India’s organised apparel retailers are adding stores at an aggressive pace, but growth in existing outlets is becoming harder to sustain. Second-quarter FY27 performances reveal a growing gap between revenue growth and store-level productivity, as uneven footfalls, delayed festive purchases and rising operating costs pressure retail economics.
Trent, V-Mart Retail, V2 Retail and Vishal Mega Mart reported double-digit revenue growth, supported by expanding networks. Yet same-store sales growth remained uneven, with some retailers experiencing sharp declines even as they opened dozens of outlets. The divergence raises questions about whether expansion is translating into stronger underlying demand or simply adding selling space.
MUCH MORE
Expansion drives growth
Trent reported operating revenue of Rs 5,788 crore, up 23 per cent year-on-year, supported by its expanding Westside and Zudio networks. The retailer added 27 outlets during the quarter, taking its lifestyle store count beyond 1,300.
Value-focused chains also recorded strong headline growth. V-Mart Retail’s revenue rose 18 per cent to Rs 953 crore, while V2 Retail grew 28.4 per cent to Rs 905 crore. Vishal Mega Mart reported a 17.5 per cent increase to Rs 3,503 crore after adding 25 stores.
However, the growth numbers mask differences in performance at established outlets. V-Mart reported same-store sales growth of 3 per cent, rising to 11 per cent after adjusting for the shift in festive dates. V2 Retail’s reported growth of 0.5 per cent contrasted with a 14.9 per cent decline on a calendar-adjusted basis, highlighting the pressure on underlying demand.
Baazar Style Retail faced a sharper setback. Revenue fell 10 per cent to Rs 478.1 crore, while same-store sales declined 25 per cent. Monthly sales per square foot dropped from Rs 865 to Rs 642, despite the chain expanding its network to 283 stores.
Table: Retailers Q2 revenue and store growth
|
Retailer
|
Q2 FY27 revenue (Rs cr)
|
YoY revenue growth in %
|
Net new stores (Q2)
|
Total store network
|
Same-Store Sales Growth (SSSG)
|
|
Trent Ltd
|
5,788
|
23
|
27
|
1,300+
|
Resilient (Led by fast-turn formats)
|
|
Vishal Mega Mart
|
3,503
|
17.5
|
25
|
645+
|
6%
|
|
Shoppers Stop
|
1,366
|
8.70
|
7
|
115+ (Dept Stores)
|
2% (7% festive-adjusted)
|
|
V-Mart Retail
|
953
|
18
|
23
|
600+
|
3% (11% festive-adjusted)
|
|
V2 Retail
|
905
|
28.4
|
43
|
427
|
0.5% unadjusted (-14.9% calendar-adjusted)
|
|
Baazar Style Retail
|
478.1
|
-10
|
33
|
283
|
-25% (Sales/sq. ft down to Rs 642)
|
Source: Company figures provided. Reported and calendar-adjusted measures are shown separately where available.
The festive calendar complicates comparisons. Durga Puja and Navratri shopping shifted later into October, delaying demand for retailers that had stocked merchandise in anticipation of earlier purchases. Calendar-adjusted figures therefore provide a different picture from reported growth, although the adjustments do not eliminate concerns about underlying store productivity.
Premiumisation gains
Department stores are facing a similar divide between premium and mass-market consumption. Shoppers Stop increased consolidated operating revenue by 8.7 per cent to Rs 1,366 crore and reported a net profit of Rs 3.1 crore. Yet department-store like-for-like sales growth slowed to 2 per cent, from 6 per cent in the preceding quarter, improving to 7 per cent after adjusting for festive timing.
Premiumisation supported the business. Premium portfolio sales grew 10 per cent, accounting for 73 per cent of core retail sales, while its premium loyalty programme contributed 22 per cent of overall turnover.
Its value-fashion brand Intune generated Rs 72 crore in gross sales, with festive-adjusted like-for-like growth of 6 per cent. The contrasting performance illustrates how retailers are attempting to serve consumers at both ends of the market: premium shoppers continue to support higher-value purchases, while price-sensitive customers seek lower-priced alternatives.
Reliance Retail is pursuing a similar strategy through differentiated formats, including Trends and Yousta, while Landmark Group’s Max Fashion is focusing on faster replenishment and continued store additions. For these players, the challenge is to align product availability and pricing with local demand rather than rely on network expansion alone.
VIEW
Inventory hits margins
The pressure on store productivity has direct implications on profits. Rent, employee costs, store fit-outs and logistics must be absorbed regardless of whether footfalls meet expectations. When sales slow, retailers are left carrying inventory for longer, increasing the likelihood of markdowns.
The Clothing Manufacturers Association of India (CMAI) reports that 54 per cent of apparel manufacturers and retail suppliers absorbed higher operating and freight costs through lower gross margins, while 35 per cent passed on the increases through price adjustments.
For retailers, the combination of higher costs and slower inventory movement can erode margins even when revenue rises. The risk is particularly acute for businesses dependent on bulk seasonal purchases and longer supply chains.
In contrast, fast-fashion models built around frequent merchandise drops and shorter replenishment cycles can respond more quickly to changing demand. Trent’s Zudio show the appeal of a private-label-led model, in which tighter control over product development and supply can support faster inventory turns. However, execution and store-level performance remain critical even for rapidly expanding formats.
SUSTAINABILITY
Growth needs discipline
India’s apparel market remains a significant expansion opportunity. CMAI estimates its value could reach $146 billion by 2029, with rural and semi-urban consumers contributing substantially to demand.
But market growth does not guarantee returns for every new outlet. Value-fashion retailers entering smaller cities must contend with local competition, price-sensitive shoppers and rising distribution costs. Store additions that fail to generate adequate sales can dilute returns on capital and increase working-capital requirements.
The second-quarter results point to a shift in the sector’s priorities. Expansion remains important, but store productivity, inventory turnover and localised merchandise planning are becoming equally critical measures of performance.
For organised apparel retail, the next phase of growth will depend less on how many stores chains open and more on how efficiently each outlet converts footfalls into sales. In a market where consumers can switch quickly between national chains and local retailers, disciplined expansion may prove more valuable than scale alone.
Easitex-Textiles Sustainability
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