Value fashion retail finds its fit while premium struggles to measure up

Embroiders a strong edge with affordability, scale, and a shift to organised retail

Listed value fashion retailers pulled ahead of premium and branded apparel in 2024-25 (FY25) and are well positioned to sustain strong growth in 2025-26 despite a high base. Trent remained an outlier, but most branded and premium retailers delivered subdued revenue growth in the January-March quarter (Q4) and across FY25. 

Their robust operational performance came through in stock returns: the four value fashion retailers — Vishal Mega Mart (VMM), V-Mart Retail, Baazar Style Retail (Style Baazar), and V2 Retail — gained an average of 19 per cent over the past three months, versus 10 per cent for premium and branded apparel firms. 

The Street remains optimistic about the segment, citing its deep addressable market and the shift from unorganised to organised retail. 

The value segment — spanning mass-market and economy products — accounts for 60 per cent of India’s apparel market, making it the dominant force. 

Consumer and retail analysts at HSBC Global Research, led by Nihal Mahesh Jham, call value fashion the biggest beneficiary of this shift. Its appeal rests on affordability, trend-driven collections, and rising quality. In a market where lower-income buyers dominate, value retail is a more resilient long-term bet. 

According to Nuvama Research analysts, led by Rajiv Bharati, the four value retailers outpaced peers in Q4, thanks to strong same-store sales growth (SSSG) and the early Eid effect, which was missing in the base quarter. 

Their combined revenues jumped 28 per cent year-on-year (Y-o-Y), supported by a 16 per cent rise in retail area and an 11 per cent gain in sales per square foot (to ₹700 in Q4 and ₹754 across FY25). Growth came mainly from higher volumes, with average transaction values for fashion retailers holding steady. 

For FY25, these four listed value retailers lifted revenues by 24 per cent, backed by a 16 per cent retail area expansion and robust double-digit SSSG, note analysts at Motilal Oswal Research, led by Aditya Bansal. V2 stood out with a 60 per cent rise in retail area and 29 per cent SSSG, compared with 12-13 per cent for its listed peers. 

Structural tailwinds shaped FY25 — rising aspirations across Tier-II, -III, and -IV markets, the shift from unorganised to organised retail, deeper private-label penetration, wider ass­o­r­tments, and faster network expansion. 

In the premium bracket, results were mixed. Madura Fashion & Lifestyle (Aditya Birla Lifestyle Brands) posted 9 per cent SSSG, lifted by last year’s store rationalisation, while Arvind Fashions delivered high-single-digit revenue and mid-single-digit SSSG, extending its nine-month trend. Go Fashion (India) improved its SSSG to 2.1 per cent, supported by a recovery in the sub-₹1,000 segment, although overall growth remained subdued. Page Industries registered double-digit growth, benefiting from rising innerwear demand and stocking by quick-commerce dark stores. Meanwhile, Shoppers Stop remained muted, and Vedant Fashions felt competitive pressure across its southern markets. 

Better margins strengthened the case for value retailers. Their blended gross margins rose 50 basis points (bps) in FY25 to 29 per cent, with a sharper 150-bps rise in Q4, thanks to a better product mix, higher price points, and procurement efficiency. 

VMM led the way, gaining 80 bps in gross margins for FY25 and 180 bps in Q4, buoyed up by a larger share of private labels. Its operating margins expanded to 8.2 per cent, supported by tighter sourcing and stronger inventory turns. Most value retailers now expect further margin expansion as new stores mature and operational leverage improves.