According to a recent webinar by CARE Ratings, Indian textile and apparel industry reported significant reduction in sales starting from March when the government imposed coronavirus lockdown. Post lockdown domestic retail sales came to a grinding halt. To add to the woes of regular garment manufacturers, international customers, who were also under lockdown, deferred orders from Indian suppliers.

Sudeep Sanwal, Senior Manager, CARE Ratings said that GDP of two major export destinations for Indian apparels manufacturers, ie, the United States and Europe, is expected to contract in 2020 which will further lower the demand for apparels. These two destinations combined account for more than half of the apparel exports from India. Due to lockdowns, order cancellations took place in massive numbers which also led to pent-up inventories. Since, the fashion industry is highly dynamic in terms of styles, the unsold stock may soon go out of fashion which will lead to inventory losses for manufacturers.

The spring summer collection of most manufacturers also witnessed a significant hit. Also affecting the sales of the manufacturers was the fact that despite having ready clothing, logistics posed a problem.

As per a Forbes India report, Indian consumers, who earlier equated fashion buying with ‘touch and feel’ experience, are slowly warming up to online shopping. Figures indicate India’s online penetration in fashion and lifestyle, which stood at 9-10 per cent in 2019, is expected to rise to 14-17 per cent by 2022. Indian brands aspire for at least 20-30 per cent share of their business to come from online channels.

Brands can explore this growth through two avenues: marketplaces like Flipkart and Amazon and own websites or apps. Of these, marketplace is a more dominant sales channel and constitutes around 80-95 per cent of any brand’s business. A marketplace enables brands to quickly respond to consumer needs with minimum investments in technology and manpower. However, Indian marketplaces focus more on growing their private labels besides forcing brands to shoulder customer discounts, increase marketing spends and be account table for returns.

Despite this, brands cannot simply pull away from marketplaces as building their own websites is challenging given their offline mindset, inadequate capacity building and their incapability to fund early losses.

Clear demarcation of roles

To succeed in online operations, brands need to clearly define the role of each of their online channels and invest accordingly. For instance, they need to focus on their websites for selling fresh merchandise, and exclusive and customized collections. They can launch special online-only assortments or marketplace-specific merchandize to avoid conflict with offline channels.

Brands can also improve customer retention by launching omni-channel loyalty programs or investing in platform-specific marketing, with clear ROI markers jointly owned with the marketplace. Another way they can gain speed to market is by building the right ecosystem of partners. They can invest in relationship managers that conduct Joint Business Planning (JPB) exercises with the respective marketplaces.

While building their websites, brands need to develop a single view of customer across channels to be able to drive hyper-personalization and superior omni-channel experience. They can deploy web crawling to capture competitor data around assortment, pricing etc.

For fashion and lifestyle brands in developed markets, multiple sales channels improve customer interaction. However, India is yet to fully warm upto omni-channel retail as elements like buy only return in store, click and collect self check-out as these concepts are not so relevant in the Indian context.

Focus on staff training and inventory management

In post-COVID world, the need to balance profitability with social distancing norms will drive brands to limit store sizes. This in turn, will help to curtail their inventory sizes. Facilitating ordering and shipping-from their local stores can help brands reduce shipping costs by over 50 per cent. It can also reduce their delivery times from a few days to a few hours. Brands and retailers need to have a single view of inventory across stores and warehouses, with minimal latency. They also need to train their store staff on the use of online stores/endless aisles, updating inventory as soon as a product is sold offline. Adjusting the knowledge of their store staff for omni-channel operations can help brands treat their stores as an experience centers for customers leading to online purchases or as a fulfillment location.

Thus, in order to reinvent strategies and boost sales, it is very important for brands to choose the right omni-channel partners and execute them well.

The Retailers Association of India (RAI), in the fifth edition of its fortnightly business survey, reported a 63-per-cent year-on-year decline in retail sales during July. The massive decrease compares favorably with that recorded for June (67 percent) and April (more than 80 percent).

The trend towards recovery was most pronounced in the food & grocery and consumer durables product categories, but not apparent in the apparel, sports goods, and beauty & wellness sectors.

The statistics signal challenges still facing retailers despite the easing of India’s lockdown last month.

Kumar Rajgopalan, CEO, RAI said, though the Unlock 3.0 creates a possibility of significant sales recovery for retail businesses, localized lockdowns, weekend curfews, and not allowing formats like food courts and cinema halls to reopen are creating roadblocks on the path to revival.

India’s mid-market online retail fashion giant Myntra is setting foot in the international market by partnering two Middle Eastern e-commerce firms, Namshi and Noon. The e-tailer chose the UAE for expansion as the region has a huge Indian diaspora, young, tech-savvy demographics and proclivity for Indian designers’ cuts and fabrics. The partnerships will help Myntra quintuple sales over the next two years with Indian-origin brands selling casual wear for a fashion-conscious consumer.

