COVID-19’s impact: A fundamental change or a painful but short blip on Retail Fashion Industry of India?

WHAT IS RETAIL SHOP CORE PHILOSPHY: By understanding consumer behaviour for providing their unmet demand at best price with most delightful experience. i.e. “for the customer, by the customer and of the customer”

This article is not another write up or any pep talk to survive ur business or manage it by giving any management jargons. This article will just help you to understand the situation better and how to respond to customer demands more actively which a retailer is supposed to do. It will talk shortly new opportunities which will arise in consumer companies which has to be understood by research & data analysis on consumer behaviour.

This article has three objectives.

a. To examine COVID-19’s impact on India’s consumer retail sector

b. Recommend a set of urgent actions to secure business continuity.

c. Exploring longer-term actions to position companies to succeed in the postvirus business environment.

Did you know the entire cosmetics industry was born in the depths of The Great Depression? It’s true. Seems that offering ladies a little inexpensive luxury made the people who sold lipstick, rouge and eye makeup extremely wealthy.

COVID-19’s Impact:

70 percent of the retailers in India expects the business recovery to happen in more than six months due to the ongoing COVID-19 crisis which has hit the retail sector of the country hard, said a survey by Retailers Association of India (RAI). The survey titled, ‘Impact of COVID-19 on Indian Retail,’ said that 20 percent retailers feels that business recovery will take more than 12 months.

Earlier, the CEO of RAI had said that if the country remains in the state of lockdown till June, 30 percent of the retail stores operating in India may have to close down, resulting in the loss of 18 lakh jobs.

Offline Sales will have massive decline in footfalls, even online sales will not increase for Fashion items as before, potential discount schemes may also not increase sales any further. Lot of challenges for retail franchisees or any business man which would be very difficult to overcome in few months. Apart from preparing itself for the challenges there is very little which any store owner can do.

While it’s too early to quantify COVID-19’s toll on the fashion sector, one thing that is certain is Consumer Habits, Consumer Behaviour, Spending power, Taste, Priorities, Delivery and Payment channels will undergo transformational change. Consumers will emerge from the pandemic in a new economic reality, changing commerce behaviours in profound ways.

Navigate the now: Immediate priorities

1. Lead with compassion and protect your people

Communicate frequently and clearly with employees. Set expectations about the new working norms, safety precautions being taken, and clear  communication channels with customers;. When the future is uncertain, Values of the organization plays a big role to build trust among customers and employees.

2. Amplify digital: Digitize your Physical Stores

Based on data from our clients in China, the Covid-19 crisis has clearly favoured omnichannel retailers when it comes to minimization of the negative impacts. Therefore, offline retailers must approach the lockdown period as an opportunity to build a strong online presence.

• Enhance Digital Presence & Digital Marketing which communicates with society of your store and loyal customers.
• Partnerships with E-Tailers.
• Revisit the logic of your marketing investment: shift from brand building to customer activation, repurchase triggers.
• 80 percent of these consumers are “smartphone shoppers” – they use their phones to help them shop while in a store, most often to research product reviews, specifications and compare prices. Lot of IT Systems like Manthan Systems based in Banglore is using AI and Anaytics on live purchasing in Stores.  
• Scenario plan around spikes in digital channel usage to ensure that the systems will remain online if they experience a 600 percent increase in demand
• Find ways to reduce the cost to serve of online fulfilment. This could include working with collaborators to jointly deliver product to customers to take advantage of the Home Deliveries.

3. Maintain connections with Loyal Consumers

Just as consumers continue to seek connections with one another during this crisis, apparel and fashion companies must continue to engage consumers as well, even if those consumers are not spending. This must happen in a way that is authentic to the brand and resonates with its consumer base.

4.   Manage for cash

Set up a “cash control tower,” with representation from both the accounts and sales teams, to examine spend and identify potential reductions in cash outflow.

5. Total Inventory Assessment Quickly review your full-year Inventory Positions, category by category, making decisions based on “fashionability” (basics or evergreen products versus on-trend products), depth of buy, and confidence in style. By Reassessing inventory and segmenting stock in each category, a retailer can maximize gross margin and free up working capital.

POST ONE YEAR COVID-19 FASHION INDUSTRY

Once the dust settles, Customer Experience will take new definition in direction which is unknown to everyone. Post one year of Covid-19 business environment will have new and more challenges for the remaining players who have survived the tide.

Below are the five recommendations which requires management considerations.

• Anticipate shifts in consumer sentiment and behavior:

While no one can predict what the next normal will be like, we expect a strong desire on the part of consumers to resume their precrisis habits once conditions allow. Comfort could become a top consideration in apparel purchases.

• Financial Strength:

Companies will have to work on Net EBITDA/Debt ratio and make it Financial ratios uptight for grabbing better diversification in future.

• Truly Become Digital and Omnichannel:

You will have to create USP of your digital brands because in coming times there will be too much clutter in it too. Develop proper E-commerce, business along with complete digitization of every business function like data, marketing, procurement, Human resources.

• Data Analytics:

Make data analytics of customer behaviour & products a regular component of your business practices so that new opportunities can be identified and there will be no lost sales in downward trend market.

• Personalized Recommendation:

Global Brand but Local Taste will be required now even for small stores or mutli brand retail outlet located in one city also. Become innovative with personalized engagement for customers. It shall be done with help of IT Systems or Human Resources at the end of the day.

Conclusion

While no one can predict what Post Covid-19 Consumer Behaviour will be like, however, companies that lead with empathy, be value driven and genuinely address customer needs can strengthen relationships and businesses.