The Retailers Association of India - The fashion apparel industry looks to Diwali and beyond for revival of business fortunes and consumer spirits
The fashion apparel industry looks to Diwali and beyond for revival of business fortunes and consumer spirits
The Retailers Association of India had brought together representatives of major apparel brands for a virtual discussion on ‘Surviving the Present and Future Impact of the Global Coronavirus Pandemic on Fashion Business in India’. Panelists of the Webinar included Amrish Kumar (Managing Director of Ritu Kumar (Ritika Pvt. Ltd.), Shailesh Chaturvedi (Chief Executive Officer & Managing Director of Tommy Hilfiger, Calvin Klein India); Vineet Gautam (CEO & Country Head of Bestseller Retail India Pvt. Ltd.); and Dalpat Jain, CFO of Manyavar (Vedant Fashions Pvt. Ltd.).
The discussion was moderated by Bijou Kurien (Independent Consultant and Member of Strategic Advisory Board, L Catterton Asia). During the hour-long session, the speakers emphasized the importance of preserving cash and shared their viewpoints on possible changes in retail business and consumer behaviour in the post-pandemic times.
Businesses must protect their employees and consumers. It will take 9-12 months for a semblance of normalcy to return to the industry.
The panelists were unanimous in their belief that the first priority for businesses was to ensure the livelihood and safety of their employees during these tough times.
Shailesh Chaturvedi (Chief Executive Officer & Managing Director of Tommy Hilfiger, Calvin Klein India) stressed that businesses would have to take care of both people and cash flows, at least until June.
Vineet Gautam (CEO & Country Head of Bestseller Retail India Pvt Ltd) reckoned it would take 9-12 months for a semblance of normalcy to return, during which time businesses would do well to look at a broader supply chain backbone. He said that the lockdown presented an opportunity to upskill and cross-train employees across functions. While agreeing on the importance of retaining employees, he stressed on the need for the government to introduce mechanisms to allow cash inflows, without which sustaining the business will become exceedingly difficult.
Looking a bit ahead, Amrish Kumar (Managing Director of Ritu Kumar (Ritika Pvt Ltd), anticipated that there would be structural changes within the industry, on both the cost side and the demand side, and that there would be some movement towards online business.
According to Dalpat Jain, CFO of Manyavar (Vedant Fashions Pvt Ltd), the important thing in the post-lockdown period would be service to consumers.
There will be a roll-on of inventory from one season into the next, at least until Diwali. The Indian climate allows for spring-summer wear to be used until winter really sets it.
Bijou Kurien (Independent Consultant and Member of Strategic Advisory Board, L Catterton Asia) raised the point of the inventory that’s currently lying in stores and warehouses and asked the panelists on their plans for managing it.
Chaturvedi admitted that inventory accounted for a large part of the company’s cash outflows, but the Indian climate is such that spring-summer wear can easily be used from July to September. He was optimistic that the cycle would normalize by spring-summer 2021, and that it would be bad strategy if brands were to offer heavy discounts to get rid of the inventory; doing so would only spoil the brand and the market.
Amrish Kumar concurred, although he said that there would definitely be a need for fresh, new designs once operations resume, and that his company wouldn’t finalize orders until the situation stabilizes and they have a fair sense of what’s happening in the market. “There will be more liquidation than we would have liked. Our winter products are imported; we’ll have to be a bit more conservative with them,” he admitted.
Jain said his company was reviewing every cost element to identify bad costs that can be cut and see if some fixed costs can be made variable.
Business operations will resume in a staggered manner after the lockdown is lifted on May 3. Adequate precautions and measures will need to be observed to minimize risk of exposure and to ensure safety of customers and retail staff.
Vineet Gautam reckoned that there will be structured, staggered opening of stores after the lockdown ends, depending on the State they are located in. Businesses would have to think about means of operating while respecting social distancing. “We will have to imagine different, possible scenarios, and plan accordingly. We will have to relook at our business model.”
Chaturvedi stressed that it was essential that customers feel safe when they walk into a mall. He lamented that most of the businesses that drove India’s GDP currently lie in the COVID-19 Red Zones. “We will need to take ample precautions at the entrances to malls and stores. We might need to change the shift hours. We might even look into limiting the number of customers that are allowed to enter the store together.”
The government must extend support to the distressed industry and offer relief to businesses which can be passed on to consumers.
Amrish Kumar opined that one of the ways in which the government could help the industry was by extending credit periods.
Jain suggested the waiving of lease costs and the provision of loans to the industry at 2% interest rate. He further suggested that to boost consumer demand, the government could provide relief on GST, which could then be passed on to consumers. Consumers are likely to become more price-conscious after the pandemic, he reckoned.
New norms will emerge. There will be a renewed respect for capital. Companies will look to conserve cash. Diwali could be a time for revival – for business and for the spirits of consumers.
Vineet Gautam opined that a lot more people than before would now move online, and that the “hyperlocal” phenomenon would gain ground, wherein brands would service people from the nearest store. “Brands like Swiggy and Domino’s Pizza are already delivering essential items to people’s doorsteps; they could expand the service to non-essential items too,” he said. He pointed to Diwali 2020 or the Spring of 2021 as the likely time of revival of business fortunes and consumer spirits.
“There is a now a renewed respect for capital,” said Chaturvedi. “People will use cash more wisely now.” He also mooted the idea of another festival within or around the time of Diwali. Referring to it as “The Festival of India”, he said that it could take any form and format that would infuse positivity, hope, optimism into the society.
Amrish Kumar observed that India is still a value- and discount-driven economy when it comes to online business. The pandemic might cause consumers to come online for convenience rather than for value. He opined that people would prefer to buy things that can be kept for longer.
Jain concluded the discussion with three predictions – backend operations will see a great deal of automation; there will be appointment-based selling among consumers; and luxury goods will be available at affordable prices.