Credited for launching the first edition of DFU Publications in 1989, Surendra Tulsidas Savai, President, Mumbai Textiles Merchants Mahajan, passed away on September 15, 2020. He was 81 years old. Savai was the Emirates Chairman of Mumbai Textiles Merchant & Federation of Association, Maharashtra (FAM). He remained the President of Mumbai Textile Mechants Mahajan for 30 years. He was also the Chairman, Joint Action Committee of Textile Traders Association, Director, New Piecegoods Bazar Co and Kalupur Commercial Cooperative Bank, and Trustee, Mumbai Port Trust.

Savai was also the trustee of Godiji Jain Temple Trust, Pydhonie- Mumbai as well as Motisha Jain Charitable Trust, Byculla-Mumbai. He was trustee of Mangrol & Chorwad Jain Temple Trust and Shrimad Buddhisagar Murtipujak Gurukul Jain Swetambar Sangh.

He is survived by his son Ajay, daughter-in-law Sonal, and daughters Smita and Jalpa. Due to the COVID-19 pandemic, no prayer meeting has been organized but a Zoom meeting has been arranged.

The Confederation of All India Traders (CAIT) estimates that COVID-19 pandemic has inflicted a loss of about US$253 bn (Rs 19 lakh crore) to India's retail industry in the past five-months, this is based on the estimates collected from figures received from 20 major cities in various states.

The entire retail trade, which is often called a growth engine of the economy, is pasing through its worst period in the current century and is in great dilemma never seen before. According to Praveen Khandelwal, Secretary General, CAIT, the pandemic has resulted in great turmoil for domestic trade to the extent that even after 'Unlock-4', traders across the country are "highly depressed". "The retail market is gripped with acute financial crisis as even the supplies made in November-December, the payment of which was to be released in February-March is still pending and there is no hope of its early realisation." he added.

CAIT appealed to Union Minister for Finance and Corporate Affairs Nirmala Sitharaman to advise banks not to charge any interest or penalty from traders for the time being. "If immediate steps are not taken about 20 per cent of the shops in India will have to close down their shutters and it will give rise to unemployment in the country," as per the association.

Brands and retailers like Benetton, Spencer’s Retail, Puma etc have adopted a just-in-time strategy for the upcoming festive season. The strategy includes inventory planning, finance options and discounts, as the pandemic has put everything in a state of flux. Fashion retailers also do not aim to stockpile as more online shoppers have been on-boarded in the last few months, says Abhishek Ganguly, General Manager, India and Southeast Asia, Puma. On the other hand, consumer durable companies have been witnessing an uptick in demand month over month. For instance, August sales at Panasonic increased by 18 per cent compared to the same period last year.

According to these companies, factors, such as, the onset of festive season, which began with Ganesh Chaturthi, favorable monsoons, WFH trends and rise in first-time buyers from rural markets are expected to salvage sales.

A report by KPMG and Retailers Association of India indicates, there will be increased adoption of online shopping, contactless payments and consumers placing safety over price, range and convenience post COVID-19. Shoppers will return to physical stores over the next few months as India hits peak festive season. Hence, retailers should shift focus to in-store safety and convert existing businesses to delivery-oriented ones, apart from tying up with delivery and logistics service providers in order to provide direct-to-home services.

According to the report entertainment, physical shopping, dining out could see a surge with gradual opening up of physical marketplaces. Harsha Razdan, Partner and Head, Consumer Markets and Internet Business, KPMG, though there will be uptick in demand, it will restricted to categories such as durables and apparel. According to him, demand will taper off again in January till the vaccine comes, and the job situation improves.

Kumar Rajagopalan, CEO, RAI, says an assurance of no localized lockdowns will fast-track recovery of sales during the upcoming festive season to almost the same levels as last year or perhaps just 20 per cent short of last year’s figures. This will prompt offline retailers to expand their direct to consumer reach, by upping investments online and expanding omni-channel reach.

The readymade garments industry is staring at 30-35 per cent loss as sales declined to Rs 6.5 lakh crore in FY20. Also, with just two months to go for Diwali festival season, apparel manufacturers are yet to receive sufficient orders from retailers. The industry witnessed 80 per cent drop in sales during the April-June quarter and it expects to drop to further widen to 60 per cent during the second quarter, says Rahul Mehta, Director, Creative Group of Companies. He estimates loss of employment in the sector to be in the range of 25 per cent or 3 million jobs this year. The sales during Diwali festival are expected to be around 50 per cent of last year.

