The pandemic has been both an adversity and a blessing to the Indian fashion sector. It has laid the road for new brands to emerge, as online shopping takes precedence over offline shopping, making the latter more an experience for the consumer than a point of sale. Sharing his learnings from the fashion segment, Manish Kapoor, CEO, Pepe Jeans India, speaking at the session powered by Istituto Marangoni School of Fashion & Design, Mumbai, at the Phygital Retail Convention that was hosted in Mumbai between November 10 and 11, said, “The consumer was changing anyway; a lot of us on the fashion side were probably not too serious about the change. We were too concentrated on the divides of channel, commercial models, online & offline modes, but the consumer was never looking at that. What the pandemic brought to the forefront was that it made us realise that these changes are already happening. It was then that we were able to fast-forward the changes that we wanted to make in our business. It did also, at the same time, throw up newer opportunities in terms of product categories, in terms of new ways of reaching out to consumers, etc.”
Having said that, Kapoor believes that one thing that still hasn’t changed is the primary reason for having a store, which is to deliver an experience to the consumer. “We could be talking about dark stores, click-and-collect stores or about omnichannel, but the reality is that the primary reason that you open a store is to deliver an experience to the consumer – that cannot go away. I think, the opportunities and the efficiencies that we have built-in during the last 18 months are going to help us in terms of leveraging our business better over a period of time, at least for the next five years, but, clearly, the future lies in a combination of physical and digital – what we call phygital – and what we need to ensure is that the premise on which we are building our business in terms of how we will be able to service our consumers better is what we should look at,” he added.
A phygital business model has altered the way stores of today operate. The pandemic may have added nuances to store operations such as lesser staff and lesser stock, but a phygital model still allows a business to be as profitable. Rohiet Singh, COO, PVH Arvind Fashion Pvt Ltd, sharing his view on how brands are looking at their physical store strategy post pandemic, said, “I think that while there is online happening in a big way, there is a lot of learning for offline as well. A key learning has been: 30-40% lesser stock and higher sales. This has shown that if you still have less but have the right strategy and the right product for the customer, you can still have an extremely profitable business. We are down by about 40% for staffing and we are still able to deliver higher growth. That has also allowed us to relook at how we were staffing our stores and how the service standards were at the store. The old school, pre-COVID thought that ‘more the number of people in the store, more the number of people that can service the customer’ has changed. I think we were way above the optimal level there and some of that was causing a customer to not come to the store. The shift was also aided by the restriction on the number of people coming to the store, which also ensured that only people who were very serious about buying would walk in.” He added that while they may not continue to stay at the same lower level of staffing or stock, they will keep adding incremental short steps, but not completely go back to the old level.
In fact, digital-first brands are also increasingly recognising the importance of physical stores in making and maintaining a connection with the customer. In the recent past, several digital-first fashion brands have opted to open physical stores in order to make their presence felt and build a top-of-the-mind recall for the customer. One such brand that is looking to get closer to the consumer through a physical store is Clovia. It already operates a few stores and is looking to open 40 more in the near future. Speaking about this journey from being an online-only brand to a more phygital model, Pankaj Vermani, Founder and CEO, Clovia, said, “We are more digital-first and offline was something that we built-in later. Over a period of time, as the brand evolves, there is a certainty you start to see in terms of how you are getting closer to the consumer. One is to reach the end consumer through the ‘product’, but there is also a need to get the ‘brand’ closer to the consumer. I think that a store plays a brilliant role there. We just opened five new stores and there are more than 40 that we plan in the coming year. The whole thought process has changed, from the brand getting closer to the consumer to actually delivering profitability as well to the business. But, a little caveat there is that our predominant business has grown from almost 50% to 60% from Tier-II and III markets, and our focus towards building stores is also there. We want to take the whole experience to a small store in a Tier-II, III environment and that is contributing to building the story further.” A mix of traditional learnings and new-age technology are helping the brand gradually build a phygital model that sustains the business.
For Mevin Murden, Director of Education at Istituto Marangoni School of Fashion & Design, Mumbai, the first lesson after the pandemic has been agility in terms of adapting to the situation, offering choice to the customer, and offering that possibility to ensure that luxury consumption continues whether it is online or offline. He added, “I think, businesses have been great in adapting to this new phygital environment. To be honest, from a luxury consumption perspective, you cannot remove the experience from the whole purchase activity. People want to have the in-store experience. Another example is fashion shows. In Europe, all fashion weeks have gone back physically and that whole ritual of luxury fashion has come back. It’s all about agility and it’s all about offering a seamless experience whether it’s online or offline.”
Muhamed Fawaz, CEO, HiLITE Mall, believes that the changes that anyway would have happened in maybe 10 years happened in the last two, causing turbulence. But, looking at the last few months, things have begun to neutralise. “I would say that online sales and offline sales are not just two things, they are part of the customer journey, part of all the touchpoints through which a customer reaches a purchase decision. They definitely go hand-in-hand, but what has happened in stores now is that even if sales have increased from 2019 levels (at least a 10-20% increase for all brands), what a customer expects from a store and what a brand has to provide in a store has changed. Earlier, it was more about selling but now what the customer needs is an experience.” He believes that stores will now have to seem less chaotic with lesser merchandise and fewer staff, and focus more on delivering the experience of the brand to the customer.
