Fashion Rules E-Commerce, But Wallet Share Shrinks

The fashion and apparel category is projected to have the highest share, at 25%, of the estimated overall online retail spends of $140 billion to $160 billion by 2025, according to a report by Boston Consulting Group and Matrix Partners India. This growth is expected to replace the mobile devices category, which is expected to fall to 23% in 2025 from 32% in 2021.

The report also suggests that as affluence in the country increases, discretionary spending will drive growth in categories beyond food and clothing. High-affluent households are expected to spend a lower percentage of their income on food and clothing and more on discretionary purchases such as transportation, communication, leisure, education, and more.

The COVID-19 pandemic has had a significant impact on the fashion industry in India, accelerating the shift towards e-commerce. To sustain growth in the fashion sector, the report recommends maximizing customer lifetime value by expanding offerings, driving loyalty through customer retention, and focusing on cross-selling and up-selling.

The adoption of AI and analytics across the value chain, alongside expanding distribution across channels and geographies, will also be essential for driving sustainable growth.