Organised Apparel Retail to Grow 12-13% in FY27

India’s organised apparel retail sector is expected to grow 12-13% in FY27, according to Crisil Ratings, slower than the 15% growth recorded last year. The moderation is mainly because consumers are spreading their discretionary spending across categories other than clothing. Between April and August 2026, sector revenue growth remained in the high single digits, with the value-fashion segment driving much of the growth. Crisil expects growth to be supported by strong demand for affordable fashion, expansion of organised retailers into smaller cities and continued consumer preference for branded clothing. Retailers are also maintaining relatively cautious expansion plans, which should help keep their credit profiles stable. Expansion in smaller cities generally requires lower capital investment than in major cities. However, the sector faces pressure from higher cotton prices and rising operating costs. Strong competition could make it difficult for retailers to fully pass these higher costs on to customers. As a result, operating margins are expected to decline by around 100 basis points to about 14% in FY27. The festive season will be particularly important, as festive sales typically account for nearly 35% of annual apparel sales. Overall: The outlook remains positive for organised apparel retailers, particularly value-fashion and brands expanding into smaller cities, but margin pressure and intense competition could limit profitability growth.