Indian retailers expand physical stores as digital spending rises

MUMBAI: The customer may click online, but the final word often comes with a walk into the store. As brands pour more money into digital advertising to win attention, India’s retail market is delivering a reminder that screens can spark desire, but shopfronts still play a crucial role in closing the sale. From apparel and jewellery to beauty and food services, businesses are expanding their physical presence even as digital channels reshape how consumers discover products.

The numbers underline the scale of the opportunity. India’s apparel market was valued at $95.7 billion in calendar year 2025, up from $49.3 billion in 2020, and is projected to reach $146.3 billion by 2029, growing at a compound annual growth rate (CAGR) of 9 per cent. According to the Indian Apparel Market Size: A Consumer Research Report 2025, presented by the Clothing Manufacturers Association of India (CMAI) in collaboration with 1Lattice, offline retail accounted for 83 per cent of apparel sales, while online channels contributed the remaining 17 per cent.

In value terms, offline apparel sales stood at $79.4 billion, with single-brand stores accounting for around half of that business. Online apparel sales amounted to $16.3 billion, of which marketplaces generated 80 per cent and direct-to-consumer (D2C) brand websites accounted for the remaining 20 per cent.

The split offers a useful reality check for brands chasing digital growth. Online channels have become important for product discovery, price comparisons and customer acquisition, but physical retail continues to dominate apparel purchases. Rather than replacing stores, digital engagement is increasingly working alongside them, creating a journey in which consumers may discover a product on their phones before heading out to try, compare and buy it.

The strategy is visible in the September-quarter performance of listed retailers. Trent, the Tata Group retailer behind Westside, Zudio and Utsa, reported standalone revenue from operations of Rs 5,788 crore in the second quarter of FY27, up 23 per cent from Rs 4,724 crore a year earlier. The company also opened its 1,000th Zudio store, underlining the importance of physical expansion even as brands compete for consumers online.

Jubilant FoodWorks, which operates Domino’s in India, reported an 11.9 per cent increase in second-quarter revenue to Rs 2,609 crore and added 108 stores across its network. The expansion suggests that physical locations remain central to businesses that depend on proximity, convenience and repeat consumption. For food services, the digital order may be placed on an app, but the customer experience still depends on the kitchens, outlets and delivery infrastructure behind it.

The trend points to a broader shift in how brands view the consumer journey. Digital advertising can introduce a product to a shopper, but stores can provide reassurance, immediate product access and a more tangible brand experience. For categories involving fit, feel, personal preference or higher-value purchases, that physical interaction can be especially important.

Festive shopping brings the connection into sharper focus. A consumer might browse an app for gift ideas during the week and visit a shopping centre at the weekend to make a purchase. For marketers, the challenge is no longer simply choosing between digital and traditional retail, but ensuring that both channels work together across the path to purchase.

Jewellery is a particularly clear example. Brands such as Giva, CaratLane and Mia by Tanishq use digital platforms to showcase designs, introduce collections and help consumers compare products. Yet visiting a store can remain an important part of the buying process, allowing shoppers to inspect a piece, try it on and assess its appearance in person.

That does not mean every jewellery purchase ends at a physical outlet. Online transactions remain part of the market, but the category illustrates why digital discovery does not automatically translate into digital-only shopping. Footwear follows a similar pattern, with customers often using online platforms to research styles before visiting a store to assess comfort, fit and sizing.

For marketers, this changes the way the sales funnel is viewed. Digital channels can build awareness and generate interest, while physical outlets help convert that interest into purchases. The two channels can also reinforce each other: an online campaign can drive store visits, while an in-store experience can encourage customers to return to a brand’s website or app.

The CMAI report’s figures support the case for this connected approach. Although online apparel sales have expanded, their 17 per cent share remains considerably smaller than the 83 per cent accounted for by offline retail. The figures do not establish how much digital advertising directly contributes to store sales, but they show why a strategy built exclusively around online transactions would overlook the dominant sales channel in apparel.

For brands that began online, physical retail can also provide an alternative to an increasingly expensive fight for consumer attention. Neeman’s founder Taran Chhabra said the footwear brand sees substantial growth potential in its retail business and plans to expand its store network across India.

“Over the next three to four years, as we expand to more than 500 stores across India, we expect our retail business to generate Rs 450–500 crore in revenue,” Chhabra said. He described retail as a steady and potentially profitable channel, particularly as digital advertising becomes more expensive and competition for consumer attention intensifies.

The target is significant: a network of more than 500 stores over the next three to four years, with the retail business expected to generate Rs 450–500 crore in revenue. However, the projection remains a company target rather than a reported financial result, and its achievement will depend on the pace of expansion and the performance of individual outlets.

Chhabra also acknowledged the costs involved. Physical stores require spending on rent, inventory, salaries and customer experience, all of which can weigh on a retailer’s economics. But they also give brands a permanent presence in the places where consumers shop, dine and spend their leisure time.

