Offline Surge and M&A Push Define Next Stage of India's D2C Growth

India's consumer landscape is undergoing a decisive shift in 2025. While D2C brands that once thrived on digital-only distribution are now aggressively building an offline footprint, legacy FMCG majors are simultaneously acquiring digital-first brands to strengthen their portfolios and tap into new consumer behaviours.

As analysts suggest, these trends signal a maturing phase for India's D2C ecosystem, one that blends physical retail and strategic consolidation

Offline Push Accelerates

According to a recent CBRE report, 'India's D2C Revolution: The New Retail Order', D2C brands leased nearly 5.95 lakh sq ft of retail space between January and June 2025, accounting for 18 per cent of all retail leasing during this period, up sharply from 8 per cent in the first half of 2024.

Fashion and apparel dominated the expansion, contributing close to 60 per cent of D2C leasing, followed by homeware and furnishings and jewellery at about 12 per cent each, while health and personal care brands accounted for roughly six per cent. The shift is equally visible in the choice of retail formats: 46 per cent of D2C leasing went to high streets, 40 per cent to malls, and the remaining to standalone stores, reflecting the category's growing focus on visibility, trial and experiential discovery. Experts suggest that it represents a strategic pivot to blended engagement.

As Devangshu Dutta, CEO of Third Eyesight, notes, "India's D2C surge is powered by digital-first consumers, tremendous improvement in seamless logistics, and low-cost market entry, supported subsequently by substantial amounts of investor capital chasing those startups that stand out from the competition. Yet, lasting success demands a more holistic view: the divide between online and offline is a business construct, not a consumer reality. The larger chunk of retail sales still happens through physical channels and, for brands that want to be mainstream, an omnichannel presence is absolutely essential."

This also aligns with the broader market outlook. The India Brand Equity Foundation (IBEF), in its Indian FMCG Industry Analysis (October 2025), estimates the value of India's D2C market at USD 80 billion in 2024, with expectations of crossing USD 100 billion in 2025. Much of this growth is being led by categories that combine frequent purchase cycles with strong digital discovery, beauty, personal care, and food and beverage segments where consumers are open to experimentation but demand authenticity, transparency, and a compelling product narrative.

"The Gen Z and millennial consumer cohorts value newness but also authenticity and unique product stories, which are best communicated in spaces that are controlled by the brand," Dutta addsed, "In the launch and growth phases, this could be the brand's digital presence including website and social media, but over time this can include pop-up stores, kiosks, shop-in-shops and even exclusive brand stores."

CBRE's data reflects this shift clearly, with D2C brands increasingly opting for flexible store formats and high-street locations to maximise traffic and visibility.

M&A Gains Momentum

Parallel to the offline push is a noticeable wave of consolidation. Large FMCG companies are accelerating acquisitions to capture emerging consumer niches and strengthen their digital-native capabilities.

In recent years, Hindustan Unilever has acquired Minimalist; Marico has bought Beardo, Just Herbs, True Elements, and Plix; ITC has taken over Yoga Bar; and Emami has secured full ownership of The Man Company. These deals, reported widely across business media in 2024 and 2025, point to the need for established companies to fast-track entry into high-growth, ingredient-forward, and youth-focused categories without the lead time of in-house incubation.

"Legacy FMCG companies are acquiring D2C brands to rapidly gain access to new consumer segments, product innovation, and digital-native capabilities, including direct engagement and insights. Such deals enable large companies to diversify portfolios, accelerate entry into trending segments by-passing the initial launch risks, and rejuvenate their brands with modern digital marketing expertise," Dutta explained.

Challenges and Risks

But the acquisitions do not come without risk and challenges, analysts warned.

"However, integrating D2C operations also poses challenges, including cultural differences, the risk of stifling entrepreneurial agility, and the need to harmonise data and omnichannel strategies. The ability to nurture acquired brands without diluting their distinctive appeal will determine acquisition success," Dutta added.

Yet even as the ecosystem expands, challenges remain. Offline stores add operational complexity, inventory planning, staffing, last-mile logistics, and real-time data integration. Still, the bottom line is that India's D2C sector is moving into a hybrid era defined by tighter omnichannel integration, sharper product storytelling, and portfolio realignment through acquisitions.