Apparel's Festive Surge: Driven by ‘Value & Affordability’ shift, tier II cities
24 November 2025, Mumbai
India's retail narrative has shifted, with festive-period growth of 11% (August–October 2025) signaling a strong focus on value-driven fashion. While the overall sector surged, the apparel and footwear categories priced below ₹2,500—which benefited from a recent GST rationalization—saw significantly stronger traction. This affordability focus is now the primary growth engine. Footwear, in particular, matched the high growth of Food & Grocery and Jewellery, each growing by 12%, while apparel registered 9% growth.
The GST catalyst and mid-market growth
The recent Goods and Services Tax rationalization, which extended the 5% slab to apparel priced up to ₹2,500, is the key market intervention. According to Crisil Ratings, this is expected to lift the revenue growth of organized apparel retailers by approximately 200 basis points this fiscal year, sustaining a 13-14% topline growth. "The GST move has boosted price competitiveness in the mid-premium and value segments, whose customers are highly price-sensitive," stated Anuj Sethi, a Senior Director at Crisil. This highlights the industry's strategic plan: focusing on the large, aspirational middle class.
Retail's regional expansion
This momentum is not confined to metros. Tier-II and Tier-III cities are fast becoming the new retail frontier. Data from the festive season shows a broad-based consumption pattern, with West India leading at 13% growth, reflecting the rising incomes and brand aspiration in these smaller markets. Leading retailers are aggressively expanding their physical footprint in these regions, confirming a long-term strategy of blending online and offline channels to capture this burgeoning demand. This geographical expansion is crucial to overcome challenges like supply chain complexities in diverse regions and sustaining the domestic market's resilience against global headwinds.
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