The growth of digital disruptors will be driven primarily by Gen Z and millennials who have a high tendency to buy fashion online, according to a report by Bain & Co. and TMRW, a house of brands in the Aditya Birla Group.
An analysis of website and app data shows 70 to 80 percent of the traffic to digital disruptors comes from these segments, with Gen Z accounting for 30 to 35 percent and millennials for 40 to 45 percent of the traffic.
Gen Z – considered to be those born in the 1997-2012 period – cares about confidence, fun, and well-being, while millennials (born 1981-1996) care more about eco-friendly and self-expressive brands.
The report revealed that 24 percent of the 18-to-24-year-olds buy from digital disruptor brands, compared with 13 percent of 45-year-olds and older. Gen Z and millennials will account for about 75 percent of spending on disruptors by FY28, up from 70 percent today.
Digital disruptor brands are those that start online and take a radical approach to scaling up businesses, according to the report titled Digital Fashion Disruptors: Navigating the Future of Fashion.
Digital disruptors target younger customers by association – staying current through merchandising based on the latest pop culture themes or collaborating with users to co-create “designs of the week” that talk to consumers directly.
A few digital disruptor categories have been able to get a share of the wallet owing to the low presence of national brands. Fashion accessories have historically been a fragmented category with few national brands. This category demands a very wide range, which can be hard to manage.
The report showed that disruptor jewellery brands have redefined the business model. One brand that is scaling up rapidly has positioned itself as a “fast fashion destination” for gold jewellery. With over 17,000 designs and about 1,000 added every quarter, the brand still runs on close to zero finished inventory. Rearranging the supply model with technology made this possible.
Kids wear is another fragmented category that comes with challenges such as the number of occasions to be served, various sizes, and the need to provide quality products in a category where customers don’t like paying a premium.
A leading brand in this space has turned these challenges into an advantage, creating a kids wear destination serving all occasions.