Sakti Arrumugham, Director-Sales, Sakthi Heinrich Apparels says, his company has been facing close to 50 per cent drop in sales since the lockdown started. The company also saw 50-60 per cent decline in export orders. It laid off around 30 per cent workers in one of its units in Tiruppur.

Harakchand Vora, Chairman, Vardhaman Fashions said, the biggest challenge faced by apparel retailers is shortage of liquidity and credit. The industry needs to survive till March 2021 or else it will be wiped out. Currently, the major hurdles before the readymade garments manufacturing industry are shortage of labor and delay in payments from the retailers. Workers from Bihar, Odisha and West Bengal are yet to return completely and only 60 per cent of the pre-COVID levels are achieved, he said.

A Bengaluru-based clothing company has seen per cent jobs loses in the city. There are over 3,000 garment factories in Bengaluru. Among the small-scale units, 25-30 per cent have closed down due to lack of orders and non-payment of previous orders.

As India eases out of lockdown restrictions, with its festive season kicking off, luxury brands are ramping up efforts to entice shoppers.

The Indian government issued orders splitting goods and services into essential and non-essential categories, at the start of the countrywide lockdown in March. However, many consumers are still differing non-essential purchases and services – marking an uphill climb for brands that fall within these categories.

That’s mainly because most consumers were forced to skip large shopping occasions in the first half of 2020, said Kishankumar Shyamalan, Vice President, Wavemaker India.

Marketers operating in luxury categories are scaling up their experience offerings to bring in more customers in a bid to drive sales during the anticipated spike in spending for the festive season.

Fashion brands and retailers are accelerating their efforts to reach out to loyal customers with at-home video shopping experiences. Sheetal Seth, Head Marketing and Digital Media, Raymond Apparel, views these experiences as the new ways of ‘moment marketing’.

Jewellery brand Tanishq is asking customers to celebrate “golden moments” with families when at home, hosted live music shows, and released occasion-based campaigns across digital and print media.

Saahil Kumar, Head - Marketing, Sennheiser India has been investing in an omnichannel approach to provide customers with all available choices for shopping.

Kumar added that there have been some early signs that show quick recovery for premium and luxury brands, leading to optimism about recovery. The International Monetary Fund has predicted India would grow 1.9 per cent for the fiscal year that ends on March 31, 2021, making it one of the few major economies, alongside China, expected to register an expansion despite the pandemic.

A survey by the Retailers Association of India (RAI) has revealed, in August Indian retailers witnessed a marginal recovery in business compared to July, even though localized lockdown in some states during Unlock 3.0 phase interrupted the growth of retail in the country.

The Survey say, retail sales shrank 52 per cent from a year earlier in August. The only category that showed a significant improvement in August was consumer durables, though their sales were still 23 per cent less than a year earlier. Sales in the food and grocery category declined by 46 per cent, footwear by 47 per cent, apparel and clothing by 54 per cent, sports goods by 58 per cent and beauty and wellness by 56 per cent all recorded sales around half of August last year.

The southern region fared slightly better with a 46 per cent sales decline, followed by East with a 52 per cent decline and West & North 54 per cent decline on a y-o-y basis. Across regions, large retailers performed marginally better than medium-sized ones.

Despite unlock 4.0 orders by the Central government, local authorities in some states continue to impose partial lockdowns, which is dampening consumer sentiment and hampering recovery, the association said. It appealed to the Department for Promotion of Industry and Internal Trade and the home ministry to instruct these states to adhere to the central government’s guidelines as any shutdowns should be very carefully calibrated to ensure a balance between lives and livelihoods.

German sportswear giant Puma India has witnessed strong sales from its online channels amid the COVID-19 disruptions and expects the demand for sports products to pick up in the coming months.

The company has witnessed a spike in new online shoppers on its website and other e-commerce platforms. It expects the demand to grow in the future as a result of increased interest by consumers in sports and fitness during the pandemic.

