Industry Overview
Dynamics of the global apparel market keeps on changing drastically in different economies. In developed countries, the growth is slowing down; while on the other hand, it is seeing a robust growth in the developing nations. There is a paradigm shift due to demanding customer base, with trends inclining towards product differentiation much influenced by social, economic and environmental concerns. The new Indian consumer prefers branded apparel over unbranded due to their inclination towards better lifestyle and willingness to try out new on trend fashion. Among the emerging markets, India is quickly becoming a preferred destination for international apparel brands. Global brands with deep pockets are making a beeline into the Indian market due to its stabilizing economy.
The textile and apparel sector are one of the oldest industries in India. Industry contributes approx. 5% to India’s GDP and 14% to overall index of industrial production (IIP). It is also one of the largest contributors to India’s export with approx. 13.5% of total export amounting 42.24 billion dollars. While, the Indian kids wear market in 2019 was estimated at Rs 66,904 crore accounting for 20% of total apparel market of the country. The future of Indian retail will be determined by factors such as consumer shifts, supply side innovations, data and technology driven disruptions, new competitive forces and government regulation
Due to Covid-19, there is a change in consumer behavior as well as their purchasing power along with the buying medium. Because of which companies are also obliged to change their strategies of retail sales, as priorities
Impact of Covid-19
Consumer Behavior
Major consumers will shift to purchase products online as they are afraid to visit the store & now, they are gaining comfort in the online purchase.
Businesses Behavior
Stores will observe less footfalls due to constant fear of getting infected. Promoters should focus more on Digital platforms to make online presence more visible. Train the team so they can easily adapt with new normal
A Ray of hope
With all the darkness around the country, there’s still a ray of hope for fashion retailers to bounce back! Apparel industry giants are investing in training their store staff for online sales and Home deliveries as it is bound to increase in the coming years. To support & give comfort like In-store purchase, they are also working on feature of Home trials to buyers before purchases as well as the return norms. Since there will be less walk-ins, stores may be utilized for quick packaging for home delivery with the help of delivery partners. Coming to Retail sector, below diagram would help in digging deep in the possible situation which may be faced by retailers in coming few day
The possible scenario for the Fashion Brands will emerge as an Integrated Market i.e. Omnichannel Sales, where an individual can purchase the products through Online medium as well as Physical Stores. Also, customers will get an option from where they wish to buy by this. Ultimately company’s sales will get increased and business will be able to sustain in post pandemic.
Physical Store may still lead the market
Apparently, due to fear of Covid-19, people will prefer to purchase products via Online medium rather than Store purchase in order to avoid Human connect. But this is Spike short term, of course online sales will have increase compared to past ratio but this doesn’t mean that Stores will die. After all Human is also a Social Animal & he cannot survive without stepping out or meeting other people. One of the famous selling models is Click & Collect where a customer can order a product through application /website & collect it from store.
According to one survey, it has been observed that to 61% consumers still prefer going to physical store to purchase a product they needed immediately, while 51% consumer’s needs physical store to experience a product before buying it, 55% feels the need to browse and get ideas whereas, 50% consumers take advantage of in-store sales/coupons available at physical store.
As there is no control over the spread of disease, people are afraid to step out for any purchases especially non-essential items in places like high streets, malls, etc. In this staggering situation, it is difficult for the business to revive their store business after this long break. Saying that stores must focus on the 4Ss:
Right now, is the time to revise SOPs, upgrade employees’ skills, so they are able to multi-task when stores are back on track again. Safety of customers and employees should be paramount. The biggest challenge is value retention, so businesses must look at cost-cutting but not at the risk of losing value. Finally, the focus should be on winning consumer confidence and bringing them back.