In the recent past, brands have witnessed a growth in conversational commerce, facilitating a new way to connect with the customer. Kapoor says that while in the online space social commerce is one of the biggest things, a bigger change has also happened in how brands are approaching the consumer. He added, “With the pandemic, focus has again gone back on the consumer and the product. So, it’s not like we are only trying to fill up the store and trying to sell. It is also about creating the kind of product that the consumer would want. We are also looking at our whole proposition to the consumer. Another change that has happened is that earlier, when we were developing a product, we were trying to develop ways and means to sell that product. We were always thinking offline. Now what has happened is that we are thinking of the consumer as a whole and saying that it is his or her prerogative whether they want to shop online or offline. Am I able to give that same sort of experience, that same sort of information to the consumer? So whether it is a simple thing that I was able to convey through a product tag in a physical environment, how am I able to do it through content now in an online environment? I think that’s where the bigger change is – that we’re thinking digital and somewhere consumers are benefitting because they are able to witness that difference and that is one of the reasons we are seeing this growth for the last three months. Resultantly, we have also become better in terms of giving that experience to the consumer.”
Invention & Sustainability
Second-hand luxury purchases have been picking up around the world and the trend has been witnessed in India as well, albeit at a nascent stage. The millennial consumer is increasingly becoming aware of the impact of his choices on the environment and is looking to minimise his carbon footprint. In doing so, he expects the brands that he shops from to adhere to these practices as well and is now defining his purchases basis these expectations. Consequently, to serve the discerning customer of today, brands are also looking at ways in which they can be more sustainable, be it in terms of the raw material they use or from where they are sourced, how the by-products of the production process are recycled, reused or upcycled, and how generation of waste can be reduced to a minimum. Singh said, “We have been able to work with lower inventories and the by-product of that serves the purpose of sustainability. Also, earlier we were trying to sell to all the footfalls in the store, now we have been able to figure out what the customers in that footfall want and what are those products that fewer customers are still buying when they walk in. In doing this, we are also looking at if we still end up achieving the same kind of numbers we did last year. That has told us what all we can do away with. We’ve seen our stores make a far more spacious inner environment and the experience is more relaxed.”
It is interesting to see that more and more brands are now engaging in ‘responsible fashion’ where it is not just about the planet but also about the people, social responsibility and profits at the same time. Murden added, “Companies and brands are producing responsibly, distributing responsibly, and consumers are also consuming responsibly. There’s no overconsumption. It’s no secret that one can buy less, buy better, reuse and re-sell. Luxury resale is also picking up in India. Sustainability is not a choice anymore. We are dealing with a generation (Gen-Z) that, compared to millennials who voice out a lot, shows up and is not afraid to protest. They are not just informed, they are also very active in the whole process, so it is very interesting that a lot of brands are putting in a lot of effort in being sustainable. As a school, we teach about sustainability and responsibility in the whole curriculum, from fashion business to fashion styling and fashion design. For instance, we have introduced software to make sure we do not waste too much in materials, etc. So, we design everything digitally and then produce it. Sustainability is something that we need to do together.”
A bigger change that Kapoor has witnessed is that for the first time, especially from an Indian context and talking about concepts, it was always a brand trying to propagate something that the consumer wasn’t too concerned with. “They were always looking at more of functional aspect in terms of the product adding value to their fashion quotient or adding some comfort. That was the only way they were able to accept the product or pay a premium for it. What I see is a change, and this started happening pre-pandemic, too. The consumer today is more conscious about where the product is made, whether it is environment-friendly or not and how, once he uses the product, he can ensure that it goes through the right channel to be used again. I think that’s the change that is coming in from the consumer’s side and the consumers are ready to pay a premium for it,” he said. In fact, Kapoor advocates the idea of not only thinking of the millennials but thinking about Generation Alpha as well – the consumers of tomorrow. Slowly, they are going to force brands to be basic and bare minimum.
Fawaz believes that sustainability is common across industries. In fashion, it is coming up like it is in any other industry. Today, people value being sustainable and businesses need to look at what the customer demands. Sustainability is just one such thing.
In conclusion, brands and companies need to be agile and not limit themselves to operating on a single channel. They must be open to change and listen to the customer in creating a product that the consumer would want, not a product that they assume a consumer would want. Processes need to be streamlined and excesses in both the production process and the in-store experience need to be done away with. Seamless, simple and sustainable – that should be the mantra for brands on today’s fashion environment.
Tips from Experts
“Looking at the pandemic, the slowdown and the actions we took to reset the business have allowed us to go back to basics and start listening to the customer again. We believed we were listening to them, but we soon realised that we weren’t necessarily; we weren’t aware of what people wanted. This reset has allowed us to make the business healthier” – Rohiet Singh
“The way brands use the retail store is definitely one thing that should change. From the perspective of malls, things are more about the experience than about shopping. We are looking at a higher amount of entertainment and experience in the mall; the proportion of retail and fashion inside the mall is coming down” – Muhamed Fawaz
“It is very interesting to hear people talk about ‘retailtainment’ now. People are going to stores for the experience. Purchase is now just a transaction that will happen in the store. Brands are now creating that essential long-term emotional connection with the consumer and that’s what brings loyalty. Using the store space for installations or for activities – that’s the future of luxury stores” – Mevin Murden
“Every brand that has survived is worth its salt. It takes cues from the customer and the customer’s cue is so strong that there is no way to ignore it. If you have to survive and strive, you will have to change yourself. The last two years have made the customer and us very impatient. So, take care of your customer, do it very fast and do it absolutely immaculately” – Pankaj Vermani
“We have to look into refining what we want the store to do – do we want to deliver an experience, do we want to just do sales, do we want to sell online, do we want to sell offline – basis that you decide whether you need a bigger box or a smaller box. We also need to look at leveraging technology and leveraging the changes around us to deliver an experience to the consumer in whichever space one operates in – online, offline, multi-brand store, or own site and platform. I think that’s where the future is” – Manish Kapoor