The COVID-19-induced lockdowns have offered Indian fashion and lifestyle brands an unprecedented opportunity to increase their share in the online fashion space. These brands can increase their revenues either through e-commerce marketplaces like Flipkart and Amazon, or by establishing their own websites or apps.

Presence on marketplaces like Amazon and Flipkart enables brands to not only widen their customer reach but also reduce their lower upfront investments in technology and team. However, since the last few months, brands selling on such marketplaces have seen their profits eroding faster as they have to not only shouldered customer discounts but also increased investments in marketing and become accountable for returns. However, these brands cannot simply pull away from marketplaces as their offline mindset, inadequate capability building and inability to fund early losses make maintaining brand websites challenging.

Clear segregation of roles for online success

Hence, to succeed in their online operations, brands need to clearly define the role of each of their online channels and allocate investments accordingly. They should focus on brand websites for launching fresh merchandise, exclusive assortment and customizations. They should also segregate their e-commerce partners based on importance and plan investments accordingly. Launching collections exclusively for online marketplaces can help attract more customers and avoid conflict with offline channels. Brands can also customize their collections as per marketplace requirements.

Right ecosystem for cost optimization

Urging offline customers to go online can help brands optimize their acquisition costs. Brands can also improve customer retention by launching omni-channel loyalty programs. Their investments in platform specific marketing initiatives can help to subsidize costs, gain speed to market and build a competitive product. Therefore, brands should build the right ecosystem of partners across technology development, digital marketing, omni-channel implementation and cataloging, analytics areas. They should invest in relationship managers that conduct Joint Business Planning (JPB) exercises with marketplaces.

Unified customer and inventory view for superior experience

It is important for brands to develop a single view of their customers across channels to offer a customized and superior omni-channel experience. For this they need to engage into frequent A/B testing on both online and offline channels. They should also deploy web crawling to capture competitor data around assortment, pricing etc. which in turn can be used to drive interventions on both brand websites and marketplaces.

They should also build a single view of inventory across all channels and fulfillment points. Extend their omni-channel services like the option of shipping from nearest store on Myntra, listing own EBO with accurate information of product availability, delivery time etc, across their own websites and marketplaces. Brands that get these fundamentals right are most likely to succeed in a post-COVID world.

Increasing consumer engagement is compelling retailers to halt their offline expansion and focus on digital channels. Furniture e-commerce brand Pepperfry has halted plans to launch new stores while fashion retail brand FabAlley has opened only 200 of its 430 stores across India as its offline sales have picked up at a higher price. Cosmetic brand Nykaa has also shut down its brick and mortar stores and is focusing on online sales.

Business strategist and angel investor Lloyd Mathias believes shutting down brick and mortar stores impacts a brand’s business revenue in the short term while Viren Razdan, Managing Director, Brand-nomics opines it depends solely on the digital maturity of the product category and the role the brand has played up until now.

Retailers Association of India (RAI) has reported a decline in growth for malls and street retail shops in India. This decline is due to the touch-based factor which has forced brands like FabIndia to start a new category of ‘experimental zones’ for better engagement. Mathias feels that brick and mortar presence will continue to remain relevant for consumers who want the look and feel of real shopping. While the COVID-19 pandemic has been a set back to the offline stores – over time they will come back.

However, for many this period has broken the stranglehold of brick and mortar with increased adoption of digital payment options and the sheer number of first-time online shoppers. India will continue to operate at varying levels of sophistication in technology adoption which will give rise to a new phyigital reality.

The government has notified new rules for e-commerce companies, including mandatory display of 'country of origin' on their products, and said any non-compliance will attract penal action.

The 'Consumer Protection (E-Commerce) Rules, 2020' will be applicable to all electronic retailers (e-tailers) registered in India or abroad but offering goods and services to Indian consumers.

According to the new rules, the e-commerce players will have to display the total price of goods and services offered for sale along with a break-up of other charges.

They are also required to mention the 'expiry date' of goods offered for sale and the 'country of origin' of goods and services that are necessary for enabling the consumer to make an informed decision at the pre-purchase stage.

Under the rules, e-commerce players have to display details about return, refund, exchange, warranty and guarantee, delivery and shipment, and any other information that may be required by consumers to make informed decisions.

Sellers offering goods and services through a marketplace e-commerce entity will have to provide the above details to the e-commerce entity to be displayed on its platform or website.

Under the new rules, e-commerce entities should not impose "cancellation charges" on consumers cancelling orders after confirmation unless sellers are ready to pay similar charges in case cancellation of orders are from their side.

