Digital disruptor brands likely to reach $10 billion by FY28: Report

Digital disruptor brands are projected to outpace the growth of the online fashion market, with a 35 per cent compound annual growth rate expected to reach $10 billion by 2027-28 (FY28), up from its current size of $2.4 billion.

Consumer preference for experimenting with new brands and the innovation from digital-first brands are driving this trend, according to a report by Bain & Company and TMRW House of Brands, an Aditya Birla Group venture.

The report, titled Digital Fashion Disruptors: Navigating the Future of Fashion, also states that the overall online fashion market is anticipated to grow to approximately $35 billion by FY28, with digital disruptors capturing about 29 per cent of the market share.

Digital disruptor brands are those that begin by selling online.

“Digital disruptor brands are creating a new fashion playbook. They have achieved a 33 per cent growth rate in the last four years and are expected to increase their share of the overall fashion market,” as Radhika Sridharan, a partner at Bain & Company, was quoted as saying in the report’s release.

She also added, “Young customers, especially Generation Z (GenZ), exhibit a greater propensity to try and purchase these brands. Certain historically fragmented sub-categories, such as ethnic wear and kids wear, are undergoing significant transformation with the growth and scaling of new digitally-led brands and are expected to see outsized growth in the next five years.”

The report states that website and app data analysis shows that 70–80 per cent of the traffic to digital disruptors originates from these segments, with GenZ accounting for 30–35 per cent and Millennials for 40–45 per cent of the total traffic.

Additionally, consumer spending analysis reveals that 24 per cent of individuals aged 18–24 buy from digital disruptor brands, compared to only 13 per cent of people over the age of 45.

The report anticipates that by FY28, approximately 50 digital disruptor brands are expected to surpass Rs 250 crore in revenue.

“The next generation of digital disruptors in the fashion and lifestyle space will be co-created with the customers. GenZ customers are interested in much more than just the product and purchase experience,” Prashanth Aluru, chief executive officer and co-founder of TMRW House of Brands, commented.

Aluru added, “In fashion, while the threshold scale for achieving profitability is low, brands must address underlying inefficiencies during the growth phase.”