Digital Stores
As stated earlier, promoters do not feel the necessity of starting digital stores as they majorly rely on their traditional model. But nowadays, it is not good to have thing rather it has become the necessity for the all the business to make their presence on Digital medium, as it has its own perks & will help your business in many ways like:
Being present online is not enough one needs to make it fruitful. One needs to take right actions at the right time in order to make it successful. Below are some key strategies that can be considered to make your business live online and make it grow
Identify Goal & Objectives: Make sure you know what you are going after – before you start posting. Ensure you know how each platform works, what audiences you want to reach while being present on that respective platform and check whether that can accomplish your objective and you will be off to a great start
Bringing human touch in store online: Even if the company uses the most technology driven customers believe humanity should still should be at the center of interactions. Companies should give the most digital experience with human touch. They can do the same by providing online fashion assistant who can help them in choosing best product for the respective client
Be visible everywhere: To grow the business online, he/she can create business presence on all of the social media platform in one go! This would also help in cross over marketing and create more awareness in the society. Make a Marketing Calendar! Make sure to add all of your upcoming events, blog posts and everything else you decide to do with your business into this calendar. Use hashtags to create more visibility
Get connected: To start business in short term, owners can pitch current customers by creating multiple groups, posting photos/videos of the product and start taking orders, which can be delivered now if they are essential ones if not it can be delivered once the market is on place.
Have suitable safety norms – To attract customers it is necessary to gain their trust and ensure them proper safety and easy shopping.
Provide a Benefit to Your Audience: People who visit your social media page always asks “What’s in it for me?” Answer them by giving something back – Consider giving them a discount code, a free look or even liking their page back. This will help you earn valuable followers who will stay engaged
Tackle Customer Complaints Efficiently: Be professional in responding to the complaints even if customers aren’t. Make sure to take good care of them by answering their questions quickly this will set an image of solid customer service.
Tie-up with other complimentary Business: Business can tap all the pages which are related or complimentary to the respective business and try to share their business link on the page. This would help in tapping the most relevant audience for the business; cherry on cake would be more followers to your page which may increase total sales.
Data Driven Personalization– based on the past data, it would be nice if we can evaluate & customize the search options for the individual. It will make them feel connected & is easy to convert the customer
Understand Their Needs: Knowing what your customers want by reading about them, consider their feed backs or suggestions which will help your business to understand what you need to give to them. Once you understand this, you can give your customer everything they want – which means bringing them to your account to see what your business is all about.
As everyone is now thinking to go online, there is a cut throat competition situation, so it is necessary for owner to bring something different than others to attract and target more customers.
Leverage of Technology:
Technology will support retailers by reducing delivery time and easy availability. Retailers can “Go Digital” by using online available sources. Also, technology can help pull in real-time streaming data from all your customer interaction touch points across digital and even offline channels. One can get a 360-degree view which includes social insights, behavioral data etc. of all customer interactions & transactions by creation of unique customer identities through our patent pending algorithms. Advanced Machine learning based predictive algorithms enable you to optimize your marketing and achieve greater ROI. Also using the correct means of technology can help in knowing the interest area of customer so they can provide customers what they want and not what they have. With the help of technology businesses can, acquire Customer via Loyalty Program, Craft Customer Journey and engage with them, connect all Communication Channel and give you an insight on relevant Campaign So, using technology is not just add an on point but also a need of hour to Increase Overall revenue and also in gaining overall customer insights to run business smoothly.
Better Supply Chain
India’s supply chains will go through huge transformations in the next few years as the impact of COVID-19 continues to challenge our demand and supply frameworks. With widespread disruptions, supply chains are either broken or severely affected. Below mentioned are some of the points which Promoter/Manager should focus for streamlining the supply chain
Day-zero and beyond planning: Due to lockdown there is no movement in stock from the stores & because of these retailers are dealing with significant over stock. It has become necessary Hence, businesses should look at reviewing their forecast assumptions and demand expectations, not only for their own categories but also for categories that compete for the customer share of wallet
Sourcing: It is important for retailers to assess critical raw material availability and map it to high value products and revenue streams along with identifying supply side capacity constraints and quantity/price volatility. In addition, organizations need to evaluate existing contingency plans, and review contract agreements for allowable variation clauses which will highlight possible risks to address. Also, there’s a need to evaluate adopting alternative sources and draw feasibility studies to compare cost versus supply chain convenience.