Such partnerships also predict Myntra’s future approach to other markets, says Amar Nagaram, CEO. Besides, Middle East, the company is eyeing the Southeast Asian market thorough which it aims to chart an international roadmap from local to global.

Large buying potential attracts brands to Middle East

Lately, many Indian fashion companies have been expanding into the Middle East market, says Bain & Company, a financial analyst. Earlier this year, designer Ritu Kumar partnered Namshi to sell items from high-end label Ritu Kumar and its ready-to-wear line, Label Ritu Kumar. As Amrish Kumar, Managing Director of the brand, Middle East is a potentially more lucrative market as it has a huge buying power and similar clothing tastes to those in India.

For its Middle East foray, Myntra is planning many marketing initiatives including a social media campaign on the Namshi and Noon platforms, app banners and celebrity-driven advertising, including appearances by Bollywood star Hrithik Roshan on behalf of the fitness brand he co-founded, HRX.

Myntra is also accelerating a planned shift to casual and athleisure wear as more people work from home now. The company plans to sell over 500 casual and athleisure wear designs on Namshi and Noon from several of its private labels and a few outside fashion lines.

Attracting international customers with ‘Indianness’

However, Myntra’s plan to sell casual clothing items through these two platforms has surprised many industry leaders. As Sahil Anand, Consultant, Cedar Consulting opines, international shoppers do not buy basic clothing items from Indian brands as they have them in abundance in their countries and are often ahead of India in riding fashion trends. To attract international audience, the clothes on these two platforms will have to either have a strong Indian aspect or be sustainable and super fashionable.

To achieve this, Indian companies will have to study the market and consumer preferences constantly and adapt quickly to stay relevant. They will also have to pay extra attention to online search patterns to give customers what they want. This alone will help these companies acquire new customers and boost business.

Shashank Pathak, Centre Director and Executive Director, WestEnd Mall, expects to see a robust festival season with Made in India products being the flavor of the season. He says 95 per cent of the permissible brands have reopened and around 40 per cent customers have returned to these malls. Though currently, people are focusing on their essential needs, the condition is improving by the day, he said.

Pathak says, no trial and no exchange policy followed by most of the brands did not deter people from buying. His mall’s first bill was for Rs 15,000 and last one was for Rs 15,000 and people were spending 1.5 to 1.6 times more than usual.. The beauty and cosmetics saw 154 per cent growth in sales.

The Phoenix Mall in Pune, too, was buzzing during the Independence Day weekend with serious buyers and footfall fast converting to sales. The Croma and Reliance Digital stores had people lining up waiting for their turn to buy. Laptops, LED TVs, microwave, refrigerators and electric kettle were moving off the shelves, said Arun Arora, Centre Director, Phoenix Marketcity Pune,

The Amanora Mall witnessed 18,000 footfall and significant sales during the Independence Day weekend. The sale of electronics dominated with high demand for mobile phones and laptops followed by casual wear and white goods. The demand for white goods, too, was higher with dishwashers and washing machines among the top buys, said Surjit Singh Rajpurohit, CEO.

Koushik Marathe, Director, Fashionking Brands, which has a network of 100 outlets selling formal clothes for men, said they had their worst ever time in the last four months. Though the demand for formal clothes has not returned, they did see some buying during Rakshabhandhan and Independence Day.

These retailers expect F&B and entertainment services to resume after the 10-day Ganesh festival by August end.

With COVID-19 diminishing consumer sentiments, the ethnic wear segment in India could register only 10-20 per cent sales from April to June. However, reports suggest, the arrival of festival season in July with Eid brought some demand back with brands like Fabindia, W, Aurelia and Ethnix by Raymond reporting a 45 per cent surge in sales. In India, the festive season contributes about 25 per cent of yearly sales of ethnic wear brands. The ethnic wear category has almost 20 per cent share of the Rs 2.35 lakh crore urban apparel market in India, says Siddharth Jain, Partner, Kearney. However, in FY21, the segment is likely to see demand erosion of upto Rs 15,000-20,000 crore as compared to the previous fiscal.

Initiatives to boost sales

Brands are working out strategies to deal with falling demand Fabindia for example is directly interacting with customers. And in order to provide customers with contactless shopping experience, the company plans to set up shops in housing societies. It also plans to explore e-commerce to boost sales. The company plans to launch the Rajwada collection in East Indian markets this September, and North India in November. This collection will help clock in 50 per cent of last year’s festive sales.

Likewise, TCNS Clothing aims to focus on casual ethnic wear line, as Anand Daga, Managing Director told Financial Express recently. The company plans to build a flexible inventory and a responsive supply-chain that will help it to offer relevant options at times of sudden surge in demand. Another brand that plans to make its supply chain more flexible is Ethnix by Raymond. Though they too have been impacted by the absence of large-scale weddings, demand for ethnic wear has not completely dwindled, points out Suman Saha, COO, Raymond Apparel. They plan to launch BTL activations over the next three months.