The company’s mono-brand site has emerged as one of the fastest-growing channels. Its focus on making Puma.com an important part of its e-commerce strategy in the country has helped it during the pandemic. The company has been witnessing new online users buying its products through its company-owned website, as well as other e-commerce digital platforms with an uptick in need-based purchases.

Puma has around 360 stores across 120 cities and is present across e-commerce platforms in India. It had reported a revenue total of Rs 1,413 crore ($212.4 million) in India in the financial year 2019.

Crisil Ratings predicts a 25-30 per cent decline in revenues of RMG makers in ongoing financial year due to the prolonged lockdown and lower discretionary spending. The agency expects this fall to be sharper for exporters due to tepid discretionary spending in the US and European Union, which account for 60 per cent of India's RMG exports.

The working capital cycle of RMG makers has elongated because of higher inventory and stretched receivables, which is expected to impair their credit profiles, the report said. The last fiscal ended with 20-25 per cent higher inventory as the COVID-19 pandemic took hold and lockdowns began in late March.

With demand depressed in the first half of this fiscal, inventories will remain high, which will add to the woes of exporters and will weaken credit profiles of some large global brick-and-mortar retailers, which will stretch receivables, the agency noted.

Consequently, retailers’ operating margins will contract 250-300 basis points (bps) to 7-7.5 per cent for the sample set, despite softer cotton prices, and cost-reduction initiative. Crisil Ratings Associate Director Kiran Kavala views that due to a sharp fall in profits, s RMG makers will not have sufficient cash accruals to meet repayment obligations in the first half of this fiscal. However, they are expected to utilize the cushion available in their working capital facilities, and will be helped by the moratorium on loan repayments, the government relief package to micro, small and medium enterprises, and the COVID-19 emergency credit lines

Though cash flows are likely to improve in the second half of this fiscal, the ratios of net cash accrual to loan repayments and interest coverage will still be significantly weaker at 1.4-1.7 times and well below 3 times expected this fiscal, compared with 2.4 times and 4 times, respectively, in FY20, it added.

As stores reopen, fashion brands hope to apply their e-commerce learning -- to coax consumers back to stores. Besides updating their websites, these companies also plan to add features like artificial intelligence and virtual changing rooms for a seamless online and on-site customer experience. While Raw Mango has replaced pop-ups with an online store, designer Anita Dongre uses online operations to boost her robust overseas business. Companies that built strong relationships with their online audiences may continue to hold an advantage by investing in areas that would reward them quickly. For instance, Myntra recently launched customized web pages to connect with Middle Eastern audiences.

Similarly, Tarun Tahiliani started using payment links to send invoices directly to consumers’ inboxes instead of relying solely on cart payments. As he points out, since the products offered by the brand are of higher-value, they require more customer engagement. The brand’s customers need to connect with its team to satisfy their doubts.

New ways to connect with consumers

During the pandemic, many companies learnt new ways to connect with their consumers. To reach online shoppers, Myntra revisited the ‘Myntra Fashion Superstar’ competition, first launched in October 2019. Raw Mango replaced pop-ups to reach an international audience with an online store.

One of India’s oldest multi-designer stores, Ensemble teamed up with the Baradari project to explore the impact of social issues as part of an online campaign to raise funds for the handicrafts industry. Some of the other brands hired professionals to train their internal teams to use social media and other virtual tools. Designer Masaba Gupta learnt to create an educational fashion content, while designer Monica Shah, Co-owner of couture label Jade, employs videos to engage its online audiences. These videos include Q&A sessions that make the design process or selection of a lehenga online easier.

Many designers are also using discounts to woo their price-sensitive shoppers. Brand Bodice has been able to boost sales of pared back neutrals and flowing lounge pants by offering a 20 per cent discount. The popularity of these items helped the company sustain its business through difficult times.

Luxury resorts to markdowns

Luxury and couture companies have resorted to markdowns. As times have changed, people are now willing to shop for high-value products, says Tahiliani. There is growing demand for lehengas, saris, gowns and statement dresses, in India and abroad, says designer Rahul Mishra who launched his collection Butterfly People at Paris Digital Haute Couture Week A/W 2020/21. The collection includes intricate masks and craft-heavy dresses. It also includes classic and artisanal pieces along with avant-garde and experimental silhouettes. Some brands also plan to capitalize on the upcoming festive season in India. Ekaya for example aims to tap the gifting sentiments of customers during this period to launch a range of handwoven scarves and pocket squares.

