor brands are born online and have taken a radical approach to scaling the business. These new brands have focused on underserved parts of the market and created new offerings that index on value, design aesthetics, speed to market with new trends, or community engagement. Categories with underserved niches and brand fragmentation, such as expressive wear, ethnic wear, and fashion jewellery, have allowed digital disruptors to create new-scale brands. 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. For example, in accessories categories, among customers who try digital disruptor brands, their share of wallet can be as high as 75%. Similarly, 50% of the share of wallet for kidswear buyers and 40% for ethnic wear buyers goes to digital disruptor brands, once customers have tried them.
The growth of digital disruptors is primarily driven by Gen Z and Millennials, who have a high proclivity to buy fashion online. Website and app data analysis shows that 70%-80% of the traffic to digital disruptors originates from these segments, with Gen Z accounting for 30%-35% and Millennials for 40%-45% of the total traffic. Consumer spend analysis shows that 24% of 18 – 24-year-olds buy from digital disruptor brands, compared to just 13% of 45+ year-olds. Gen Z and millennials will account for approximately 75% of spend on disruptors, up from approximately 70%, today. Brands cater to Gen Z with their unique needs such as confidence, fun, and well-being, while Millennials associate more with eco-friendly and self-expressive brands.
By FY28, approximately 50 digital disruptor brands are expected to scale beyond INR 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. Fashion demands a heightened level of discipline. It is easy to enter due to outsourced production, and the distribution afforded by digital platforms. However, scaling is more complex. The next wave of winning brands will not follow the platform playbook but will be true fashion brands, built on differentiated propositions, memorable branding, a sharp understanding of assortment, and tight data-led operations.
The sector’s massive potential will see an increased confidence from the investors in the Indian fashion sector, and consequently, funding and investments is also expected to see a rise as more fashion brands demonstrate a path to profitability or scaled growth.