Love shopping at Zudio? Should you invest in its growth?
- Kiran S N
- Aug 7
- 7 min read
Imagine a brand so aggressive that it's opening one new store every three days! That’s Zudio’s reality in 2025, as it sprints past established players and redraws India’s retail map.
In just four years, Zudio has grown from 280 to 765 stores a staggering 173% jump.
Westside, known for its urban appeal, grew from 163 to 248 stores in the same window a respectable 52% increase, but nowhere close to Zudio’s breakneck pace. A couple of years ago, Westside comfortably led in store count. Today, Zudio has overtaken Westside by a landslide, raising an obvious question: Why are value-driven, fast fashion brands like Zudio outpacing their older, more premium peers?
Why Fast Fashion Loves Tier 2 & 3 Cities
Think of India's metros like large-cap stocks: stable, saturated, and well-tracked, then Tier 2 & 3 cities are your small and midcap bets: under-researched, higher risk, but loaded with upside.
That’s exactly how fast fashion players are viewing them. And Zudio’s footprint proves the point, 85% of its stores are now in these cities.
Why not chase the supposedly “safe” top-tier markets like Mumbai or Delhi? Because those markets are already spoken for, rents are high, competition is intense, and incremental growth is limited. The real alpha is elsewhere.
Yes, Tier 2 & 3 cities come with their own barriers: smaller catchment sizes, patchy infrastructure, and more conservative buying habits. But when you look at the numbers, the opportunity is too big to ignore:
Average income is ₹32,000/month, or 91% of metro levels at ₹35,000/month
Living costs are lower, so discretionary income is higher
Households now spend 16% of disposable income on fashion, up from 10% pre-pandemic
Tier 2 and tier 3 cities are expected to account for 40% of the total consumer spending by 2025, up from 30% in 2019. That's a massive ₹10 lakh crore shift in consumption patterns over just six years.
Apparel market growth (estimates)
Category | Current Size ($bn) | Projected Size by 2030 ($bn) | CAGR (%) |
Overall India | 100–110 | 170 | ~10 |
Tier II & III | 40–50 | 80–100 | 12–15 (CRISIL, ICRA) |
Metro Cities | 60–65 | 70–75 | 3–5 |
Sources: Technopak Advisors, Wazir Advisors, RedSeer Consulting, Statista, CRISIL, ICRA
What’s Really Driving the Boom?
1. Disposable Income and Spending Shifts
As economic parity with metros closes, residents in smaller cities are less price-sensitive and more willing to experiment with branded fashion. Unlike previous generations focused on gold or property, today’s consumers are actively allocating more income toward clothing and lifestyle.
This behavioral shift is supported by infrastructure improvements and the growing middle class, which has expanded by 60% in Tier 2/3 cities over the past decade
2. Digital Democratization
The smartphone and mobile internet wave has collapsed cultural and aspiration gaps. With 80% of internet users in Tier 2 & 3 cities shopping online, the aspiration gap has virtually disappeared. Access to Instagram, YouTube, and Netflix means a girl in Kochi wants the same trending look as someone in Mumbai right now.
3. Fast-Fashion Inventory: The 50-Drop Phenomenon
Traditional boutiques change their styles 3-4 times a year. Zudio and rivals refresh their shelves 50 times a year. For Gen Z and young millennials, a new “drop” every week keeps them returning and spending. The fast-fashion cycle feeds the demand for novelty.
4. Affordable Price Bands
Zudio, along with peers like Reliance Trends and now Yousta, focus on ultra-accessible price bands of ₹99–999, packing value into every purchase and erasing the old premium associated with “branded” wear. In fact, 85% of Zudio’s products fall under ₹1,000.
5. Omnichannel Infrastructure
These brands are digitally native, running tight offline and online operations, drawing in consumers wherever they are. Meanwhile, many independent and traditional stores lack the scale to compete and are closing at a rate of 5% per year.
6.Psycological Effect
Shoppers walking into Zudio confront an “everything under ₹999” promise that feels like a steal triggering a classic low-price, high-reward bias. With most units clustered between ₹199 and ₹499, the perceived cost of adding one more T-shirt or accessory feels trivial, so baskets quietly expand to two or three items. Industry data peg Zudio’s average ticket at roughly ₹1,200 for 2 to 3 units, versus closer to ₹1,500 for just a single unit in premium stores. In effect, the lower the individual outlay, the more permission shoppers give themselves to indulge, turning price into a psychological nudge that lifts unit volumes even if margins stay slim.
The new ₹12 lakh zero-tax limit effectively lifts disposable income for millions of salaried Indians, especially in price-sensitive Tier 2/3 cities. With Zudio’s core range priced at ₹199-₹599, that extra cash can translate into several spontaneous shopping trips....fueling the brand’s high-volume, low-margin model and reinforcing its “buy one more” impulse at checkout.
Another key reason Zudio can scale this fast? It's low setup cost. While a typical Westside outlet needs ₹8-9 crore, Zudio can get one running for just ₹3-4 crore. That gives it the freedom to experiment with locations, double down on successful clusters, and still maintain healthy unit economics. In smaller towns, this lean setup matters, it lowers breakeven thresholds and makes profitability more attainable even at modest footfalls.
Now the important question... should you invest in Zudio?
