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Wary apparel firms look to liquidate stocks, move online

Apparel retailer Madame has cut its winter order by almost 70%, focusing instead on using its existing unsold spring-summer inventory for the upcoming autumn-winter season in August.Premium
Apparel retailer Madame has cut its winter order by almost 70%, focusing instead on using its existing unsold spring-summer inventory for the upcoming autumn-winter season in August.

  • Apparel retailers have cut future orders and are in talks with more e-commerce firms to ramp up sales online
  • As the pandemic sways shopping behaviour, retailers said they are also looking at stepping up their presence online

NEW DELHI : Shuttered apparel retailers stuck with a season’s worth of inventory are reducing future orders and will recycle their existing inventory to last another season, in a bid to tide over the lockdown that has seen sales slump.

Retailers Mint spoke to said they have slashed future orders and are in talks with more e-commerce players to ramp up sales online. Expansion plans are on hold too, as shop owners try and save cash in a scenario where it could be months before shoppers begin trickling into stores.

Apparel retailer Madame has cut its winter order by almost 70%, focusing instead on using its existing unsold spring-summer inventory for the upcoming autumn-winter season in August. It will also liquidate stocks at a discount when sales resume.

“Of the entire order cycle, whatever we were holding for the summer, half has been shifted to August as autumn orders have been cancelled. The rest we will spike up with discounts and liquidate them," said Akhil Jain, executive director, Jain Amar Clothing, which manufactures and retails the Madame brand through 155 stores.

India has been under a tight month-long lockdown that has wiped out sales for apparel, footwear and accessories retailers, among others. Now, as the country prepares to partially ease restrictions from 3 May, retailers say they remain uncertain about how consumer demand will shore up as shoppers stay away from crowded places. This, they said, has pushed them to review budgeting and merchandising plans for the year.

Madame has also put on hold all expansion and renovation plans till 31 March 2021, as the cash-flow situation is tense, Jain said. Compared to the last fiscal, Jain said the firm has cut sales forecast by 35-40%.

Footwear retailer Woodland said it will halt fresh collections for markets in the south and west and use up stocks in stores right now.
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Footwear retailer Woodland said it will halt fresh collections for markets in the south and west and use up stocks in stores right now.

Apparel and footwear retailer Woodland said it will halt fresh collections for markets in the south and west this year and use up stocks in stores right now.

“Even if the lockdown opens, whether consumers will walk into stores—there is uncertainty. So there’s no point making new merchandise. We will play with existing stock, adding a few more for the winter line which is mostly north-India centric," Harkirat Singh, managing director, Woodland, said, adding that given the uncertainty over demand and opening up of existing stores, the retailer has put expansion plans on hold.

BESTSELLER India that manages fashion brands such as Vero Moda, Only, and Jack & Jones here said the company has put on hold all expansion plans for the next 6 to 9 months. The retailer’s spring summer inventory will not be offered at “deep discounts or liquidation as the weather conditions in India are very different to that of Europe so we can in fact carry forward our spring summer collection," said Vineet Gautam, CEO & Country Head, BESTSELLER India. Gautam added that e-commerce as a platform will "definitely get a head start" once the lockdowns ease. "We already partner with majority of platforms. Those relationships are only getting stronger day by day," he said, but did not discount the ability of physical retail to bounce back gradually.

As the pandemic sways shopping behaviour, retailers said they are also looking at stepping up their presence online. Madame’s Jain said the retailer is anticipating a scenario where the share of online sales will get a huge fillip. “We will pass our unsold offline inventory online," he said.

Woodland’s Singh also said the retailer will push online sales. “We are planning to launch a sale with our partners such as Amazon, Flipkart and Myntra as soon as lockdown eases," he added.

Retailers Association of India (RAI), on several occasions, has alluded to the “severe liquidity challenges" being faced by the retail industry that employs over 15 million people. RAI has been making desperate pleas to the government, as well as landlords, seeking concessions in pay and rentals in a scenario where there is nil business.

As and when India emerges from the pandemic, a slump in economic activity will also have deep bearings on discretionary spending for months to come, leading to significantly lower sales forecast. This, said analysts, is prompting retailers to reduce any expansion plans for the year.

“Retailers will relook at their store portfolio—wherever they see gestation periods are high, wherever they see they do not have the right rental model, they will either let go of stores or shrink square footage. Expansion looks very tough in the near term unless stronger players look at this as an opportune time to pick and renegotiate good real-estate," said Rachit Mathur, India leader, consumer and retail practice, at Boston Consulting Group.

Jain said the retailer has shortlisted 12 stores that can be shut if demand fails to improve.

“Any expansions will be ‘extremely tight’ and be stress-tested multiple times," said Amrish Kumar, managing director at fashion house Ritu Kumar. The retailer, which has more than 90 stores across brands, has also scaled back on orders for the autumn-winter .

“Given the economy will dip in to a recession, it will change consumer behaviour. Now more than ever, it is important that every retailer gives small treats to customers," Sumit Dhingra, managing director- India, Sri Lanka and Nepal, Crocs, said at a RAI webinar last month. The retailer will take cues from the brand’s experience and recovery in China, he said, adding that like China, “promotions will be key for recovery".

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