“Digital disruptor brands have been growing, especially in certain fragmented categories, at 33% every year since 2019 to $2.4 billion. These new brands focus on underserved sections of the market and created new offerings that focus on design aesthetics, speed to market with new trends and through community engagement, besides value. Their digital-first operating model enables speed and data-led decision-making,” it added.

Such labels account for 20% of India’s online fashion market. While a few have currently crossed the ₹100 crore mark in sales, Bain & Co. expects it to grow further and at a fast clip.

The number of such brands exceeding ₹250 crore in revenue will jump five times within five years, with categories like expressive wear, ethnic wear, and jewellery leading the sales; while athleisure or activewear will witness similar growth but with fewer brands. Bain considered key operational metrics of over 700 digital disruptor brands, interviewing 1,100 online consumers, besides founders and retail experts. Bain & Co. estimates over 700 digital-first brands to exist currently in the fashion apparel and lifestyle space.

The growth of such brands will be primarily driven by Gen Z and millennial consumers, who have a high propensity to buy fashion online. Data shows 70-80% of the traffic to digital first brands originates from these two consumer segments.

Consumer preferences are also shifting, with an increasing willingness to experiment with new brands and a growing desire to wear aspirational brands, the report said.

Meanwhile, the presence of international as well as homegrown e-marketplaces, which are serving pin codes that were hard to reach is helping more consumers to discover brands.

E-commerce has democratized access to fashion, and the category has seen around 30% growth annually, since 2019, the report said. “Next phase of growth for such brands will be led by premiumization and a switch to branded clothing,” Prashanth Aluru, chief executive and co-founder, TMRW, said. Last year, it tied up with eight such brands across fashion sub-categories, including Berrylush, Bewakoof and Juneberry.

“TMRW is very early in its journey, you will see some large and mid-sized brands in our portfolio—and we will also announce a few more brands in the next coming months, which will make the portfolio far more broader and more complete,” he said.

While, success rates of such digital first fashion brands is still limited, Radhika Sridharan, partner in Bain & Company’s s Mumbai office said some brands are beginning to exhibit signs of success. “If today there are only 25 such brands over ₹100 crore, within five years there could be 50 brands over ₹200 crore in value. I think this is quite meaningful in the context of the broader fashion market in India that has historically been super fragmented,” she said. Bain expects 140 digital-first fashion and lifestyle brands in the ₹50 to ₹100 crore revenue range by FY28.

Updated: 05 Sep 2023, 11:48 PM IST