Supplier risk assessment: There exists a need for consumer companies to identify their key suppliers and assess their risks and ability to meet supply requirements. Here packaging material suppliers and transportation partners are critical as they are two high risk supplier categories, from an operations discontinuity perspective. Also, they need to create contingency plans along with their suppliers, in line with scenario-based stress points identified by them.
Monitoring inventory and flow of goods: Presently for retailers, monitoring inventory levels and having visibility, over all inflow of goods is critical. Retailers should also try and gain visibility of supplier production schedules, shipments, etc. and foresee any material flow disruption situations beforehand.
Delivering to the last mile: Consumer companies should review all locations of delivery centers and distributors to compute risks by geography. Conducting an analysis on warehouse and front-end processing capacity along with its impact could reveal potential stress hotspots that need to be fixed. For those with global operations, evaluation of country plans and risks associated with each geography is essential. Companies could also consider partnering with established players that can offer digital ordering and/or last mile delivery capabilities.
Assess cash/liquidity position: These companies should also assess their liquidity positions and potential options to invest, borrow, or liquidate. Switching to well-established tools for cash management and forecasting is an idea worth considering. It is important for companies to evaluate capex projects from an execution moratorium and/or a milestone payment deferral perspective and review the overall capex and revenue budgets with more rigor. Many retailers are also now reviewing their positions so as to streamline their financial arrangements.
Shift to ‘safe retailing’: COVID-19 has driven customers to priorities health and supply chain safety over cost and convenience. There is a definite requirement for retailers and consumer goods companies to realign their operations in ways that provide minimal touchpoints. To this effect, majority of consumers today (82%) intend to buy from retailers/brands who have demonstrably taken measures to improve their product and supply chain hygiene in the context of COVID-19.
Establish a war-room: Establishing a cross-functional empowered war-room headed by the C-suite or someone empowered could help consumer companies take decisions fluidly in line with guiding principles and core objectives of the business.
Evidently providing a seamless journey for consumers through a mix of digital and physical infrastructure will require the backing of a strong supply chain. That said, COVID-19, in all its volatility and stress, has brought with it an opportunity to take a hard look at the entire consumer and retail supply chain, so as to meet tomorrow’s customer needs.
Conclusion
To conclude the above scenarios, it can be said that, “Demand of apparel is a delayed demand and not a dead demand” so apparel market will soon bounce back. As predicted the demand of apparel will grow in future but to fulfil the demand and enjoy the profits one needs to follow the correct guidelines issued by the government and also follow the safety measures. Fashion industry will soon create thunder and will be back on its routine operation with the help of hybrid business models.
Authors:
Saloni Surani, a Strategic Business Consultant, who pursued her Masters in Management & has an eclectic experience in J.Hirani with various industries like Manufacturing, Real Estates, Hospitality, FinTech, etc. She is a keen observer who silently achieves her goals and happily surprises everyone with the results. Adapting & learning new things has been her forte which helps her in getting new ideas always, anyone who wants to refresh their Values- just look at her.
Heli Shah, an MBA graduate is associated with J.Hirani as a Business Analyst. She is fresh soul with humble and optimistic approach who is working in different industries like Manufacturing, Retail, and Hospitality etc. Flexibility and greediness in learning new things helps her to conquer the challenges coming on her way.
About J.hirani: J.hirani is a Strategic Transformation team which works as a growth partner for different organisations in various industries by providing services like Agile transformation, Scenario mapping, Strategic alignment, Balance scorecard, Digital transformation, Incubating new ventures, Operation excellence and Aligning human capital.
©J.hirani, Fasion Brands – Shaping up new trends in Pandemic, July 2020. All rights reserved
