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.

A recent study by Kantar says that though majority of the CEOs in India believe customer focus is essential for driving business growth, only 37 per cent of consumers believe retailers offer truly customer-centric experiences. The study says Indian retailers are yet to evolve themselves to provide customer service experiences. According to Sushmita Balasubramaniam, Domain Head -CX and Commerce, Kantar South Asia, bad consumer experiences can have much more repercussion now during the pandemic than normal times.

The study says the pandemic provides a huge opportunity for retailers to review their strategies, take the current challenges head on and look for ways and means to service customer needs better in the coming months.The study noted that retailers who are focused on customer experience have higher customer loyalty and with whom the last interaction has been excellent become the most preferred retailer for the future.

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.

According to a survey by brand insights firm TRA Research, a category that is set to reap in Diwali sales is apparel, which will record 3.11 times the average of other categories, the survey observed.

The study — TRA’s Diwali 2020 Buying Propensity Report — hinted at categories that could be worth investing in, with targeted advertising. Twenty-eight per cent respondents shared a neutral buying sentiment, compared to June, whereas 7 per cent felt it would worsen, according to the study. The buying propensity index reflects an individual’s need-based and desire-based buying.

A recovery in household expenditure is likely to cheer up brands. After a fall in expenditure by 12.3 per cent from February to mid-June, the recovery is projected to record a net gain of 6.8 per cent in spends until Diwali.

A comparison of consumer household spends between the Diwali of 2019 and 2020 shows this year is likely to see a dip in expenses by 5.1 per cent, the report said.

A graph on the matrix of buying propensity and planned purchases showed that mobile phones, consumer electronics and two-wheelers were in the very high-priority list; home furniture, jewellery and TV formed the high-priority category; laptops, kitchen appliances, cars and personal accessories were in the medium priority band; and home renovation, health insurance and travel fell in the low-priority bracket.

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.

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.

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.

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.