The easing of lockdown comes as a huge relief for fashion retailers stuck with huge unsold inventory. According to a recent report by the Financial Express, though getting the demand back to pre-COVID-19 levels might be a huge challenge for retailers, they can expect some relief with the onset of major festivals during this quarter when apparel sales are most likely to return to FY20 levels.
However, navigating through the 18-month period will require sustained efforts from retailers. They will have to adopt a two-pronged approach to success, meeting demands with agility and making long term changes in their business models.
Saving costs and tapping new opportunities
One of the most important measures retailers need to take is to save money by seeking rent waivers, shutting down non-performing stores, deploying retail staff through a variabilzsed model, freezing all discretionary spending among others. They will also have to plan their Autumn/Winter ’20 collection smartly to avoid being saddled with unsold inventory.
Though many consumers may seek retail therapy to break away from their monotonous lives post lockdown, fear of crowding may curtail store visits. To tap into whatever little demand there will be over the next few months retailers will not only have to make their collections available online but also facilitate doorstep delivery of products through tie-ups with hyperlocal delivery companies etc and tap into the more opportunistic categories like fashion masks, protective wear, work-from-home collections etc.
This crisis will permanently change the buying habits of consumers. Hence, to stay afloat, companies will also have to make certain tactical changes in their operations. This entails:
Make customer exchanges more intimate: One of the ways retailers can drive higher loyalty during this period is by facilitating more intimate exchanges at their stores and also online. They can also adopt a direct to consumer” model and not rely only on e-marketplaces for their sales.
Omnichannel retail: Facilitating a seamless movement of inventory across offline and online stores, will help brands double sales. It will also be critical for these brands to balance the sales from marketplaces and D2C (direct-to-consumer). To achieve this, they should plan for 60-70 per cent of sales to come from online marketplaces and the balance from D2C.
For this, brands will have carefully plan their merchandize and assortment for marketplaces. They can engage in strategic partnerships and joint ventures with leading marketplaces to prevent the downgrading of ASP and unviable discounting in the long run, which can simply kill a brand.
Promote seasonless buying: Seasonless buying is another change that is expected to sweep across the industry in the future. Brands will have to replace the trends of designing a range 8 to 10 months ahead of the season with closer-to-season trends-sensing and buying model. In simpler words, they will have to digitalize their merchandising and planning to cut lead times.
Control costs by minimizing waste: This crisis has taught companies to have a tight control over their costs. Companies will have to reset their cost structure by variabilizing assets and workforce, cutting wastes and applying zero-based costing for their purchases.