The government urged to extend support to the distressed industry and offer relief to businesses which can be passed on to consumers.
The fashion apparel industry sees the revival of business during Diwali festivities. The industry believes that business operations will resume in a staggered manner after the lockdown is lifted on May 3.
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 Managing Director of Ritu Kumar Amrish Kumar, Chief Executive Officer and Managing Director of Tommy Hilfiger and Calvin Klein India Shailesh Chaturvedi, CEO and Country Head of Bestseller Retail India Vineet Gautam and CFO of Manyavar Dalpat Jain.
The retail sector needs to take adequate precautions and measures to minimise the risk of exposure and to ensure the safety of customers and staff.
The discussion was moderated by Bijou Kurien, Independent Consultant and Member of Strategic Advisory Board, L Catterton Asia.
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During the hour-long session, the speakers emphasised the importance of preserving cash and shared their viewpoints on possible changes in retail business and consumer behaviour in the post-pandemic times.
Most said businesses should protect their employees and consumers and 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.
Chaturvedi stressed that businesses would have to take care of both people and cash flows, at least until June.
Gautam reckoned that it would take 9-12 months for a semblance of normalcy to return, during which businesses will do well to look at a broader supply chain backbone. He also said 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, Kumar anticipated that there will be structural changes within the industry, on both the cost side and the demand side, and that there will also be some movement towards online business.
According to Jain, post-lockdown period service to consumers will be the primary thing.
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, expert said.
Kurien 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 normalise by spring-summer 2021, and that it will turn out to be a bad strategy if brands were to offer heavy discounts to get rid of the inventory; doing so they will not only spoil the brand but also the market.
Kumar concurred, adding that there will definitely be a need for fresh, new designs once operations resume, and that his company will not finalise orders until the situation stabilises and until they have a fair sense of the market scenario.
“There will be more liquidation than we would have liked. Our winter products are imported; we will have to be a bit and be more conservative with them,” Kumar said.
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.
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.
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 percent 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.
According to industry experts, new norms will emerge and there will be a renewed respect for capital. Companies will look to conserve cash and Diwali could be a time for revival – for businesses and for the spirits of consumers.
Gautam pointed out 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 also pointed out Diwali 2020 or the Spring of 2021 as the likely time of revival of business fortunes and consumer spirits.
“There is 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.
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.