Further, e-commerce entities will have to provide information on available payment methods, the security of those payment methods, any fees or charges payable by users, and the contact information, among other details, of the relevant payment service provider.

With revenues dented, and recovery expected to be slow, mall operators have started renegotiating their contracts with mall owners – for waivers in lease payments, or discounts over the period of lockdown and in the medium term – thereby impacting mall revenues.

These operators expect a 50-100 per cent lease waiver for the period of lockdown, followed by a 30-50 per cent concession in rentals in the current quarter and the next, which will reduce to 0-20 per cent in the quarter to March, said Sachin Gupta, Senior Director, Crisil Ratings.

These malls have total rated debt of Rs 4,200 crore and cover 7.5 million square feet (msf), with pan-India presence. These have strong sponsors and high debt service coverage ratio (DSCR) of 1.5 times on average. Mall owners may need to give deep concessions to keep their tenant profile intact and may even need to shift to a 100 per cent revenue sharing model. The current revenue stream includes a minimum guaranteed rental along with a portion from revenue share.

Revenue of mall operators is set to halve this fiscal because of the COVID-19 pandemic-driven lockdowns, an analysis by Crisil of the top 10 malls it rates indicates. Much of the impact on mall revenue is because multiplexes, food courts, restaurants and gaming zones have not yet opened in many locations as per government orders.

For the other categories, such as apparels, cosmetics, electronics, and bookstores, which contribute 75 per cent of mall revenues, consumption is still low at 30-35 per cent of previous years’ numbers in the first month of operations post re- opening.

In a webinar on ‘Rebooting Textile Industry, Rahul Mehta, Chief Mentor, CMAI, said, the ongoing lockdown has severely hit the textile industry which is likely to become a low margin industry with smaller players struggling to survive.

With around 80 percent of the garment industry mostly micro, small and medium enterprises, CMAI, said most of its members do not have the kind of reserves to see them through 3-6 months of this magnitude.

Mehta said CMAI had done a survey among its members and analyzed around 1,500 responses and the responses were quite frightening.

According to the survey, almost 20 percent of them said that they were thinking of closing down the business after lockdown. At least 60 percent of them anticipated a drop in revenue to the tune of 40 percent, which is massive, if you look in terms of number of employment.

Going ahead, Mehta feels, customers will move from unbranded to branded clothing further impacting the smaller players. If the garment industry closes down, it would impact the entire value chain from fabric supply industry to brand to the zipper and label industry, Mehta said.

Driven by high demand for comfort wear, electronics, skin care and beauty products and bolstered by deep discounts from high-end brands, footfalls at malls have doubled in a fortnight after Unlock.2. Most mall operators say, sale of electronics goods have already reached pre-COVID levels, while sales in other segments, except clothing, are also picking up. Though footfall remain only 30 per cent of the pre-COVID levels, higher sales number indicates only serious shoppers are coming to malls.

There is a gradual increase every week as shoppers get more confident about venturing out. Kerbside pickup is gaining traction and now people have started coming out to dine also. Some luxury brands are even giving appointments to ensure social distancing said Pushpa Bector, Executive Director, DLF Shopping Malls.

After electronics, skin care and footwear segments are witnessing good sales. Categories such as, personal care/grooming, beauty and electronics are seeing great demand post reopening. Currently, a lot of brands are on sale or offering various offers/discounts as this period also coincides with the mid-year end of season sales, said Nimish Arora, Director and CEO, Select Citywalk.

The Phoenix Mills, which operates malls in metros and tier two cities, also said skin care and beauty products are driving footfalls. Vikram Bhatt, director, Enrich Salons, said the salon's outlet in Inorbit mall in Vadodara, for instance, has clocked 50 per cent revenues in July compared to February. NCR-based mall operators Pacific, Gaur and Mahagun have seen footfalls rebound by a third. Mall executives say clear guidelines from the government will help them drive more footfalls.

A report by credit card bill payment platform CRED states e-commerce spends surpassed pre-COVID-19 levels after the lockdown across Delhi, Mumbai and Bengaluru as more people opted to shop online for their discretionary and non-discretionary spends. Based on an analysis of credit card spending patterns of over three million members across the three cities, the report reviews February 2020 spending as a baseline and compares it to spends in subsequent months under which the lockdown and unlock time periods fall.

The study was done to understand larger trends reflected in spending behaviour of affluent consumers pre-, during and post the lockdown.

According to it, more individuals opted to shop online for their discretionary and non-discretionary spends during the lockdown but have continued after the lockdown as well, indicating a larger behavioral trend. Sharp spikes were recorded in online grocery and e-commerce surpassing even pre-COVID-19 levels, while spending on physical grocery and shopping fell substantially.

