Driven by omnichannel gains, apparel players built on last quarter’s upswing, with strong direct-to-consumer (D2C) sales and new store openings aiding growth
As higher repeat purchases, increased awareness across digital and offline channels and new store openings supported the revenue uptick in the fourth quarter of fiscal year 2025 (Q4FY25), apparel brands kept the momentum up and running in the recently concluded quarter (Q1FY26) with healthy growth on online, offline, and marketplaces.
With brands reporting that their online business maintained healthy unit economics despite increased marketing spends, direct-to-consumer (D2C) sales remained the dominant channel, contributing a significant portion of overall revenue and supporting higher margins and improved customer retention. However, while the segment keeps showing growth optimism, the slowdown in urban consumption remains a concern, especially in discretionary mid-to-premium segments, as inflationary pressures and cautious spending habits persist.
“In Q1FY26, we had a strong start to the year with growth across all categories. We delivered our best-ever numbers across every channel- online, offline, and marketplaces- which reflects the strength of our brand and the love from our community. We also expanded our retail footprint by opening 10 new stores, taking us closer to our customers,” highlighted Vedang Patel, Co- founder of The Souled Store.
Categories Aiding Revenue Uptick
Highlighting that the revenue uptick has been supported by healthy growth across categories, industry players and experts reported that formal wear and casual wear seem to have grown a little better than in the recent past during the quarter. As usual, children’s wear has led the category sales. Patel noted that non-licensed merchandise, including casual wear, loungewear, and accessories, accounted for 50 per cent of total revenue.
“Snitch had a high-growth Q1FY26, clocking over 3.2x year-on-year revenue growth, led by strong momentum across both online and offline channels. Within apparel, co-ord sets, oversized fits, and bold seasonal prints led the charge, contributing over 50 per cent of total fashion sales,” Siddharth Dungarwal, Founder Of Snitch, told BW Retail World.
Surprisingly, industry experts added that ethnic wear and particularly wedding garments have been a little slow, and the performance in this segment has not been up to expectations. That being said, Dungarwal noted that the company’s newly introduced categories, perfumes, shoes, and accessories, accounted for nearly 12 per cent of its Q1 revenue, validating strong consumer appetite beyond core apparel. He also added that the Snitch’s expanded category mix, data-led merchandising, and improved conversion journeys led to an 18 per cent increase in average order value (AOV).
“Kurta sets continue to be our core driver, contributing over 60 per cent of our business consistently. However, in Q1, we observed a marked uptick in categories such as dresses, co-ord sets, loungewear, kurtis, and summer shirts, primarily driven by the onset of the holiday season,” highlighted Sidhant Keshwani, Founder and Chief Executive Officer (CEO), Libas
“Q1FY26 was absolutely incredible for us. We achieved 49 per cent revenue growth, which honestly surprised even us. With 4.5 million monthly active users, our community keeps expanding because people trust what we have built,” highlighted Ackshay Jain, Chief Executive Officer (CEO) and Co-founder, Culture Circle.
Enhancing Offline And Digital Footprint
Amid the rising competition in the apparel space, brands are doubling down in their efforts to enhance their footprint in the offline retail as well as in the digital space. The Souled Store expanded the retail footprint by opening 10 new stores during the quarter. The company also saw profitable expansion through offline stores, particularly in tier-two and tier-three cities, which enhanced regional reach and delivery efficiency. Snitch reported that offline retail scaled rapidly with a 5x growth in store count year-on-year.
“We launched 15 new stores, taking our total to 40+ stores across India, with offline contributing 40 per cent to overall revenue. On the digital front, our app saw a 2.7x rise in daily active users, and repeat purchase rates improved significantly,” Dungarwal added.
Consumption Slowdown Still A Concern?
While the growth chariot of the fashion ecosystem is gaining momentum, the slowdown in urban consumption still remains a big hurdle. As inflationary pressures and cautious spending habits persist, the brands reported that urban consumption remains impacted, especially in discretionary mid-to-premium segments. Industry players noted that the discount-heavy market environment continues to erode margins, making sustained profitability difficult.
“Going forward, I believe the overall slowdown in apparel consumption is the biggest challenge facing the industry, with discretionary funds being spent in several other categories than in apparel. I think whilst the disposable income has remained more or less stagnant, the avenues for spending such income have grown quite a bit, resulting in the share allocated to apparel going down,” noted Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI).
Structural Challenges Remain
Despite steady growth, the fashion and lifestyle retail industry continues to face several structural challenges. While demand remains strong, the industry continues to grapple with high customer acquisition costs, supply chain unpredictability, and the challenge of balancing speed with scale in fast fashion. Brands noted that increasing competition, from global brands to quick commerce platforms, makes it harder to retain consumer loyalty.
“Rising digital marketing costs have made customer acquisition more expensive, impacting margins for D2C brands. Inventory management and supply chain volatility also pose risks, with unpredictable demand cycles and evolving consumer preferences,” Patel explained.
Many consumers still do not understand the value of authenticated luxury resale, Jain noted, while explaining that there is also the whole supply chain complexity when one is dealing with global brands and Indian regulations. Offline expansion, while essential for reach, adds pressure through high rentals and operational costs, brands emphasised.
For digitally-native brands, staying culturally relevant while delivering consistently on product quality and delivery timelines remains a recipe for better results. While the challenges do remain, the growth trajectory of the apparel ecosystem is gaining momentum, and apparel brands appear well-positioned to ride the next wave of fashion retail.
