South India emerges as the next big battleground for value fashion retailers

Take, for instance, the country’s fastest-growing value retailer, Trent’s Zudio. The brand has 833 stores nationwide. While Maharashtra hosts the highest number, about 118 stores, Zudio has around 282 stores across Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, and Telangana—making up roughly 34% of its network.

Its newer rival, Reliance Retail’s Yousta, which was launched in August 2023, has 120 stores overall, with 49 in the southern region, accounting for 41% of its total network. The first store was launched in Hyderabad in 2023.

In the September quarter, Aditya Birla Fashion and Retail Ltd (ABFRL) formally entered the mass-youth value segment by converting its Style Up stores into OWND!, positioning it as a Gen-Z-focused fashion brand. “OWND! continued to gain strong traction, with revenue up 43% Y-o-Y. The brand expanded its footprint by adding 10 new stores in Q2 and now has 59 stores, and is on track to add 30-plus stores in the second half of the year," said Jagdish Bajaj, CFO of ABFRL, during the post-earnings call on 11 November.

OWND! has 25 of its stores in key south Indian cities, like Vizag, Chennai, Bengaluru, Hyderabad, Mysuru and Guntur, thereby underscoring the brand’s focus on the southern market.

“South for value fashion is a very under-penetrated market. If you see the west and north, the expansion naturally comes to the south, and then to eastern India," said Pratik Prajapati, a Mumbai-based equity research analyst. He added that rising incomes and the still largely unorganised market make it a lucrative opportunity.

Mass players

Smaller value retailers are also eyeing growth in the South.

Vishal Megamart, one of the country’s largest brick-and-mortar retail chains, ventured into Kerala during the first half of this year and Karnataka over the past 2-3 years. While the company does not disclose state-wise store counts, the southern region has the second-highest density of its outlets, with around 193 of its 742 stores located there.

V-Mart Retail Ltd, traditionally one of the strongest players in Uttar Pradesh and Bihar, is also accelerating its southern expansion. According to its latest filings, V-Mart now operates 533 stores nationwide, comprising 438 V-Mart outlets and 95 Unlimited stores. The retailer has been adding stores steadily across Tamil Nadu, Karnataka, Andhra Pradesh, and Telangana as it seeks new growth corridors outside its legacy belt.

“We will continue and focus a little more on the Southern India part as we see more opportunities…markets in Southern India like Tamil Nadu and Kerala are looking good," said Lalit Agarwal, MD of V-Mart, during the September earnings call. He also drew a distinction between V-Mart’s positioning and that of newer urban-focused players: “Style Union, Yousta and all of those are definitely a little more urban-ish retailers. We are a mass retailer, and our price point of similar items should be at least 15-20% lower. That’s our goal."

Agarwal added that competition remains relatively limited in the southern value fashion segment compared to the crowded northern markets, improving the company’s ability to scale.

Increase in income

Much of this accelerated interest stems from the sharp rise in purchasing power across southern states. According to a July 2025 submission to the Lok Sabha by the finance ministry, southern markets have seen some of the fastest per capita income growth over the past decade. Karnataka’s per-capita Net State Domestic Product (NSDP) rose from ₹1.01 lakh in 2013-14 to ₹2.04 lakh in 2024-25, an 88.5% jump. In the same period, Tamil Nadu’s increase was 83% to ₹1.96 lakh, while Telangana surged 85% to ₹1.87 lakh. Andhra Pradesh, too, recorded a strong 81% increase to ₹1.41 lakh. This sustained income growth over the past decade has strengthened discretionary spending, enabling middle-income households to trade up from unorganised apparel shops to branded yet affordable fashion.

With disposable incomes rising and a predominantly unorganised apparel market, Southern India presents significant growth opportunities for retailers seeking to tap this shift. For many value chains, the unorganised-to-organised migration—already visible in states like Karnataka, Tamil Nadu and Telangana—makes the region the most important new frontier. As northern markets mature and competition intensifies, the South has become the focal point for expansion, making it a major geography with substantial potential for scale.

“Existing organized players have very large showrooms, around 1 lakh square feet. But there isn’t a value retail format with typical store sizes of 10,000 square feet. That’s why brands are moving into these under-penetrated markets—they see a good opportunity here," Ambit’s Prajapati said.

At the same time, analysts say the southern market offers distinct structural advantages for value retailers. “Store economics in the South are quite favourable—rent as a percentage of sales is more rational, catchments are compact, and footfall conversion is strong, which shortens the payback cycle," said Sandeep Abhange, research analyst, consumer and midcaps at LKP Securities.

Consumption pattern

He added that consumer behaviour in the region complements the value-fashion model. “Shoppers in the South have relatively higher discretionary spending but buy in smaller, high-frequency baskets. That fits perfectly with fast-fashion and private-label strategies, especially at the ₹199-499 price points."

According to LKP’s Abhange, several micro-markets are emerging as major growth hubs. “Cities like Kochi, Thrissur, Calicut, Coimbatore, Madurai and Mysuru are seeing strong traction because penetration is low and consumption is rising," he said. Retailers are also tailoring assortments more sharply. “Companies are customising fits and prints for the region and increasing private-label penetration to lift gross margins," he added.

Even with higher rental costs, the southern states continue to attract retailers. “Brands are seeing strong growth. Jewellery and other categories already have large stores there, yet there’s still ample opportunity for expansion in value fashion," Prajapati from Ambit said.