Nobody is yet sure about how the world will look like once the Covid 19 pandemic will be over. This crisis has already forced the global economy into deep recession. The upcoming economic crisis is certain to change how consumers will spend especially on non-essential items like fashion.
Fashion drives maximum consumption via discretionary spending. In a webinar organised by TRRAIN industry has anticipated that Fashion will take at least a year to revive. Government can help the retailers for initial few days; later on they need to win the battle by themselves.
Following are few strategies which can help retailers in winning the post covid challenges:
Gear-up for the festive season
Festive time is always precious to retailers this time it would be even more special. Companies expect festive season sales from Oct’20 to be the first indicator of any real change in consumer sentiment; till then sentiment is likely to remain muted. The delayed festive season (Diwali being two weeks later this year) is likely to provide time to clear spring-summer’20 collections till Oct’20 (pre-Diwali), given India’s climatic conditions, which are suitable to push summer wears. Consumers may defer purchase of relatively high-priced products / categories till overall sentiment improves.
Stop bulk production
Companies stopped bulk of production / sourcing for summer collections by mid-Mar’20 itself. While companies may resort to early-EoSS, they are not keen on any brand dilution. They are likely to skip pre-fall clothing completely and instead plan production of autumn-winter’20 collections.
Moreover, as soon as malls and stores will open the focus will be on selling piled-up inventory. In a statement, Kumar Rajagopalan, CEO, RAI said, “ It may take six months for the larger companies to revive and 12 months for the smaller retailers. Retailers are sitting with six months of un sold inventory”.
Ramp-up security measures
People will be conscious about hygiene like never before when they will step out. Companies would need to prioritise safety for consumers and employees to allviate COVID-19 fears and get customers back to stores. It is unlikely that all malls/stores will open by 3rd May’20; more likely is that they will be opened in a phased manner across India.
In China, it took nearly three/four weeks for all stores to open post lifting of lockdown. Companies would be following stringent safety measures as per government directives, limiting working hours, restricting customer entries, etc. in the initial days. Besides, retailers / mall owners need to create safe environment and communicate the same to customers.
The heart is at Online
Online sales were predominantly used as a key liquidation channel for most brands. Going ahead, this channel is likely to gain traction for even new season / fresh collections as consumers may still want to avoid crowds as well as for greater convenience. Companies may need to invest further to strengthen their online capabilities.
Companies are focusing on preserving cash and managing costs, especially rent and SG&A heads (discretionary and other overheads). Companies believe some of the measures – such as linking rent with revenues may become structural for the industry. They expect the government to provide some relief measures, e.g. moratorium to mall owners for their loans to relax rental norms for retailers, relief in high GST slabs to boost consumption, lower interest rates on working capital loans.