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COVID-19 Impact: Key learnings & future course of action for retailers

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India’s retail sector is one of the largest employers in the country with almost 46 million people working in the industry. With the onset of the pandemic and as retail businesses continue to be deeply damaged by the ongoing COVID-19 and economic crisis, a large number of these employees – a vast majority of who come from middle-income and lower-income salaried classes from across India’s urban, peri-urban and rural heartlands – have lost their livelihoods and futures.

COVID-19 Impact: Key learning & future course of action for retailers

IMAGES Group and TRRAIN have shifted focus during this pandemic to this lower income group. Through the platform, the two organisations are working closely to support the most vulnerable of our human resources, retail’s foot soldiers.

The last of the weekly ‘Retail Panchayat’ webinar series – in an unrestrained style with candid, insightful conversations on people, processes, practices, ideas, outlooks and learnings in retail – threw up insights on business models, innovation culture, people and products and customer service orientation.

The webinar was co-hosted by , Founder, TRRAIN and Amitabh Taneja, CMD, IMAGES Group.

The guest speakers included:

– Ishwar Chugani, MD & CEO, Giordano Middle East (FZE)
– Rahul Singh, Founder & CEO, The Beer Cafe
, MD & CEO, Tommy Hilfiger and Calvin Klein India

Journey of Giordano

Amitabh Taneja, CMD, IMAGES Group started the conversation by putting a question to Ishwar Chugani, MD & CEO, Giordano Middle East (FZE) asking him that a lot of Indian manufacturers, garment brands and apparel companies used to go to Hong Kong to source fashion and would then tell everyone back home in India that Giordano has 10 stores on the same street. “I would like to know why 10 stores on one street. Aside from this, please also tell us how you have grown in terms of company and business and also share the total number of stores.”

“I will answer the latter part first. Giordano will be turning 40 next year. Today, we are present in 35 countries and we operate 2,200 stores globally. It is a public-owned company from Hong Kong. I started as a franchise and the brand asked me to look after it globally. I am also on their board and a management committee advisor with Chairman and two other Directors that look at the global strategy of the group,” said Ishwar Chugani, MD & CEO, Giordano Middle East (FZE).

“A lot of changes have taken place in the last 20 years, but the brand remains true to itself. We are still everyday essentials. We provide what customers need and what they are looking for. It is also a brand which has always tried to offer pricing within affordable limits. In markets like Pakistan and Bangladesh, we have done really well. You must be wondering why not in India. India was very tough to crack. For me it was a biggest learning that you cannot sell in India till you make in India and you cannot treat India as one country, you need to treat it as different countries because of every area – North, South East and West. I learned that many years ago, but sometimes it was very difficult to run in India by remote controls sitting in Dubai. Now as things have started moving, manufacturing has started, we have a licensee in place, stores have started to open post , we have a team on board, hopefully, this is one market which we will see grow post-COVID. Things are already in place,” he added.

Talking about the brand further, he said, “As a group, we continue to grow. One of the biggest learning that I had is that COVID-19 started in China and Hong Kong where we had most of our stores, so we already had a lot of insights that prepared us when COVID-19 came to our other markets. We were already aware of what the situation would be how bad it could be.

Answering the first question, he said, “Yes, we used to have 10 stores on the same street in the past but as the real estate grew and online grew we reduced it to 2-3 stores in the same area. In Saudi Arabia, we have 7 stores within 2 minute-walk. They all work well as each of the stores basically has a different story to tell but everybody still knows that it is a Giordano store. You might have all white Polo T-shirts in one store or black Polo T-shirts in another store. It all depends on the customers. Saudi, especially in the downtown area, you have people from all over the world, so you have to look at need of all the customers. I do not think that this approach might not work moving forward. Now, it is going to be more about quality, location and online. A lot of our stores we can be now readjusted to be more of a showroom or a pick-up point or click-and-collect point.”

“Our best performing store is in Mecca doing a per square ft sale of US$ 500,” he added.

What Makes Tommy Hilfiger Products Stand Out from Others

Shifting the conversation along, Taneja asked Shailesh Chaturvedi, MD & CEO, Tommy Hilfiger and Calvin Klein India that there is something different about Tommy Hilfiger products as they really stand out. Why hasn’t India been to create a product like that?

“I have a positive feeling that India will also be able to crack it soon. Today, if you have to look at high-quality garments or high-quality product, one of the key requisite is a very large local market. We have seen that in the apparel industry that local market size is still very small but the groundwork has been laid out in top 14-15 cities as there are good malls and you can do business along with this online is also growing. The fundamentals of a large volume domestic markets are being set up and that is a very big one requisite for high quality production to happen. Brands like Tommy Hilfiger have shown an example that we can run high-quality business in India, scale it up. We are present in 72 cities in India. So, there is a sort of benchmark that ‘if Tommy Hilfiger has done business in 72 cities with a particular scale and size then why can’t we do the same’ and it sort of pushes other brands to do it. It will happen. The time has come now,” Chaturvedi said.

