The fashion industry has been hit the worst largely because of the fact that the malls got closed, the store closed, highlighted industry experts at the webinar organized by Retailers Association of India (RAI).
Vineet Gautam, CEO & Country Head, Bestseller India, said, “We run businesses across the globe and have our stores shut in China. We have a lot of data and learning coming from there but every country has reacted differently.”
“The first thing is our employees and customers. So, we should look at what to do now and for the future. This pandemic shut down has allowed us to relook at the business. I foresee 9-12 months for the normalcy to return and we are looking at how the business can be managed during this time. Cash is going to be the most important part and safety the next. Both these things should be looked in by the business leaders across the board,” he added.
He further added that fashion has relatively more challenged because products get aged very quickly and especially fast fashion brands like us who are seeing products getting older in the stores or lying in warehouses. So, we have to look once we will open up what to liquidate, what to carry forward, and how do you continuously manage this entire fashion value chain.
Talking about the pandemic’s impact on the fashion industry, Shailesh Chaturvedi, MD & CEO, Tommy Hilfiger, said, “For last more than a month sale and collection is zero but we still have a business to run, we have expenses, mall rental, we have to pay for the import of goods or production of goods. We are really challenged by the cash flow. So, to me in the short run, till June end it’s all about taking care of the team and cash flow.”
Amrish Kumar, CEO, Ritu Kumar, mentioned, “Once we do start up again there will be a gradual start-up and then over a period of time it will get to some kind of normalcy. There are a couple of structural changes that will happen within the industry. One on the cost side and other on the demand side. On the cost side, it is very evident that in terms of the fixed cost of apparel retail things are going to change structurally whether the types of rent we pay, the magnitude of those, the manpower. This will also include some elements of business moving onto online. On-demand side, its less evident wat’s going to happen.”
Dalpat Jain, CFO, Manyavar opined, “There are three phases of our transition plan. One is short-term, we have to take care of our people in the manufacturing beat, corporate houses, warehouse, and in retail stores. We will safeguard our workers completely and their livelihood is not impacted in this period. For consumer safety, all the security norms to shut down with the sanitization methods and to protect the inventory have taken care of. The third change will be how we as a retailer will service our customers. I think the hangover of this Corona is going to remain for sometime after the lockdown is lifted for at least 12-15 months. And in this period the way we service our consumer is going to change.”
What about inventory?
Talking about the inventory, Chaturvedi said, “We will push some of the spring-summer goods to early fall season in India before Diwali. We will use some of the pre-fall goods as we intended and we will cut a part of our pre-fall goods, we will cut the production of some of our fall holiday goods. And this whole cycle will only get normalize by Spring-Summer 2021 season.”
Kumar added, “The pattern that we follow in India, the season in terms of fabric begins to change in October. So, prior to that, there is a lot of buffers we all have.”
The fixed cost of revenue is higher in fashion. How to preserve cash and how to ensure that retailers have the cash on hands to be able to take into account the current cost and also the uncertainties in the future.
Jain shared, “We are reviewing each and every element of the cost to see if there are any bad costs which can be cut. There are three parts of the cost in our business – one which gets adjusted with the revenue itself, which is based on the utilization like electricity cost. Some of them, are working with the partners to ensure that we can convert them into a variable. The largest cost element which is facing the entire industry today is lease cost where we as an industry are working together to ensure that we can arrive at a solution with our partners. So, we are trying to reduce the monthly burn by making a fixed cost into a variable.”
How to reopen
Sharing his views on how to reopen post lockdown, Gautam said, “The stores will open in bits and pieces and this is going to be a structured opening. The most paramount thing to relook now is how do we work in the post-Covid regime which is how to still manage social distancing and this is going to remain for a while. This is going to be the new norm. So how do we operationalize our stores and what all need to be there. The new norm will also be how do we make contactless payments and the entire store upkeep is far better hygiene than it used to be. What happens if we get too many customers together and how will we manage that traffic. We will have to have new ways to look at things.”