It further said online grocery spends surpassed pre-COVID-19 levels in both May-June and June-July periods. The highest recorded spike across categories and time periods analyzed in the report was witnessed in Mumbai during the lockdown when spends on online grocery spiked to a whopping 147 per cent compared to pre-COVID-19 levels, nearly 1.5 times.

The study also noted that insurance spends during the onset of the lockdown were close to pre-COVID-19 spends. However, during the May-June period, spending spiked across all three cities and surpassed pre-COVID-19 levels. These stabilized but remained high during the unlock period. Mumbai topped with consistently high expenditures on insurance across time periods, CRED said.

Shopping, the favorite hobby of many Indians; especially women, is undergoing a paradigm shift with the pandemic altering not just the modes of shopping, but the products being bought. While COVID-19 has spurred demand for products such as hair color, hand sanitizers, eye-make, computer accessories, instant noodles, loungewear and sleepwear, demand or formal wear, lipsticks and sunscreens, has dipped.

Push in demand for skin and haircare products

The outbreak and subsequent lockdowns has increased demand for skin and hair care products. Herbal beautycare brand Kama Ayurveda is seeing increased demand for its Organic Hair Color Kit while beauty salon Kaya is witnessing a push in demand for functional products such as acne, anti-ageing, hair loss and dandruff treatment solutions. The Body Shop has also seen a rise in demand for its anti-bacterial skin care range of Tea Tree products.

However, there has been a noticeable dip in demand for sunscreen lotions as people are not stepping out of their homes, says Gaurav Singh, Managing Director, Khadi Natural. Demand for mood-boosting and wellness-oriented products is also rising as consumers seek ways to de-stress themselves from the virus, adds Neha Rawla, Head-Brand Communications, Forest Essentials.

Sanitization, home décor gains importance

A category that has gained a lot of importance during this time is of sanitization products including hand cleansing solutions, including hand soaps, sanitizers and moisturizing cream, says Rawla. To cater to this demand, Nykaa launched has launched a wide range of hand sanitizers, hand wash, masks, PPE suits and disinfectant sprays for cleaning vegetables and fruits, and home and travel needs.

Umashan Naidoo, Westside’s Head Cosmetics & Head of Customer also observes an increase in the sale of home decor products. As people set up offices at homes, they are spurring demand for study tables and chairs, said Rajat Mathur, Business Head, Godrej & Boyce. The company is in the process of designing small and compact work-from-home ecosystems. Its office-décor band Godrej Interio is also designing couches and beds with platforms to enable people to place their laptops and a host of other WFH accessories.

Emphasis on comfort over style

In apparel and clothing, demand for formal pants, shirts and dresses, and accessories such as ties, socks and belts is on a decline. Consumers are preferring comfort over trend, points out Tanvi Malik and Shivani Poddar, Co-founders, FabAlley, a women’s fashion brand which has launched a WFH collection, featuring preppy shirts, versatile blouses and keyboard-up formal top wear.

There is also a surge in demand for loungewear, casualwear and sleepwear categories. Marks & Spencer is seeing increased demand for women’s T-shirts, casual blouses and tops along with its casual linen bottoms. Demand for the brand’s non-wired bras has also increased with its Flexifit fabric Crop Top bra becoming one of its top sellers. FabAlley is noticing an increase in sale of cotton-based separates, T-shirts and bottoms while Benetton India is witnessing a huge pull towards knits across categories.

Another favorite category amongst consumers these days is activewear. This can be seen from the increased demand for sweatpants, joggers and coordinated pajama sets by Lingerie brand Zivame. Fashion masks have also emerged as a new category in the last 40 days. While Myntra has already launched its range of personal protective masks Madame plans to launch a new collection of co-ordinated T-shirts and masks in August.

Apparel brands and retailers have deferred new launches for this season owing to the extremely slow recovery in consumer demand that resulted from the above-mentioned situation,

While a big number of clothing retailers have still not opened their stores, few prominent brands including Cantabil and FBB have only opened their selective stores with ‘no exchange, no return’ policy.

Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI) underlined that not only new launches have been deferred due to the ongoing unprecedented times, but even the previous plans of opening up new stores have been put on hold.

Earlier, retailers used to operate some stores just for location advantage even if they were non-profitable. Now, business sentiment has completely changed with their’ focus on break-even or profit-earning before expansion into new products or location, he added.

Experts believe without effective e-commerce, India’s post-pandemic economic recovery would be harder than it is now. E-commerce players like Myntra and Amazon are helping physical stores overcome difficulties in delivering to consumers beyond urban centers. Through its Mensa network, Myntra has partnered over 15 to 1,000 small shops across India to reach last mile consumers. While Amazon India has upgraded its logistic services with HIS, DSP and Amazon Flex networks.