Sharing the journey of Tommy Hilfiger in India, he said, “When I joined Tommy Hilfiger 14 years ago, we clearly had two segments of consumers. One consumer was the super-rich who was travelling abroad and buying these brands abroad and we could have chased them and given them good service in India and taken a 40-50 percent market share theoretically, but we did not chase these customers. What we did is that India’s consumption was rising, premiumisation was happening. So, we said that the India is expanding, we will chase the consumers of then current brands of India (Benetton, Wills, Madhura Brands, Levi’s). We thought as consumers of these brands will upgrade, if Tommy Hilfiger will try to take an even smaller 10 percent market share, we believe that the business size would be larger, and the scale and scope of our opportunity must be larger. We went after that and believed that we will be the first international brand that will hand-hold the Indian consumers and bring it to international standards and there were some requirements to upgrade the customer like no compromise on standards, no compromise on the products, sensibly priced, good service, so we did a lot of those things and we went after consumers who were buying these premium brands in India and they are today buying Tommy Hilfiger or Calvin Klein in India.”

Entrepreneurial Journey of The Beer Cafe’s Rahul Singh

“The first 14 years of my career were spent working a job. The next 14 years, I have created jobs. I started my career journey with Stencil Apparels, India’s first readymade garments brand. Then I worked for brands like Liz Claiborne and Triburg and then I thought of moving to retail and started working with Reebok to look after the brand called Rockport. The entrepreneur bug bit me in 2007 and I took the rights to sell merchandise of Greg Norman, a golf brand, in India and in 2008 the financial crisis happened. The worst sector to get hit was luxury. Post this, I started a brand called Golfworx, my first foray to retail directly to consumers. I created largest golf facility in India. Consumers instead of playing golf were coming to taste single malts, cigars etc. and this set the foundation of The Beer Cafe in my mind,” said Rahul Singh, Founder & CEO, The Beer Cafe.

Impact of COVID-19 on The Beer Café

According to BS Nagesh, The Beer Cafe is not about beer, it is about socialising, food, belonging, friends, network and it is a community within a community. Nagesh asked Rahul Singh which elements of his business were not safe from the effect of COVID and which elements would help pull the business out of trouble.

To this, Rahul Singh replied: “Beer as a product is one of the oldest recipes known to man. It was discovered by a woman and it is something which is consumed most after water and tea. So, it is currently largest consumed beverage in the world. In India, it is the second largest packaged beverage after aerated drinks. India’s liquor business stands at Rs 3.5 lakh crore out of which Rs 55,000 crore comes from beer. The Next Gen, instead of getting high on alcohol, wants to enjoy its beer and that is where The Beer Café comes in. We aggregate more than 50 types of beers from 21 countries. It is a complicated process to get these beer out. The other problem with beer is that it is the only liquor that expires. During lockdown, Rs 3 crore of beer has gone down the drain. To prevent the loss further, the government should open the bars.”

Pros & Cons of Running a Restaurant

Taneja then wanted to know from Singh what three positives and negatives people should look out for before getting into restaurant business.

“Restaurants are usually run as a family business over generations across the world, so it comes from an inherit passion. A lot of restaurants in the world are owned by chefs and the reason is that they are passionate about food. One of the reasons that it is on the bucket list of a lot of people to open a restaurant is because they have the passion. Validation and gratification comes to us naturally when we see consumers happy and it has a very quick to scale up model. The cost of goods is very low, and the gross margins are very high,” Singh said.

The negative is that you are dealing with every possible regulations and licenses. Being a restaurateur is a very hard-working role. We are working the hardest when everybody is having a good time. It is a very people driven business,” Singh added.

Big Learnings From the Lockdown

Taneja asked Chaturvedi the big learning from these three months of lockdown.

“One thing I have realised is that there is a need for collaboration and partnership. You need to partner with government, with the mall owner, the department store, employees and we as a part of PVH International, we regularly interacted with them to see what is happening in China, Europe and other markets.

Second thing needed at a very personal level is patience. With events like COVID-19 you get frozen, you know what to do but you cannot get out of the house, you are locked down, you are helpless, you are sort of chained in a way, you cannot do many things that you want to do and mentally you say that you need to do this but you need to have the patience to just wait for it to get over. We need a lot of patience to see businesses pick up again. And if we become impatient, we will end up committing mistakes.

The third and the final thing is that I have seen a lot of people losing their salaries, jobs. It is very frustrating. However, as a community we would like to help. And why do they need help? We need to reach a point, whatever happens, we do not need somebody’s help and that will happen if you are good at something small at a national level,” stated Chaturvedi.

Post-COVID Retail Plans of Giordano

Taneja the moved the discussion back to Giordano asking Chugani, “What are the lessons that had been learnt for the future. What are you thinking in terms of post-COVID retail of Giordano and how are you strategising?”

