MUMBAI: India's $130 billion lifestyle market, with 80% fashion and the rest beauty and personal care (BPC), is expected to grow at a CAGR of 10%-12% over the next five years to $210 billion, driven primarily by the organised segment. The Indian e-lifestyle market is expected to grow from $16-17 billion in 2023 to $40-45 billion by 2028. These are some of the findings in a new study, 'Estyling in India: Decoding India's Online Fashion and Lifestyle Shopping Trends', released today by Bain & Company and Myntra.
This growth of e-lifestyle will be possible due to easing of inflationary pressures in the near term coupled with structural and favourable demand changes such as rising incomes, growth of trend-conscious generation, digitally native Gen Z shopper demographic and increasing demand for organised/branded products. There will also be additional tailwinds from superior customer value propositions such as on-trend assortment, faster delivery, easier returns, tech-enabled buying journey, social media-enabled discovery and omni-access. This will fill up significant penetration room for global markets such as the US, China and Germany, where e-lifestyle penetration is over 35%. Hence, e-lifestyle penetration in India will increase from 13% to 18-22% over 2023-28.
“The Indian e-lifestyle market has matured over the past few years and has built a diverse shopper base. Two in three online shoppers are from outside the top 50 cities, one in two are non-affluent and one in three is Gen Z. There is still a lot of room for penetration. One in every five dollars spent on lifestyle will be spent online,” said Shyam Unnikrishnan, partner at Bain & Company.
Currently, e-lifestyle is dominated by fashion, accounting for approximately 75% of the market. Accessories and women's apparel are expected to grow faster than other fashion segments. Beauty and personal care (BPC) is expected to become more mainstream with a penetration rate of approximately 16% in 2023, growing at a slightly faster pace over the next five years.
Another prominent trend driven by online platforms is the rise of the trend-driven fashion market in India. With a wider selection and faster update cycles, this online trend-driven market is expected to grow eight times to $4-5 billion by 2028. As a result, the online share of trend-driven fashion is expected to increase to 50-55 percent from the current 30-35 percent.
In 2023, over 175 million customers across India will purchase lifestyle products online, making an average of 6-7 transactions per year. For 40%-45% of e-commerce newbies, lifestyle products are their first purchase, making it a key gateway category for e-retail. These online shoppers are visiting more platforms more frequently and completing purchases in a shorter time frame. High-retention shoppers (defined as those who spend INR 50,000+ per year on a platform) visit their preferred platform at least once a day on average and make more than 25 purchases per year, compared to the market average of 6-7 times. Gen Z shopper base of 60 million are transacting more frequently but spending less per order. These fashion-forward digital natives account for 25% of the e-lifestyle market, with e-lifestyle GMV standing at $4 billion. New-age emerging brands are seeing 2x adoption rate among Gen Z. For brands to win over Gen-Z, it’s important to cater to their needs and preferences by offering an affordable, on-trend assortment and highlighting the authenticity of the brand positioning, tech-driven shopping journeys and active influencer endorsements.
This has created opportunities for Indian manufacturing and is evident in the growing share of Indian assortments among global brands. Manufacturing capabilities are being strengthened in technical textiles as well as cotton, and brands are working closely with manufacturers to enable faster GTM, controlled costs and agility, and a greater role for technology in sourcing, strengthening India's position as a fashion sourcing destination for brands.
India is a core market for the world's top brands, with 90% of the world's top 50 brands already present in India, and half of these brands have revenues of over $30 million from their Indian operations. India's credibility as a key lifestyle market is evident with over 60 global brands having launched or planned to launch in the country in the last 12 months. These brands span large scale, niche, luxury and new generation brands in fashion and beauty.
“In the past one year, three out of five global brands have entered India through online channels and we are proud to have played a part in helping them enter the country. Comprehensive scale and reach, facilitating easier discovery, access to information relevant to the needs of the fashion-conscious Indian consumer and Myntra's reach in 99% of serviceable postal codes are key enablers for the expansion of global brands in the Indian subcontinent,” Myntra CEO Nandita Sinha said.
A closer look at unique and fast-growing brands reveals common strategies for expanding online sales in India: first, a relevant and differentiated customer proposition across assortment, value and service experience; second, a smoothly functioning sourcing engine; and finally, the ability to build a strong brand through targeted social media and online campaigns. Moreover, for global brands, an empowered organization for India and seamless go-to-market alignment are key drivers of growth.
