The ongoing lockdown to curb the spread of Coronavirus has impacted the Indian retail industry in a big way. Brands like Raymond are taking steps for effective cost rationalization by cutting down all non-critical expenses and marketing spends, managing the cash flows along with keeping the cost of working capital low.
Raymond is also deploying all tools to effectively manage the liquidity with an increased focus on payment realization from the market.
In an interaction with Indiaretailing Bureau, Sanjay Bahl, Group CFO, Raymond talked about the industry efforts that are going in minimising the loss due to Covid-19, the pandemic’s impact on consumer behaviour and a lot more.
How has Covid-19 impacted the apparel industry?
Apparel industry in India is amongst the most adversely impacted sectors. Taking into account the current shutdown, the revenues of apparel industry are stalled as it falls under the non-essential category. Thus, maintaining adequate cash flows during lockdown is a big challenge. Additionally, managing current inventory levels is a challenge as both domestic and international demand have eroded, and international buyers are postponing their orders.
What kind of support is the sector seeking from the government – both state and central?
The industry expects that along with the respite given through moratorium on term loans, relief should also be provided through moratorium on trade finance dues that is critical to the textile and apparel sector. Additionally, the industry is also looking at measures that can be instituted for immediate relief such as GST refund, reduced GST and wage support for the labour intensive Textiles and Apparel manufacturing. The industry also advocates the levy of anti-dumping duty on Chinese textile imports that can partially fund the SOPS for the sector.
Throw some light on the rent arrangement with mall owners during lockdown. How far has it proved fruitful?
We are in active discussion with mall owners and high-street shop owners to find out an amicable solution and all the stakeholders are working together to reach a situation which is a win-win for both the parties.
Do you think consumer behavior will change post lockdown? If yes, how are bracing for change?
It will take some before consumer confidence bounces back to pre-pandemic levels. Given the fact that apparel as a category is driven by discretionary consumer spends, the month of May might witness consumer promos as brands will try to make up for lost sales.
Can we expect heavy discounts once the lockdown is over? Or the sale period coming in early this year?
We do expect an early onset of End of Season Sales akin to what happened during GST implementation in the country.
Do you think even post lockdown consumers will prefer to buy online?
As a result of the lockdown, we expect to see a higher transition to the online channel in the short term. While it might take some time for physical stores to be out of the lock down impact and while consumer sentiment bounces back to pre-pandemic levels, it is hence pertinent for retailers to leverage online channels for effective inventory management.
How has Coronavirus impacted the production of Autumn-Winter season?
Though the preliminary booking for Autumn-Winter season has already happened, the lockdown would certainly have an impact on the production timelines of the collection. Given the duration of the lockdown and the restoration respectively, Autumn-Winter collection will be reassessed, and we are hopeful that the consumer confidence return to healthy levels owing to festivals as well as wedding season.
Can we expect having an impact on the seasonal cycle of retail?
The usual seasonal cycle is disrupted this year. However, this will be an opportunity to break away from the season mentality that is a very western concept and not very viable in the Indian context. Taking into account the immense volatility that requires prior commitments 8 to 9 months in advance. May be Indian brands could evaluate the viability about creating products much closer to the season then following the regular sales cycle.
What is the way forward for the apparel industry?
Once we tide over the current crisis, Textile & Apparel in India is poised pegged to benefit in the long-term. A big positive that we expect is strengthening of India’s position as a preferred supplier of textile and Apparel as global supply chains will look to develop alternatives to china and Imports from china & Italy will be impacted post the lockdown period is over.