For Neeman’s, the rationale is to make the brand accessible beyond the digital marketplace. As the company expands, physical locations can offer consumers an opportunity to experience its products first-hand, while helping the brand reach shoppers who may not discover it through online advertising alone.

Beauty and personal care retailer Nykaa is pursuing a similar omnichannel strategy. Originally built as an online business, the company opened 14 new outlets in the September quarter, taking its offline network to 338 stores as of 30 September 2026. The additions further expand its physical reach across a category where product discovery, demonstrations and personal preferences can influence purchasing decisions.

Nykaa’s beauty business continued to see strong performance from its proprietary House of Nykaa range, alongside growth from existing brands and new entrants across skincare, cosmetics and personal care. Its fashion business also recorded consistent performance, with the company expecting year-on-year growth of more than 40 per cent in net sales value (NSV) for the fashion segment.

The expansion illustrates how online reach and offline availability can coexist within the same business. Digital channels provide a platform for discovering products and exploring a broad assortment, while stores create another point of contact for shoppers who prefer a physical experience. The approach also allows brands to engage consumers at different stages of the buying process instead of relying on a single route to market.

Trent’s performance offers another illustration of how store networks remain central to retail growth. As of 30 September 2026, its portfolio comprised 1,342 stores across its businesses. During Q2FY27, it added a net 10 Westside stores and 17 Zudio stores, taking total net additions across the two formats to 27.

Expansion continued through the first half of FY27, when Trent added a net 11 Westside stores and 36 Zudio stores, or 47 across the two formats. Revenue from the sale of merchandise, excluding other operating income, increased 23 per cent in the September quarter and 21 per cent in the first half.

The opening of Zudio’s 1,000th store marks a milestone for the value-fashion chain, while the wider portfolio demonstrates the group’s continued investment in physical distribution. However, Trent’s exchange filing does not provide a format-wise revenue split, so the respective contributions of Zudio, Westside and its other lifestyle businesses to the standalone quarterly revenue of Rs 5,788 crore cannot be established from the disclosed figures.

The company has also flagged risks that could influence consumer spending and operating costs. These include potential short-term effects from the West Asia conflict, supply-chain disruptions, commodity prices and inflation. Trent said discretionary demand remained calibrated as consumers balanced their aspirations with fiscal prudence.

It reported no meaningful change in the level of competition and noted encouraging consumer momentum in its Star food and grocery business. These observations suggest that while the opportunity for organised retail remains substantial, expansion is taking place against a backdrop of consumers weighing purchases carefully and businesses managing cost pressures.

The numbers also show why store growth should not be viewed in isolation. New outlets increase a retailer’s physical reach, but their long-term contribution depends on consumer demand, operating efficiency and the ability to generate sales from the expanded network. For brands, the challenge is to convert additional locations into productive retail assets rather than simply larger store counts.

The food services business offers a different version of the same story. Jubilant FoodWorks added 108 stores during Q2, with Domino’s India accounting for 88 of those additions. The Indian Domino’s network reached 2,601 stores as of 30 September 2026.

In the Eurasia region, the company added three stores, taking its network there to 798. Together, the additions demonstrate the continued importance of physical outlets in a business where digital ordering is closely linked to the availability of nearby kitchens and delivery infrastructure.

Unlike apparel or jewellery, food services often involve more frequent purchases and a different balance between browsing and convenience. Apps can make ordering easier, but the underlying store network remains essential for preparing food, serving customers and fulfilling deliveries. The digital interface and physical outlet therefore operate as connected parts of the same business rather than competing alternatives.

The wider retail opportunity also extends beyond major metropolitan markets. The CMAI report identifies first-time branded consumers, shoppers upgrading to more premium offerings and customers moving from unorganised to organised retail as important parts of India’s consumption landscape.

For these consumers, brand trust and product accessibility can be decisive. A store offers an opportunity to examine merchandise, seek assistance and make a purchase with greater confidence. Digital channels can introduce the brand and help consumers navigate choices, while physical outlets can support the transition from curiosity to a transaction.

The debate over digital versus physical retail is increasingly becoming a question of how much investment each channel deserves, where stores should be located and how the two can work together. Digital remains a powerful way to reach consumers, promote products and build awareness, particularly during festive periods when shoppers are actively looking for new ideas and offers.

Yet the apparel market’s 83 per cent offline sales share shows that physical retail continues to account for the bulk of spending in the category. Trent’s store expansion, Nykaa’s growing outlet network, Neeman’s plans to exceed 500 stores and Jubilant FoodWorks’ addition of 108 outlets all point to businesses continuing to invest in real-world access even as digital channels gain importance.

The figures do not suggest that every online campaign leads to a store visit or that physical retail will always deliver better returns than digital advertising. Instead, they highlight the need to evaluate both channels according to their role in the consumer journey, the economics of the category and the preferences of the target audience.

For retailers, the next phase of growth may depend less on choosing between a screen and a shopfront and more on making sure neither works in isolation. Digital can win the first glance, but the store still has a major role in winning the sale. In India’s expanding consumer market, the most effective retail strategy may be the one that makes the journey between the two feel seamless.