Demand to remain subdued

Though e-commerce will emerge as the leading retail channel this season, it will prove to be an expensive proposition for apparel companies, feels Anand Ramanathan, Partner, Deloitte India. E-commerce will erode almost 30 to 40 per cent of profit margins compared to offline channels.

It takes six to eight months of planning for brands to launch their ethnic wear products, says Jain. However, as this year was majorly disrupted due to the lockdown, these companies faced supply chain challenges from March to September. Shortage of artisans owing to the pandemic has affected the apparel business during this period.

Experts feel, demand in the upcoming festive season is likely to be subdued. Though sales may pick up during Durga Puja and Diwali, they will remain 30 per cent lower than last year. Again, this will depend on strategies brands adopt to lure customers into stores.

For the first time in decades, Indian retailers have mixed expectations for the upcoming festival season. The festival season in India begins in September with Ganesh Chaturti and stretches till November with Diwali and beyond. Usually, this is the most opportune time for the country's apparel, jewellery and home appliance makers as it contributes to around 40 per cent their annual sales.

Apparel retailers go easy on stocks

Though electronics retailers hope to clock some sales growth during Diwali, apparel retailers are not so optimistic. In fact, they have lowered their sales forecasts for the festive season. Meanwhile apparel brand Benetton India expects Diwali to be dull with sales declining by at least 25 per cent over the past year. According to Sundeep Chugh, Managing Director and CEO, retailers are unlikely to match numbers of previous years and may see 25-30 per cent lower sales than last year.

With customers deferring their purchases of apparel, accessories and beauty categories, retailers are going easy on stocking new inventory for the festive season. However, hopeful of demand reviving by September and October, Puma India has launched new products every month. Similarly, value retailer V-Mart, meanwhile, expects sales to improve by the end of the month on account of better farm income due to sufficient monsoons

Electronic makers upbeat about festive demand

With consumers shopping for laptaps, upgraded television sets and kitchen appliances, electronics retailers are more upbeat about festive season. Retailers like Nilesh Gupta, Managing Director, Vijay Sales expects demand for these products to continue as they are more need-based. His firm registers 40 per cent of its sales from September to November.

Makers of home appliances and consumer electronics expect around 10-20 per cent growth in demand over last year, says Rakesh Khanna, Managing Director and CEO, Orient Electric. To leverage this demand, retailers are filling up inventory for the festive season as disruptions caused by the lockdown and the subsequent shortage of labor has yielded lower production. The production of Bajaj Electricals has reduced to 70-80 per cent of its capacity though it plans to increase this to 100-110 per cent in future, says Anuj Poddar, Executive Director.

However, all retailers worry local weekend lockdowns could meddle with the festive season’s demand and their plans. Hence, they plan to go easy on discounts and instead focus on good EMI options and genuine need, adds Gupta.

Nobody had imagined the transformation Indian retail landscape is currently going through due to COVID-19 crisis. The debilitating effect of continuous lockdowns has sent many retailers, especially those in the luxury segment, into a tailspin, with more consumers opting for delivery services, curbside pickups, online services and WhatsApp-based concierge services, says Yogeshwar Sharma, CEO & Director, Select Citywalk.

Consumers are either booking a slot online for luxury brands such as Bottega Veneta or buying products in stores and getting them delivered to their cars, says Deval Shah, Group Vice President, Reliance Brands.

Need for customer-oriented approach

The onus of making the shopping experiences impeccable rests on the well-trained store team. The staff needs to ensure that all their stores, including changing rooms and billing desk are sanitized, points out Anshuman Singh, Founder-CEO, Paul Adams. The team should also visit client’s homes with pieces chosen online or a catalogue, adds Divyansh Sanklecha and Vipul Pirgal, Founders, Curio Casa. This would allow clients to test products. Moreover, the staff needs to be service driven and find quick solutions to customers’ problems, says Yogesh Chaudhary, Director, Jaipur Rugsem.

Sangeeta Boochra, Owner of Eponymous jewellery brand, advises retailers to deploy VR solutions for store associates. Beauty brands like Kama Ayurveda have already replaced testers with virtual consultations and complimentary samples of new products. Their stores have been rejigged to allow fewer customers.

Bridging the online-offline gap

To leverage the growing demand for e-commerce, brands need to bridge the online and offline experience. Customer’s decision journey needs to be tracked to understand their changing preferences. Broocha, implements a mirroring 3D technology to offer in-store experience to customers, digitally to boost sales.

As customers are being more cautious about their purchases, luxury brands need to focus on offering more value for money products. They need to add meaningful value to their luxury offerings and make them more sustainable.

