BackApparel retailers pin revival hope on summer collections
''Retailers saw a surge in work-from-home attire as customers scrimped on formal clothing in the absence of office routine and social occasions. Apparel retailers are expected to close FY21 with a 40-45% decline in revenues''
PremiumNEW DELHI : Apparel retailers are now gearing up for their summer collections in the hope of getting close to their 2019 business by middle of next year as they recover from dismal formal wear and occasion wear sales owing to the pandemic and subsequent lockdown.
Retailers saw a surge in work-from-home attire as customers scrimped on formal clothing in the absence of office routine and social occasions. Apparel retailers are expected to close FY21 with a 40-45% decline in revenues, India Ratings and Research (Ind-Ra) said in a November report.
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Retailers are entering the next year with a sense of caution, better digital presence and planning their inventory in moderation. “I think for everybody, it is caution only. There is a bit of a thought that maybe business will improve. But every time you think that things are improving, there is some news to the contrary, like the travel restriction from the UK (as a covid 19 variant threatens the country). People are planning but none of them are planning very huge quantities. Retailers are thinking they will buy things nearer to the season," said Kumar Rajagopalan, CEO, Retailers Association of India (RAI).
Rajagopalan said that retailers are expecting a 70-80% of recovery in business next year as compared to 2019—given that summer of 2020 was largely eclipsed by the lockdown restrictions.
Analysts tracking the sector expect next year to be marked with better gains for value retailers and those with a better presence online. Apparel retail companies are likely to see gradual demand recovery in CY21 if concerns around covid recede by mid-CY21. After sharp 40% year-on-year decline in CY20, revenues may inch towards CY19-levels in CY21, analysts at ICICI Securities said in a 16 December report on the brands and textiles segment.
The sector has witnessed gradual recovery post relaxation of lockdowns, and sales have recovered to about 70% of pre-covid levels in offline channels, the report said.
Apparel, footwear and accessories retailer Lifestyle said it expects recovery to be around 90-95% by summer of 2021 and it is going back to its plan of 2019—adding fresh new stock monthly and placing orders for its summer collection. “2020 was a challenge because summer was a complete washout, with practically no sales for two-and-a-half months. A lot of that got shifted into winter and therefore in certain categories we were selling a bit of summer stocks in winter. But summer is going to be a fresh new start with the completely new launch new stocks landing every month and all of that is on track," said Rishi Vasudev, chief executive officer, Lifestyle and Home Centre formats, part of the Landmark Group.
Most retailers had to cut back on festive and winter wear orders for the current year and liquidate their summer inventory. Retailers also shut loss-making stores, paused expansion and re-negotiated rentals.
Some 2020 learnings will trickle into the new year, especially brands using the digital mediums to both market and sell their apparel online, said RAI’s Rajagopalan.
Analysts at ICICI Securities said that companies have partially resumed purchases for SS’21 collections, given demand optimism seen during recent festive sales.
Retailer Woodland said it will buy less inventory for now and fill in stocks closer to the season. “We plan about a year in advance, so we already have planned our summer also. We've not gone overboard but have been conservative. If there's more demand we have production facilities or outsourcing partners and can always increase the inventory," said Harkirat Singh, managing director, Woodland.
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