The Challenge
For all its headline-grabbing hype, Zudio’s meteoric rise is now confronting a new and perhaps inevitable set of challenges. The very forces that powered its boom are beginning to test the brand’s long-term resilience and Trent’s broader growth thesis.
Margin Pressures and Operational Costs
Zudio’s sub ₹1,000 mass-market focus leaves little room for error as rents, wages, and supply chain costs climb. Even with blockbuster volume, the ability to sustain EBITDA margin has become harder. The most recent quarters have seen Zudio’s margin hold around 9%, while Westside’s healthier, premium-focused structure delivers closer to 15%.
Westside, on the other hand, is flipping the script by tapping into its fast-growing online shopping app to support profitability. Its app and digital sales now make up over 6% of total sales. That may seem small, but it’s highly profitable....online orders usually sell at full price and cost less to fulfill than in-store purchases.
The challenge for zudio go beyond just rising input and operational costs. There’s been a clear shift in Trent’s revenue composition: where Zudio contributed about 57% of total revenue last year, that share has now slid to 49%. At the same time, Westside’s contribution has increased from 43% to 50%
Slowing Store Productivity at Zudio
Goldman Sachs' recent downgrade crystallized a concern that had been brewing among analysts: store cannibalization. In Zudio's top 10 cities, which house 260 of its stores, multiple outlets now operate within the same pin codes. The investment bank's analysis revealed that incremental revenue per new store has been declining for two consecutive quarters.
Latest annual update seem to show a shift in store opening trends, during Q1FY26 Zudio has consolidated 10 stores and opened 11 drastically cooling down from the previous 2 quarters.
Quarter | Zudio Stores Opened | Zudio Stores Consolidated |
Q3FY25 | 62 | 4 |
Q4FY25 | 132 | 2 |
Q1FY26 | 11 | 10 |
Stock Price
The Stock didn't fare any better and has been falling from an all time high of ~₹8,300, granted the market was in a downtrend, but Trent stock is still falling. It posted a ~(-15%) single day drop on 7th, April 2025 and has been sideways since then.
Adding to that people got used to a certain rhythm with Trent, during the dream run from Jan 2023 up to the all-time high it gave nearly ~500% returns, and suddenly when the results didn't align with expectations that reflected in the stock.
Financials
It's like this, image a companies sales grew from ₹1000 Cr to ₹2000 Cr that's a 100% growth, and it has been doing so for a while, but suddenly it went to ₹3000 Cr an increase of 50%, that's still great but lower compared to what was expected.
That is exactly what happened with Trent, in Q4FY25 revenue grew y-o-y by 25% and PBT by 44%, looks great....but when compared with Q4FY24 where revenue grew 53% and PBT 153%, even the annual revenue growth rate of 39% pales in comparison. EBITDA margins however have improved to 9.3% a y-o-y increase of 13.4%.
That being said this isn't necessarily a crisis, it's the natural evolution of a hyperscale retail format. Even retail giants like Starbucks and McDonald's face similar challenges as they saturate primary markets.
Road Ahead
The Management realises the key challenges in sustaining retail growth and aims to address them through a twin-pronged strategy: expanding deeper into Tier 2 and Tier 3 markets, while adopting a more intentional and targeted approach in Tier 1 cities. Instead of merely opening new stores at random, the focus is on accessing growth by concentrating on comparative micro-market pockets within cities or regions that show stronger revenue potential. This shift moves the emphasis from individual store performance to optimizing revenue share across high-opportunity catchments, supported by an evolving store portfolio in terms of density, design, and local relevance.
The Tata-Reliance Battle...Enter Yousta
If Zudio set the benchmark for expansion, Reliance is hitting back with its own value brand, Yousta. Launched in 2023, Yousta already has 55 stores across 27 cities and plans an audacious 1,000 stores in the next two years, directly mirroring Zudio’s strategy.
Zudio: 765 stores, 235 cities, 9 years in market
Yousta: 55 stores, 27 cities, just 2 years old
Strategic Differences
Zudio has built its success on physical retail density and the Franchise-Owned, Company-Operated (FOCO) model, which reduces capital requirements while maintaining operational control. Yousta, on the other hand, is leveraging Reliance's massive retail ecosystem, including design inputs from London and integrated online-offline presence through Ajio and JioMart.
Pricing & Positioning
Both brands target the same price point (₹199-999), but their approaches differ. Zudio focuses on affordable trendy fashion with 85% of products under ₹1,000, while Yousta emphasizes character merchandise and tech-savvy features like self-checkout
Yet another player
Shein is set to re-enter the Indian market after being banned in 2020, this time backed by Reliance Retail, a move that adds a new layer of competition to the fast-fashion space. It will be interesting to see how this partnership reshapes the dynamics in an already crowded market.
What It Means for India’s Fashion Future
The fast fashion revolution in India has moved decisively beyond the metros. As brands like Zudio and Yousta race to blanket Tier 2 and Tier 3 cities, the real winners are the newly empowered consumers....confident, digitally savvy, and unsatisfied with yesterday’s choices.
The coming years will see India’s fashion retail mirroring global norms: branded, organized, and digital-first. In this new landscape, those who can innovate fast, price smartly, and tap into the pulse of young India will set the pace for everyone else.
Research Assist - Krishna Priya
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