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\tIndia\u2019s organised apparel retail sector is projected to record revenue growth of 12-13 per cent in the current fiscal, supported by value-fashion demand, expansion into smaller cities and consumers\u2019 continued preference for branded apparel.<\/p>\n
\tGrowth, however, is expected to moderate from around 15 per cent last fiscal as consumers allocate more discretionary spending to categories beyond apparel. Rising cotton prices and elevated operating costs are also likely to weigh on profitability, with retailers expected to pass on only part of the increase to customers amid intense competition.<\/p>\n
Crisil Ratings projects 12-13 per cent revenue growth for organised apparel retail in India this fiscal, down from about 15 per cent last year.
\nValue fashion and tier-II, tier-III expansion are driving volumes, but rising cotton and operating costs may pull margins to 14 per cent.
\nFestive demand, store productivity and responsive sourcing will shape full-year performance and supplier planning.<\/p>\n
\tConsequently, operating margins could decline by around 100 basis points to approximately 14 per cent this fiscal, according to the Crisil Ratings.<\/p>\n
\tThe assessment is based on an analysis of 41 organised apparel retailers accounting for nearly 28 per cent of India\u2019s organised apparel market.<\/p>\n
\tValue fashion is emerging as the sector\u2019s main growth engine. Along with fast fashion and mid-premium apparel, largely priced below \u20b92,500 (~$26), these segments contribute about two-thirds of sector revenue.<\/p>\n
\tAnuj Sethi, senior director at Crisil Ratings,<\/strong><\/em>\u00a0said, “Value fashion has emerged as the key growth driver for organised retailers, growing more than twice as fast as the other segments over the past three fiscals and increasing its share of revenue to 46 per cent from 39 per cent. The shift reflects increasing share of aspirational consumption by price-conscious consumers, wider choice at lower price points and increasing penetration into smaller cities. While value fashion will continue to support volume growth, the rising share of lower-priced apparel is expected to moderate organised apparel retail revenue growth to 12-13 per cent this fiscal.\u201d<\/p>\n \tBetween April and August 2026, sector revenue growth remained broadly in the high single digits, with value fashion accounting for much of the momentum.<\/p>\n \tThe festive season will be an important determinant of the full-year performance, as festive spending typically accounts for nearly 35 per cent of annual apparel sales. Sustaining momentum in value fashion and movements in cotton prices will also be key factors to watch.<\/p>\n \tPhysical retail remains central to expansion despite the growing importance of omnichannel shopping. Online sales account for only around 10 per cent of total retail sales, while stores continue to generate the majority of apparel revenue.<\/p>\n \tValue-fashion retailers are leading store additions in underpenetrated tier-II and tier-III cities, where relatively lower set-up and operating costs are allowing companies to expand without significantly increasing leverage.<\/p>\n \tCapital expenditure is expected to remain at around \u20b92,500 crore (~$261 million) this fiscal, broadly unchanged from the previous fiscal. The report said retailers are pursuing calibrated expansion in larger cities while requiring comparatively lower capital outlay for stores in smaller markets.<\/p>\n \tCredit profiles are therefore expected to remain stable. Among rated apparel retailers covered by the note, average gearing is projected to remain at around 1.3 times by the end of the fiscal, while interest cover is expected to stay healthy at approximately eight times.<\/p>\n \tHowever, the productivity of newly added stores will remain important. Poonam Upadhyay, director at Crisil Ratings,<\/strong><\/em>\u00a0said, “Revenue per square foot has remained largely flat at around Rs 11,000 over the past three fiscals and is unlikely to improve meaningfully this fiscal because same-store sales growth remains subdued. Growth continues to be driven primarily by new store additions and the increasing share of the value-fashion segment. With rising cotton prices and elevated operating costs likely to lower operating margins somewhat to around 14% this fiscal, maintaining the balance between growth and profitability will remain critical.”<\/p>\n \tAs retail networks expand and fashion cycles become shorter, inventory management is also gaining importance. Retailers are increasingly focusing on faster replenishment and responsive sourcing to reduce stock obsolescence and write-offs.<\/p>\n Such measures are expected to support expansion without materially increasing working-capital requirements, while helping retailers respond more quickly to changing consumer demand.<\/p>\n
<\/p>\n Fibre2Fashion News Desk (MS)<\/p>\n
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