India’s retail renaissance from land grab to profit per sq ft

18 February 2026, Mumbai

In 2026, gone are the days when the race was simply about store counts or geographic reach, the mantra now is profits per sq ft. While Western markets, particularly the US, grapple with structural decline, Indian retailers are shifting toward the ‘Value-Aspirational’ segment, a sweet spot that blends affordability with desirability. The winners are brands that can deliver Instagram-ready fashion at neighborhood-tailor prices. Behind this shift lies a meticulous recalibration of portfolios, formats, and real estate strategies by India’s retail giants.

Organized value retail takes center stage

Year 2026 has marked the year of value retail in India. The mid-market urban store model, long considered a growth engine, is showing signs of fatigue. Consumers have become brand-wise but budget-conscious, resulting in declining footfalls for traditional departmental formats. Retailers are responding by right-sizing their portfolios, closing underperforming mid-tier outlets and rolling out compact, high-velocity formats.

Table: Comparative performance: value format scoreboard (Q3 FY26)

Zudio’s hyper-fast inventory turnover and aggressive value pricing are designed to capture Tier-II, III consumers, whereas Intune focuses on combining loyalty integration with margin protection in metro-adjacent clusters. Yousta, on the other hand, leverages Reliance’s ecosystem to appeal to tech-savvy urban youth, ensuring engagement across digital and physical touchpoints.

Shoppers Stop mastering the barbell strategy

Shoppers Stop has embraced a dual-track model, premiumization at the top and value at the bottom. Its Intune format exemplifies this shift. In Q3 FY26, Intune recorded sales of Rs 77 crore, a 22 per cent year-on-year jump. This performance is notable given the subdued discretionary environment, as the company’s traditional department stores grew only 1 per cent over the same period. Smaller, older stores are being closed and replaced with compact Intune outlets ranging from 5,000 to 8,000 sq. ft, placed in high-footfall areas. By the end of Q4 FY26, three additional Intune stores are slated to open, bringing the total to 84 locations.

Intune is designed as an entry point for Gen Z customers, gradually moving them into Shoppers Stop’s premium beauty offerings and loyalty-driven First Citizen ecosystem. The format demonstrates that carefully calibrated small-format stores can drive both traffic and long-term engagement while maintaining margin integrity.

Zudio’s operational efficiency benchmark

Trent has become the gold standard for retail right-sizing in India. In Q3 FY26, the company reported revenue of Rs 5,345 crore, a 15 per cent increase year-on-year, driven almost entirely by the lean operational model f Zudio. Trent has pursued an asset-light expansion strategy, opening 48 Zudio stores in a single quarter. By avoiding heavy branding costs and relying on unbranded trust, Trent saves significantly on marketing expenses while sustaining high customer footfalls.

Margin protection is central to Zudio’s model. The brand employs an RFID-enabled supply chain that ensures 90 per cent of inventory is sold at full price, eliminating the need for profit-killing end-of-season sales. Non-apparel categories, including beauty, footwear, and innerwear, now contribute 21 per cent of revenue, allowing the company to generate more margin from the same floor space. Zudio proves that efficiency, speed, and careful inventory control can outperform traditional large-format department stores in both growth and profitability.

ABFRL’s demerger and portfolio focus

Aditya Birla Fashion & Retail (ABFRL) has taken a bold step to sharpen its focus by demerging its Madura Lifestyle brands into a separate entity, AB Lifestyle Brands Limited, in 2025-26. The company has simultaneously launched Style Up to compete directly with Zudio in the Masstige segment blending mass appeal with prestige. Style Up is being pushed aggressively into over 500 ‘City Economic Regions’ as identified in the 2026 Budget.

Meanwhile, Pantaloons is being repositioned to avoid margin dip in the value segment. The company is closing smaller, discount-heavy stores and relaunching them with a younger, more premium identity that emphasizes Western wear. These strategic moves illustrate ABFRL’s focus on balancing value and premium segments while ensuring profitability per square foot remains the key performance metric.

Profitability trumps presence

Data from 2026 indicates that India is not experiencing a retail apocalypse but a format evolution. Shoppers Stop reduced inventory by Rs 73 crore year-on-year in Q3 FY26, freeing up working capital and improving balance sheet efficiency. Tier-II and smaller city dominance is a clear trend, with 75 per cent of new Zudio and Style Up stores located in non-metro markets, where real estate costs are 40 per cent lower than in prime cities such as Mumbai or Bengaluru.

The beauty segment is emerging as a critical hedge against apparel volatility. Categories like SS Beauty, Nykaa, and Zudio Beauty are registering growth between 14 and 20 per cent, providing high-margin cushions for retailers as apparel cycles fluctuate. In many cases, a 5,000 sq. ft value-focused store in a Tier-II city such as Karjat generates more profit than a 20,000-sq ft flagship in a struggling metro mall.

India’s retail market is in the midst of a strategic metamorphosis. Giants like Trent, Shoppers Stop, and ABFRL are proving that success lies not in the number of stores but in Digital integration, beauty expansion, and Tier-II penetration are boosting this trend. The 2026 retail narrative is unmistakable: profits drive expansion, and size alone no longer guarantees victory.

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