India’s USD130 billion lifestyle market, with fashion accounting for approximately 80 percent and the rest beauty and personal care (BPC), is expected to grow at a 10 percent to 12 percent compounded annual growth rate (CAGR) to reach USD210 billion over the next five years.
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India’s e-lifestyle market is poised to grow from USD16 to USD17 billion in 2023 to USD40 to USD45 billion in 2028.
These are among the findings from a new study released by Bain & Company and Myntra.
According to the report, the growth in e-lifestyle will be enabled by the easing of short-term inflationary pressures, combined with structural and favourable demand shifts, such as rise in income, growth of fashion-forward, digital native Gen-Z shopper base as well as an increase in demand for organized/branded products.
Additional tailwinds from superior customer value propositions of trendy selection, faster delivery, easier returns, tech-enabled purchase journey, social media-powered discovery and omni-access.
This will bridge the massive penetration headroom versus global markets such as the US, China and Germany, which are at 35 percent e-lifestyle penetration; as such the lifestyle penetration in India will grow from 13 percent to 18 to 22 percent over 2023 to 2028.
Lifestyle category purchases a key gateway to India e-commerce
“India’s e-lifestyle market has come of age in the last few years, with a diverse shopper base – two in three online shoppers are from beyond top 50 cities, one in two are from non-affluent segments, and one in three are Generation Z. There still exists massive penetration headroom. 1 in 5 dollars spent on lifestyle will be online,” said Shyam Unnikrishnan, partner at Bain & Company.
Currently, e-lifestyle is dominated by fashion, comprising approximately 75 percent of the market, and accessories and women’s apparel are expected to grow faster than other fashion segments.
Beauty and personal care (BPC) has become more mainstream with approximately 16 percent penetration in 2023 and is expected to grow slightly faster over the next five years.
Another prominent trend driven by online platforms is the rise of the trend-first fashion market in India.
With a large width of assortment and faster refresh cycles, this online trend-first market is expected to grow eightfold, reaching USD4 to 5 billion by 2028.
Consequently, the online share of trend-first fashion is projected to increase to 50 to 55 percent, up from the current 30 to 35 percent.
In 2023, more than 175 million customers across India shopped for lifestyle online, transacting 6 to 7 times annually on average.
For 40 to 45 percent first-time e-commerce shoppers, lifestyle is their first purchase, thus becoming a key gateway category for e-retail.
Generation Z consumption leans toward frequent but lower-cost transactions
Online shoppers in India are visiting more platforms and visiting them more often; these shoppers are also completing purchases over a shorter duration.
Deeply entrenched shoppers (defined as those with spend greater than INR 50,000 annually on a platform), visit their preferred platform at least once a day on average, and purchase over 25 times per annum.
The 60 million Gen Z shopper base transacts more frequently but spends lower per order, according to the study.
These fashion-forward, digital natives account for 25 percent of the e-lifestyle market, at USD4 billion e-lifestyle GMV.
New-age insurgent brands have seen 2X higher adoption among Gen Z.
In order to win Gen Z, it is critical for brands to cater to their needs and preferences by offering an affordable and trendy assortment, highlighting authenticity in brand positioning, tech-led shopper journeys, and active influencer endorsements.
India a core market for top global brands
Ninety percent of the top 50 global brands are already present in India with half of reporting over USD30 million in revenue from India operations, according to Bain and Myntra.
The confidence in India as a key lifestyle market is underscored by the launch or planned launch of over 60 global brands in the last 12 months. These span scale, niche, luxury and new-age brands across fashion and beauty.
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A deeper look at distinct, high-growth brands point to a common playbook to scale online sales in India. First, a relevant and differentiated customer proposition across selection, value and service experience; second, a well-oiled sourcing engine. And lastly, an ability to build a strong brand through targeted social media and online campaigns.