By 2021, India’s e-commerce market is expected to grow to $84 billion with over 900 million consumers going online, says a report by Deloitte and Retail Association of India. More than half of Indian customer base is likely to come from Tier II and III cities.

COVID-19 makes growth predictions redundant

Online luxury shopping is one of the key reasons for the high growth in consumers from the Tier II and III markets. These high net worth customers often complain about the limited edit of collections from brands like Gucci, Louis Vuitton and Burberry in physical monobrand luxury stores. Customers in these towns also have to pay high customs duties to procure luxury items. Customs duties are sometimes equal or surpass the value of the goods with the extensive paperwork often holding back the shipment of these goods.

A 2019 report by McKinsey’s FashionScope predicted India’s apparel market will reach $59.3 billion in 2022. The online segment of this market was predicted to grow at a compound annual growth rate (CAGR) of approximately 32 per cent, according to a report by RedSeer consulting, a research and advisory firm. However, COVID-19 has made these forecasts redundant with e-commerce apparel sales declining in double digits, says Taohai Lin, Consumer & Retail analyst, Fitch Solutions.

A more subdued market

Hence, brands and e-commerce players will have to cater to a more subdued market and shifting consumer behavior, says Darshan Mehta, President and Chief Executive Officer, Reliance Brands. The company estimates the Indian fashion market to contract between 10 to 15 percent. According to it, mid-market brands backed by weak operators will be the worst sufferers while brands catering to the value segment and having a robust online presence may gain market share,

Analysts also expect the uncertainty over public spaces to bolster consumers’ shift to e-commerce. Rasul Bailay, Assistant Editor, The Economic Times, expects the concept of showrooming, in which consumers use physical stores to browse but then buy online — to become more prevalent across the country. COVID-19 is likely to deepen the trend towards immersive online user experiences. Retailers move away from discounts

Now, convenience and choice attract customers more than discounts, says a recent survey by TechArc. Faisa Kawoosa, Senior Technology Analyst and Founder of TechArc, advises online players Amazon, Flipkart and Myntra to research around these two factors before moving away from the discounts pitch. Myntra recently launched Myntra Insider Masterclasses to enable customers to interact directly with leading industry experts. However, despite these initiatives, the issues of touch and feel and returns still plague the Indian market. For such customers, Myntra launched the ‘alteration at doorstep’ service, which connects 500 tailors in 13 cities to local customers and allows them to alter purchases at no extra cost rather than return them.

Indian e-commerce players and brands face have to constantly adapt to the changing needs of their consumers. They have to work harder to lure and retain their consumers. Reliance’ plans to launch a new luxury e-commerce platform quadruples their threat and threatens to force them to either take the deep discounting route or constantly innovate on their products and services.

Speaking at a virtual conference organized by the Federation of Indian Chambers of Commerce and Industry (FICCI), finance ministry official said the government was expecting a "V" shape economic recovery beginning next fiscal year.

A top finance ministry official said that India is working on offering production linked incentives for up to five sectors to boost domestic manufacturing , bolstering efforts to attract new investments in the coronavirus-stricken economy.

The government has announced a raft of measures including direct food subsidy to nearly 810 million people and credit guarantees of Rs 3 trillion ($40.17 billion) on loans to small businesses.

Tarun Bajaj, economic affairs secretary said that incentives would be offered to sectors to push manufacturing and help struggling industries. Incentives have also been announced for pharmaceutical companies for production of bulk drugs and on medical devices.

The Retailers Association of India (RAI) urged the state government to allow all essential shops, including kiranas, general trade shops, supermarkets, to operate till 9 pm everyday as restrictions imposed by several state governments have resulted in hindered supply chains and skewed buying patterns.

RAI has submitted representations to various state and local authorities putting forth recommendations to get businesses and life of consumers on the track to recovery, including mandatorily allowing essential shops to operate every day of the week until 9 pm to cater to the daily needs of the customers. It also sought ensuring uniform and regular opening of all categories of retail for full working hours while following stringent hygiene practices and adhering to social distancing norms.

Supporting his view, Sandeep Kataria, CEO, Bata India said longer operational hours will support recovery for retailers besides helping them to adhere to social distancing norms. Similarly, Himanshu Charkrawarti, CEO, Arvind Lifestyle Brands says, brands can ensure customer convenience and prevent crowding best by operating at regular retail timings. Kumar Rajagopalan, CEO, RAI urged policymakers to ensure economic revival across the country.