Domestic shopping to boost luxury retail

Indian luxury retail sector may benefit from continued closures of borders as more people may spend in India. Earlier, around 50 million Indians travelled abroad each year to meet their shopping needs, particularly during the peak months of May, June and July. Now, most of this demand is coming from within India. Indian luxury stores are dealing with lesser footfalls by adopting a highly personalized ‘By appointment’ strategy, However, this may reduce impulse buying amongst consumers.

Also, consumers may now prefer to shop in a malls as they have are dealing with the situation more effectively with employees dressed in PPE, temperature check, air filters and purifications.

Fashion apparel and accessories firm Indian Terrain Fashions is in the process of expanding its retail footprint with the launch of 20 new retail stores in Tier-II and Tier-III cities and towns. The company, which has completed two decades of operations, has opened stores in Hubli, Lucknow, Siwan, Ooty, Ganganagar and Srinagar among others.

With a turnover of Rs 900 crore, Indian Terrain operates over 1,500 stores across formats such as exclusive brand outlets (EBOs), multi-brand outlets (MBOs) and large format stores. The company is focusing more on online sales, having strengthened its e-commerce partnerships with Flipkart, Myntra and Nykaa. It has also revamped own e-commerce website. Its overall online sales are ahead of the pre-pandemic levels. Currently, its contribution of online sales is between 10-12 per cent and it aims to increase this to 25 per cent in the next three years.

According to estimates by Goldman Sachs, India’s e-commerce sector — especially grocery — is forecasted to grow to $112 billion by FY25. Amazon, Flipkart and Reliance Industries would be the key players in this segment with RIL’s push initially likely to be in grocery/FMCG, and over time into categories such as apparel and electronics.

Three-four players are likely to co-exist in the Indian e-commerce space, given the size of the vertical, says Goldman Sach. Advertising will emerge as the second-largest after e-commerce, which also includes OTTs. The dominance of Google and Facebook will sustain, with some incremental market share to telcos including Reliance Jio, Bharti Airtel,etc. Within video/audio OTT, advertisement will continue to contribute more than 50 per cent of segment revenues.

Other categories like travel would also see growth in traction in the online space and drive the growth for sectors like hotels. MakeMyTrip continues to be the dominant platform here with more than 50 pere cent market share currently, and according to Goldman Sachs, there’s not room for more than two platforms to co-exist in this space.

The addressable market for segments such as food delivery and ride-hailing will be limited to less than $10 billion by FY25 as these services are likely to stay restricted to key urban centres in terms of volume contribution.

Goldman Sach says, fintech in India is estimated to be a $2.5 billion revenue pool by FY25, split 20 per cent-60 per cent-20 per cent between payments, lending and insurance. Digital payment platforms are expected to process more than $200 billion of merchant payments annually by FY25 and WhatsApp has the potential to become the dominant platform in payments, given its high traffic.

However, profitability would remain elusive as categories such as online retail, grocery, food delivery and fintech will face stiff competition.

Focusing on a sustainable business model, apparel brand Madame has trimmed expansion plans for this financial year and will open only seven new stores in FY21 against the previous plan of 22-25 stores in 2020. The brand also plans to enhance its back-end operations and improve the logistics segment. It will think more about profits than revenues now. The apparel major will open new stores in Ahmedabad, Itanagar, Bengaluru, among others this fiscal. Among the seven stores scheduled for launch this year, one was launched in Lucknow last month.

Akhil Jain, Executive Director believes demand for apparels may pick up by November on the back of the festive season. According to him, the market will fully recover in the second quarter of the next financial year and companies will be able to turn towards the expansion mode.

The Gujarat Industrial Policy 2020 aims to provide nearly Rs 40,000 crore as subsidies to industries in the next five years. It will help lease out government land to industrialists, and offer incentives to private industrial parks and units aspiring to relocate because of the pandemic, especially from China.

The new policy provides for appointment of dedicated ‘relationship managers’ by the Industrial Extension Bureau (iNDEXTb) that hosts the summit. These managers are meant to be the single point of contacts for investors.

It also provides an average annual outlay of Rs 8,000 crore, meant to provide incentives to industries. It will provide support by up to 65 per cent of the cost of acquiring foreign patented technologies by micro, small and medium enterprises (MSMEs). However, the maximum support will be up to Rs 50 lakh.

For start-ups, the new policy increases the seed support from Rs 20 lakh to Rs 30 lakh. It also provides increased sustenance allowance and additional fiscal support. The policy also provides incentives to private developers for setting up private industrial parks in the state. The incentive will be 25 per cent of fixed capital investment up to Rs 30 crore. In case of tribal talukas, the policy will support setting up of industrial parks at 50 per cent of fixed capital investment up to Rs 30 crore.