With COVID-19 altering consumers’ shopping behavior, fashion labels like W for Woman, Benetton, Pepe, Jack & Jones and Inglot are upgrading their technologies to bring more of inventories on e-commerce platforms like Flipkart, Amazon, Myntra and Ajio.

For brands, e-commerce is a one-time investment and signifies the company’s desire to change the way they want to do business, says Manish Kapoor, CEO, Pepe Jeans which recently partnered Flipkart to deliver products from 15 outlets in the Delhi NCR and Mumbai.

Spike in enquiries for omni-channel enablement

Though Indian retailers had been planning to explore omni-channel retail for the last few years, they achieved little progress on this front. COVID-19 is pushing brands to upgrade technological investments and explore multiple retail channels as consumers are shying away from malls and high streets. Ace-Turtle, an omni- channel enabler company, witnessed a spike in inquiries from companies about offline-online synergies. The company has signed 19 brands for omni-channel roll outs since the outbreak of the pandemic, informs Nitin Chhabra, CEO.

However, growing emphasis on e-commerce is also creating tensions between fashion brands and malls as some malls are refusing to agree to new lease arrangement. Arjun Gehlot, Director, Ambience Group that operates malls in Delhi and Gurgaon has asked brands that use mall space to make online deliveries, to be prepared to pay appropriate charges for the services.

Malls recommend revenue-sharing for online deliveries

The group has advised malls to formulate a policy to factor this cost in. It recommends a model that classifies deliveries from shopping centers as sales from stores. Malls like Select Citywalk and Pacific Mall in Delhi have already incorporated a revenue-sharing model in new lease agreements for online orders fulfilled from stores in their malls. They have even agreed to charge brands less for fulfilling online orders compared to the amount mentioned in the revenue-sharing agreements

Kapoor believes, omni-channel would be the norm going forward for brands. Hence, malls and retailers need to agree on the amount for revenue-sharing from their online order fulfillments. According to him, the amount designated for retailers in the revenue sharing model should not be determined by their store sales as they have to bear all other costs.

By selling his retail empire to Reliance Retail for Rs 24,713 crore, entrepreneur Kishore Biyani has finally ended his stint in the retail world. The entrepreneur has got rid of all key businesses to save himself from bankruptcy. Now, only the FMCG business, the Rs 4,000-odd crore Future Consumer, the integrated fashion sourcing and manufacturing business as well as its joint ventures with Future Generali and NTC Mills remain with him.

A person who never feared to experiment, Biyani has an unending appetite for taking risks. He first landed in trouble in 2008-10, when he ventured into the mall and supply chain business. The misadventure landed him in a debt crisis forcing him to sell Pantaloon Retail to Aditya Birla in 2012. Hoping to turnout his FMCG business into Rs 20,000 crore by 2021, Biyani continued to expand his retail business, opening new formats and also acquiring new businesses. However, all these businesses tanked pushing him to the brink of bankruptcy.

Over-dependence on private brands

After selling his retail business to Reliance, Biyani is now left with Future consumer and apparel sourcing and manufacturing businesses. He was especially passionate about the FMCG business. Apart from his own stores, he was also eyeing the global market. However, his FMCG business hasn't been particularly successful as it over depended on private brands, says a retail expert.

Future Consumer focused on launching more competitively priced products in regions where national brands don't have a presence. Therefore, in a category such as atta, the company’s atta brand, Desi Atta, offers a host of other varieties such as jowar atta, ragi atta and so on. In soaps, the company launched liquid body wash at the price of a regular cake of soap. Though these ideas looked great on paper, there weren't too many takers.

Getting back to roots

Biyani also distributed these brands through Aadhar Wholesale in order to push his own brands. Majority of the company’s sales came from own stores. However, his strategy of carpet bombing failed miserably, says a former Future Group senior executive.

Biyani now aims to go back to his apparel business as both Pantaloon and FBB have been successful ventures. Whether he will able to carve a niche in the FMCG space and give stiff competition to legacy companies such as HUL or Nestle, only time will tell.