To this, Chugani replied: “COVID-19 has changed our lives. Being in the industry for almost 40 years, we have learned to be resilient. We have gone through different ups and downs – geo-political, economic – but this one is different. It has hit everybody from across all sectors. We cannot always control what is happening, but we control the response to what is happening. We realised no matter what the situation is currently, there are going to be lots of opportunities moving forward. We have passed 6-months of COVID-19. All of us have been at home under lockdown. It has brought about the best of every human being in terms of trying to understand who they are, we have learned to love things at home, we learned to do a lot of new things, we actually learned to manage our entire lives sitting inside and that has given a new paradigm on how we can do things. It is going to be very tough for us as a retailer because many people now realise that they do not have to go out, they do not have to shop. Human beings are resilient, they find ways to adapt.”

“Now, that when the things have opened, we have gone through a situation where there was fear, frustration and now there is acceptance, but the biggest worry is that media has to play their part. The things are improving here as the media has also decided that let’s move away from the fear and frustration and communicate in a very different way to the people and now people are going out, they are realising that there is life outside home. It is now our responsibility to make sure that we cannot always keep it on the government and government should also realise that after keeping everyone at home, people want to go out. We have to understand that what we used to sell pre-COVID and what we may sell post-COVID maybe very different as consumers preferences have changed. We have to understand and adapt according to what people are looking for now because for a lot of people there is uncertainty, people would really want to hold on to their money, so we need to offer what they are looking at – increased value, more savings,” he explained.

“Other thing what we have realised is that slowly you can communicate to your people and customers that the things are safe and we are doing everything possible and our first priority is our people and customers, so they can start coming. In the last 8 weeks since we have opened, we noticed that things are actually improving. Business is growing day-to-day. However moving forward, we need to look at the different shifts like how consumers are buying. We have to minimise the contact and focus on health and hygiene. We know that there are going to be less footfalls, but if customers walks into our store today, we know that he is a real buyer, so what we have to do everything to get him to buy,” Chugani said.

“Next step is that we have to look up to our supply chain. It is going to be more of less, it will not be about bringing all things to all people. We will really have to reduce our SKUs because many of the items that used to sell before may not sell going forward. We have to be very careful. All of us are having a lot of inventory. The challenge is how do we move it. If we start over-discounting, it is going to be like a drug. So for us as a group, we are moving the merchandise whether globally, regionally, locally. We are looking at 80:20 approach because 80 percent of our business comes from everyday essentials. We have stopped future orders as we have enough merchandise for the next few months. We have moved merchandise, we have shared merchandise and that way we can continue to get the best possible price on these items,” he further explained.

“Other things what we can look at is that customer today does not care what you sell, how you are selling, they really care for what you are doing for society, what all you are doing to make the word a better place to live on and moving forward we learned this is last 3 months that how important online is going to be. COVID-19 was the biggest teacher for any company. Moving forward to embrace the new normal, we need to add more value to our offerings, we need to be community driven, we need to reshape and repurpose our asset base, we may not need 2,000 stores, some of the stores can be re-positioned, and very important, as a group, we are going to look at Omnichannel offering and how do we bridge the gap between online and offline.

“In a situation like this, an unexpected crisis brings to the surface the tiny fractures that were unnoticeable during the good times. Now it is the fertile ground to re-learn some of the lessons of the past and form the wisdom of the future. There is no way retail will ever die as it has been there for generations. There are 3 good things that every good retailer does and should do:

– Identify what is important
– Make is obvious
– Make all new again (let’s keep reinventing ourselves). Once we all get back to work, we will see that a lot of brands have reinvented themselves,” Chugani concluded.

ANGEL DONORS

IMAGES Retail, together with TRRAIN, has set up a relief fund to offer and provide sustenance support to deserving retail associates and their families over the next three months until the COVID-19 situation settles down and there is some normalcy. TRRAIN will identify retail employees who have no means of income post April-May 2020 and provide them with an income bridge for three months until they are able to seek alternate employment. TRRAIN will also leverage government schemes by connecting the associates to them for short- & long-term relief. In order to ensure transparency towards the money collected by the relief fund (which has already reached up to Rs 2 crore), a five-member independent board has been set up.

The beneficiaries (retail employees) will also be on-boarded onto the TRRAIN Circle mobile app (an app to help and enable a better life for the frontline employees employed in retail & another sector) to have access to over the phone counseling services, additional financial services, and e-learning courses to develop skills & disbursement of financial aid.

Through the Relief Grant, TRRAIN will be offering to the beneficiaries:
– Rs 4,000 per beneficiaries over a period of 3 months
– Enrolment to Government of India’s relief schemes for grants starting from Rs 1,000

Retail Panchayat hopes to benefit over 5,000 families with much-needed financial support in these difficult times. Some of the angel donors towards this good cause are listed here:

Ramesh Poddar, Chairman, shared his thoughts on winning the Guinness Book of World Records recently: “We were continuously meeting 400-500 retailers to create positivity during lockdown. We thought that there are about 12 lakh textile retailers in India, and we should organise a webinar with them. 55,000 retailers joined and this was a program to teach them how to increase sales and how to make some more money. A few top retailers even shared their success journey with other them. And soon we got the Guinness Book of World record certificate of organsing this webinar.”

Other angel donors who participated and donated included:
Harsh Bansal, Director,
, Managing Director,
– Rahul Vira, Country Head,
– Raza Beig, CEO, Splash, Iconic and
, Everstone Capital Advisors