Post-headwinds, Indian retail set for strong 9-10% growth, says RAI report

21 July, Mumbai 2025

After passing through a period of headwinds, the Indian retail sector is on the cusp of a strong revival, with optimistic projections pointing towards higher growth in the near future. A recent ‘Retail Renaissance Report 2025’ by the Retailers’ Association of India (RAI) paints a promising picture, highlighting resilience and shifts within the industry.

"After weathering a challenging year in which the sector’s growth slowed to 5 per cent, the retail industry is now set to accelerate, with projections indicating a potential growth rate of 9 to 10 per cent in the near future,” says the Retailers’ Association of India (RAI) in its comprehensive annual analysis.

Report unveils growth drivers

The 'Retail Renaissance Report 2025,' published by the Retailers’ Association of India, gives an in-depth analysis of the Indian retail space, drawing insights from extensive market research, consumer surveys, and industry stakeholder consultations.

It attributes the previous year's slowdown to numerous factors, including inflationary pressures, cautious consumer spending, and global economic uncertainties. However, it forecasts a strong rebound driven by improving economic indicators, increasing disposable incomes, rapid urbanization, and the continued expansion of digital infrastructure. The report emphasizes the critical role of technology adoption, supply chain optimization, and evolving consumer preferences in shaping the industry's trajectory.

Fashion & apparel, a style statement for growth

Within the broader retail narrative, the fashion and apparel sector stands out as a strong growth engine. Despite facing unique challenges related to inventory management and fast-changing trends, this segment demonstrated remarkable adaptability. The RAI report highlights that the fashion and apparel sector, which saw a growth of approximately 6.1 per cent in the past fiscal year, is expected to outpace the overall retail average, potentially achieving double-digit growth in the coming fiscal year. This ruse is due to the young, aspirational demographic, increasing brand awareness, and the blurring lines between online and offline shopping experiences.

Zonal dynamics

The report offers a granular view of the fashion and apparel sector's performance across India's geographical zones, revealing distinct growth drivers and consumer behaviors.

Southern India: Continues to lead the charge, with high disposable incomes, strong brand loyalty, and a mature retail infrastructure. Consumers in the South are quick adopters of global trends while also embracing traditional wear, creating a dynamic market.

Northern India: Shows strong growth, particularly in cities, propelled by a large youth population, increasing fashion consciousness, and the proliferation of organized retail formats including large format stores and shopping malls. E-commerce penetration is also a significant factor here.

Western India: Exhibits steady and consistent growth, characterized by diverse fashion preferences and a strong market for both value and premium segments. Mumbai and Pune remain important fashion hubs, influencing trends across the region.

Eastern India: Emerges as a high-potential growth zone. While historically lagging, increased infrastructure development, rising incomes in Tier-II and III cities, and expanding retail footprint are unlocking significant opportunities for fashion brands.

Projections for fashion & apparel

The 'Retail Renaissance Report 2025' projects an impressive outlook for the fashion and apparel sector, with an anticipated overall growth of 11 per cent in the upcoming fiscal year. The table below provides a detailed breakdown of the projected growth rates for each zone, alongside their key drivers.

Table: Zonal growth scenario

Zone FY24 growth (actual) FY25 growth (projected) Growth drivers North 6.50% 11.00% Urbanization, e-commerce, youth demographic South 7.20% 12.50% High disposable income, brand consciousness, mature market East 4.80% 9.00% Emerging markets, infrastructure, rising incomes West 5.90% 10.50% Diverse fashion trends, strong consumer spending Overall Fashion & Apparel 6.10% 11.00% Overall Retail Sector 5.00% 9-10% (As per RAI quote)

The report underscores that while the overall retail sector aims for a 9-10 per cent growth, the fashion and apparel segment will be a frontrunner, showcasing the consumer's renewed enthusiasm for personal expression and lifestyle upgrades.

A resilient future

The findings of the report suggest a dynamic and resilient Indian retail sector, ready to capitalize on evolving consumer demands and a strengthening economic environment. For the fashion and apparel industry, this outlook translates into strong opportunities for innovation, expansion, and deeper engagement with a diverse and increasingly discerning customer base across all regions of the country.

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