Myntra, online fashion arm of Flipkart, said small towns could account for more than half its sales in the next 3-4 years driven by high demand for discretionary products including premium and international brands, a sharp contradiction to the rural slowdown even in basic staples and groceries segment. At present, tier-2 markets contribute 40% to its sales especially during mega sale events.
“If you look at the next three-four years, it will definitely be closer to 55%. It will be a journey that we will make and it has nothing to do with a low value or budget. That’s the myth that we all are discovering that is to be busted,” said Nandita Sinha, chief executive officer at Myntra that sells over 6,000 brands. “Maybe the contradiction is in the headroom that we have as ecommerce, because fashion and branded fashion is so under penetrated in this country.”
Within the overall ecommerce category, fashion accounts for 10-12% and Myntra said a large part of the growth and new shoppers will come from the non-metro. For the company, live commerce as a proposition has much higher traction in T2 towns in terms of engagement as consumers experience brands for the first time.
“There is this whole expansion of the fashion cohort, non-metro customers, the Gen Z customer, the millennial customer, the beauty customer. The role that the brands expect us to play is to actually leverage the entire ecosystem, bring all of these pieces together, to be able to provide an experience which is great for the customers, but also their ability to tell brand stories,” Sinha told ET during its first-ever ‘Creator Fest’ ahead of its ‘End of Reason Sale’ (EORS).
Fashion is the fastest-growing category in India’s tier-2 and tier-3 cities, with over 93% YOY growth in FY 2022. Experts feel online shopping novices typically start with purchases from the fashion segment. In fact, even though tier-1 cities report a muted growth of just 19% in 2021, fashion remains one of the most mature segments across Indian metros.
“Shoppers from tier-2 and tier-3 cities are set to change India’s e-commerce landscape. These online savvy buyers accounted for over 61% of the overall market share in FY 2022, up from 53.8% in 2021,” according to a joint report by Unicommerce and Wazir Advisors. “As these cities continue to grow at a faster pace, their market share will continue to rise. New regions will emerge as priority markets for leading marketplaces and online sellers.”
According to Tofler, Myntra Designs reported a 46% jump in revenues for the financial year 2021-22 at Rs 3,610 crore while net loss widened 40% to Rs 597 crore.
Fashion was one of the most affected segments during the pandemic-led restrictions but recovered quickly as consumers got back to social engagements and offices, which meant they had to refresh wardrobes.
“With social media being so prevalent, people want to celebrate each festival and ethnic was a big driver of consumption. Also, workwear came back in demand. There was a set of consumers that were shopping for international brands, even from non-metro areas,” Sinha added.