Tata Group-owned Trent Ltd., the company behind Zudio and Westside, is starting to feel the pressure of a cooling fast fashion market, especially after a robust post-pandemic boom. The slowdown was reflected in the company’s January-March (Q4) earnings, which were below analyst expectations, leading to a sharp 19% drop in its stock price on April 7.

In Q4 FY24, Trent posted a 28% year-on-year (YoY) revenue increase, clocking ₹4,334 crore. While the number looks decent in isolation, it falls short of the company’s five-year CAGR of 36% and represents the slowest quarterly growth since FY21. During that year, the industry was still recovering from pandemic-induced disruptions.

The High Base Effect and Urban Weakness

Experts attribute this moderation to the high base effect — the result of previously accelerated growth — and a cooling urban demand, particularly in metros and Tier-1 cities.

“After delivering strong double-digit like-for-like growth, the high base effect is beginning to moderate Trent’s growth momentum,” said Abhijeet Kundu, Analyst at Antique Stockbroking.

Even global fast fashion giants like H&M and Uniqlo are facing the heat in India. Uniqlo’s growth fell from 60% in FY23 to 31% in FY24, while H&M dropped from 40% to just 11% in the same period. This signals a sector-wide deceleration, especially among urban consumers.

Why Urban India is Pulling Back

Consumer sentiment plays a huge role in retail, and the mood has noticeably changed. According to Praveen Govindu, Partner at Deloitte, middle-income groups — which form the backbone of fashion consumption — are now more cautious.

“Wage growth has been modest over the past 1–2 years. Spending is also a sentiment — consumers will spend if they feel comfortable,” he said.

While higher-income groups are still spending on experiences and hospitality, fashion purchases are seeing cutbacks, especially in discretionary segments like fast fashion.

Tier II and III Cities to the Rescue

While metros stagnate, Tier II and III cities have become growth hotspots. These regions are witnessing income growth, and Gen Z consumers are emerging as a new driver of fashion demand. Their appetite for trendy and affordable apparel is reshaping the landscape.

Brands like Zudio, V-Mart, and Reliance’s Yousta are rapidly expanding in smaller towns, betting on the rise of aspirational value-conscious consumers.

A report by Deloitte and the Retailers Association of India (RAI) stated that these regions will power future retail growth, thanks to a rising youth population and improved digital access.

Challenges for Fast Fashion Retailers

However, this shift comes with new risks:

• Store Expansion Pace: Brokerages like Elara Capital flagged slower-than-expected store additions as a concern.

• Price Wars: The value retail segment is becoming increasingly competitive, affecting margins.

• Rapid Trend Changes: Staying relevant to Gen Z’s fast-changing tastes is a huge challenge. These consumers demand authenticity, transparency, and personalised experiences.

The Gen Z Effect on Fashion Retail

Gen Z is now India’s largest end-consumer cohort, influencing nearly 45–48% of lifestyle purchases, directly or indirectly. Their behaviour is drastically different from millennials or Gen X:

• Brand loyalty is minimal.

• They prioritise values, sustainability, and authentic storytelling.

• Nearly 63% of Gen Z shoppers buy online, and two-thirds check online reviews before making a decision.

“Gen Z connects with values and stories. If they align with a brand’s principles, they engage — otherwise, they move on,” said Govindu.

For brands like Zudio and Westside, which have historically built their success on product-led strategies, this represents a significant transformation challenge.

Macroeconomic and Regulatory Pressures Add to the Heat

Experts also warn of broader pressures, such as:

• Inflation and modest income growth

• Possible regulatory actions, like income tax adjustments, affecting disposable income

• A general slowdown in discretionary consumption

According to Bharat Mimani, MD at BCG, although organised retail continues to outperform traditional formats, growth will correct to a more realistic trajectory.

What Lies Ahead for Trent and the Fashion Retail Sector

Trent may still be ahead of peers in many metrics — store network, sales volume, brand value — but sustaining that lead in a changing consumer landscape won’t be easy.

The focus now needs to shift from urban-centric strategies to a broader, diversified approach, one that includes:

• Rapid digital transformation

• Personalised engagement strategies

• Sustainable sourcing and transparent communication

• Building community-centric brand narratives for Gen Z

Conclusion: A Defining Moment for Indian Fashion Retail

Trent’s Q4 numbers, while disappointing compared to recent years, may be an early warning for the broader Indian fashion retail ecosystem. The era of post-pandemic retail euphoria is giving way to a more nuanced, segmented growth path.

To succeed, fashion brands must adapt to evolving preferences, embrace regional diversity, and invest in digital-first Gen Z strategies.

The future of fashion retail lies not just in cities like Mumbai and Delhi, but also in Patna, Indore, and Bhubaneswar — places where ambition meets affordability, and style meets sustainability.

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