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Retail Realigned: What’s driving business today?

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Much has been said about how the COVID-19 pandemic has altered the way businesses think and operate. In the fashion retail world, where product lifecycle from creation to delivery was once a long-drawn process, business are now looking to be more agile and quick, invest more in technology to make systems more automated, and lead with empathy. People and culture have taken precedence over sales generation. Experts from the sector share some key insights with us on changing yardsticks.

Panellists

Abhishek Ganguly, MD & Head – South Asia, Puma India
Devang Sampat, CEO, Cinepolis India
Rahul Vira, CEO, Skechers India
Vineet Gautam, CEO, Bestseller India
Vishak Kumar, CEO, Madura Fashion & Lifestyle, Aditya Birla Fashion and Retail Limited (ABFRL)
Session Moderator: Anurag Mathur, Partner & Leader – Consumer and Retail business, Strategy, part of the PwC network

The last quarter of year 2021 has been positive for fashion retail across categories. But, this relief comes after much turmoil over the 18 months preceding it. Brands have had a roller-coaster ride and business has seen several ups & downs. And those that survived have a telling account of their learnings.

Sharing his experience of those 18 months, Abhishek Ganguly, MD & Head – South Asia, Puma India, speaking at the Phygital Retail Convention in Mumbai in November, said, “Our category did go through a positive trend which has acted in our favour. But if I go back in time, we were all taken aback when COVID struck and lockdowns happened. It now seems a long way down, but a lot of things have changed fundamentally. Businesses have realised the need for speed, nimbleness and flexibility – things we probably did not focus on in the past, especially in our industry of fashion which has a long lifecycle from product creation to reaching the consumer. We all have to relook at our business. But, I would say that if you take the challenge that we all went through, the second wave was virulent for our teams. A lot of us lost team members, but in the midst of all this, to carry on because business has to go on, required leadership and everyone to really stand up. So, one of the things I take forward, which I think is extremely important in such a dynamic environment, is empathetic leadership at the core of whatever we do. It has become critical for all industries and all companies, and that is one of the big takeaways that I have had over the last 18 months.”

The pandemic has definitely made people more empathetic. Echoing Ganguly’s thoughts, Rahul Vira, CEO, Skechers India, said, “One of the key learnings we have had in the last 18 months is that people have become so important. There were days when we were all sitting at home or operating from the constraints of our room, but our staff was operating the stores. Respecting those people actually became a very important thing while a lot of other things also happened, such as business planning, product lifecycle planning, supply chain planning, negotiations with malls, etc. But, the guy standing at the front level, servicing the customer with a mask on, was really touching. Valuing people became a very important learning during that time.”
Even while business was severely impacted, companies were working hard to get their staff vaccinated, a challenge that kept them on their toes for most part of the pandemic. Sharing his view, Vineet Gautam, CEO, Bestseller India, said, “Between finding stocks and running stores, we were trying to find vaccines, so it was a very different time. Today, almost 99% of our employees are fully vaccinated, which I think is a big achievement. When I look at our counterparts in Europe, some of them have not even got a single dose. Still, I think a bigger challenge was how we could be fluid and keep working.”
Battling a pandemic was not on the agenda of many a business continuity plan, so keeping business going while being an empathetic leader was truly a test for many. Gautam added, “This situation was something we were not used to and couldn’t forecast. You do business continuity, but you never know when the business will shut 100% and when it would suddenly open again. This was the time people wanted to see leadership in the forefront. Not losing people that time was most critical. Protecting them and their families was very important to us. Another thing we learnt was that this was a time you could actually make some amends. In the flow of business, a lot of inefficiencies are ignored. But when you have a hard stop like this, you start to revaluate everything. That has given us a lot of positivity. We have come out stronger as an organisation and as a business.”
With lockdowns imposed across the country at the beginning of the year and people working from home, a fashion category that suffered a huge setback was formal wear. The very definition of work wear had become more casual and comfortable, and people refrained from spending on formal wear. Vishak Kumar, CEO, Madura Fashion & Lifestyle, Aditya Birla Fashion and Retail Limited (ABFRL), said, “Survive, revive, grow – we thought that was it, but then there was Survive 2.0, Revive 2.0 and Grow 2.0. This was a time for reinvention and introspection. This was also a time for businesses, organisations, leaders and individuals to look at ‘good karma’ – taking care of the people. A strong organisation has strong relationships; that was another realisation for a lot of people – how strong relationships can support each other. And, of course, it gave tremendous opportunity to right a lot of wrongs of the industry.”

