How are Myntra and Zara targeting Gen Z spending in India's booming lifestyle market?

India's lifestyle market is on the brink of substantial growth, primarily fueled by the rise in affluence, premiumization, and a shift towards organized retail. Gen Z consumers, heavily influenced by social media trends, are expected to drive this growth, with a significant surge in online shopping anticipated.

According to a joint report by Bain & Company and Myntra. Currently valued at $130 billion and forecasted to expand at a compound annual growth rate (CAGR) of 10-12%, this translates to a potential $80 billion increase in spending, driven by a combination of factors. The domestic lifestyle market, encompassing apparel, beauty, accessories, and footwear, is projected to reach a remarkable $210 billion by 2028,

Playing a crucial role in this growth are India's digitally-savvy Gen Z shoppers, numbering around 60 million, born between 1997 and 2012. These trend-conscious consumers are heavily influenced by the latest fashion trends and social media influencers and exhibit a higher purchase frequency, with an average of eight to nine times a year, compared to the national average of five to six times.

Gen Z currently accounts for 20-25% of the online lifestyle market, valued at around $4 billion in gross merchandise value. Although they transact more frequently, their individual order values tend to be lower than the average.

The CEO of Myntra, Nandita Sinha, highlighted the influence of Gen Z on fashion trends, emphasizing their exposure to global trends and styles, their desire for a new look each time they step out, and their significant contribution to the overall e-lifestyle category.

The online lifestyle market in India, presently estimated at $16-17 billion, is anticipated to surge to $40-45 billion by 2028. Fashion remains the dominant category in e-commerce, constituting 75% of the market share. Accessories and women's apparel are projected to experience the fastest growth within this segment.

In 2023, over 175 million customers across India shopped for lifestyle products online, averaging six to seven transactions annually. Lifestyle products are the initial purchase for 40-45% of first-time e-commerce shoppers, making it an essential gateway category for e-retail. Furthermore, the report highlights the growing significance of online shoppers and their behaviour, including visiting more platforms more often, completing purchases in a shorter duration, and increasing engagement and purchase frequency, especially among deeply entrenched shoppers.

The trend toward organised retail is expected to be another significant growth, with the organized segment projected to grow at a rate of 15-20% annually until 2028, while 66% of the overall lifestyle market remains unorganized offline retail.

This shift moving towards organised retail has intensified competition in the market, with both large foreign retailers and homegrown retailers expanding their store networks. Online commerce players are diversifying their offerings to cater to the growing demand.

The growth in lifestyle retail is not limited to major cities, as cities beyond the top 50 already contribute two-thirds of India's lifestyle consumption. This expansion will be supported by various factors, including rising incomes, the growth of fashion-forward Gen Z shoppers, and increased demand for organized-branded products.