Speaking at the Convention, Devang Sampat, CEO, Cinepolis India, also spoke about his learnings from the pandemic, especially hailing from a sector that had completely shut down – cinema. Faced by an adversity like none other, Cinepolis India strategized to strengthen business basis key fundamental pillars. “The first pillar for us – being the first ones to close and the last ones to open – was tying up with the government and assure that we were taking the right precautions and that the cinema was not the most dangerous place to go to even during the COVID period. The second pillar was to liaison with our content owner because content always has the option of exploring other avenues of exploiting their revenues. The third was going to mall owners and making them understand how badly the cinema industry was hit. Fortunately for us, all three pillars reacted positively. We laid down new SOPs. At the backend, we improved on processes and built in efficiencies with a people-first approach.”

Will buoyancies last?

The COVID-19 pandemic may have altered the way businesses were run, helping eliminate a lot of inefficiencies in the process and people coming back with increased fervour to shop and be out of their homes. But, a looming question is how long these buoyancies will last. After the much-talked-about revenge shopping, will people go back to the normal cycle? Which are the key consumer behaviours that will last and which won’t?
Sharing his view, Ganguly said, “Consumers adopting and endorsing the digital medium is a habit now. Today, even older customers aged 60 years and beyond have got used to digital platforms for convenience. I think, this is a habit and will continue. People also discover products online today, and this was only hastened by COVID as people stayed indoors. I think this is going to stay. Hopefully, in our industry, we will see focus on health and wellness across different tiers and cities, across genders, etc. Things that would not continue are very difficult to ascertain. That said, I think, in offline shopping, targeted shopping, where people come in just to buy a particular product and leave, would not last because shopping will get back to being an experience and people would see that as a part of their life’s entertainment.”

To this, Vira added that the consumption of digital, which had increased immensely, would continue. “There is no right format to say that this will stay and this will not stay. The situation is evolving, technology is moving faster, and we should be ready to expect change in the way the customer consumes. Having said that, offline retail, online retail and the consumer transcending between these two formats is something that is going to continue for a long period of time,” he said.

While the consumption of digital has skyrocketed, a key facet of business that was already on the cards for some but has become a more certain outcome of the pandemic is the focus on sustainability. Kumar added, “There has been enough greenwashing. It is time we actually did things that were truly sustainable and reduced the negative impact. We should use this almost as a trigger to create that change and between us, in this industry, must pledge that we will actually accelerate all the things that we need to do from a sustainability point of view.”
Agreeing, Gautam added that a lot of brands had already started the journey and those that had not, should begin soon. “This is no more going to be about one of the things to do; it is one of the things to ‘must do’ now,” he asserted.

Sampat added that it is important now to take note of a key change in consumer behaviour – the desire for an experience rather than a product. He added that consumers are now more cautious in choosing where they are going and what are they experiencing compared to what they experienced pre-COVID. “In the big scheme of things, not compromising on consumer experience and how we up the game for them will be the mantra,” he said.

Change for the better

Companies have spent the last 18 months repairing and reviving business. But, which aspect of the business model have they needed to change and what areas have they needed to invest in, even if disproportionately, to ensure business continues to grow profitably?

Bestseller India is putting a lot of energy into expanding its portfolio of brick-and-mortar stores. According to Gautam, one thing that consumers now need is space within the store. The days of small, cramped spaces are long gone. “Brick and mortar investments remain, and are actually getting accelerated. Also, omnichannel was only being spoken about earlier, but is being done now. I think, investment in terms of technology to ensure that stock visibility and availability is there and you are able to service that is definitely a larger investment,” he said, adding that what is equally important is to invest in people and grow talent internally.

For Kumar, it is the ability to be more nimble and hence respond with much smaller cycle times through better digital initiative and through better supply chain that is going to be a game changer. “We have moved from a 12-season model and we keep getting faster and faster at understanding consumer trends and being able to provide product solutions. But, investment into brands and investment in 2021 is even more different and difficult than the past. It is an extremely cluttered space, so, to be relevant to the consumers through consumer experiences both in store and with products as well as through brand building exercises is going to be a vital piece. We are also looking at how we can become more nimble and agile, how we can vertically integrate even more so that we are able to handle a much larger part of the entire supply chain,” he added.

With the business world continuously evolving, investments, too, are driven by its dynamics. Ganguly added that with the athleisure category growing at a fast pace, two things that they would like to focus on as a brand are experience and convenience. “For us, that’s the outcome of all the investments that we do. The way I look at it is – this is the right time for us to invest as a company in India and we need to ensure that our consumers get the right experience and have convenience, and that can only happen if you have that culture going, which is future-thinking, ever-evolving, quick and fast,” he said.
Vira believes that what is being done in terms of expanding stores is where investments are going; technology is where investments are going. “In fact, one major area where investments are growing is supply chain planning. That is a major thrust, coupled with technology. Manpower and getting the right people – those are the challenges and I hope at some time we are able to overcome them, but largely, at this point of time – the way India has recovered and the way we are seeing sales – we do expect there would be some amount of normalisation that would come in. We are a country poised for great growth and as an organisation, our focus is to be ready for that growth that is going to come in,” he concluded.