Apparel companies in India struggle with Covid-19 demand shock

02 April 2020 3 min. read
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India’s apparel sector is devising ways to deal with the sudden dip in revenues brought about by the Covid-19 crisis, according to a senior advisor at Alvarez & Marsal. Rishav Jain on how footfall at apparel shops has plummeted and its impact. 

“In certain cases the drop is as high as 80-100 per cent,” said Jain, who is a Senior Director and Consumer Retail sector lead at Alvarez & Marsal. Such a scenario is expected in light of the recent lockdowns imposed across the country, which has spelled disaster for the brick & mortar retail sector.

What makes matters worse for the apparel sector, according to Jain, is that the lockdown came at an awkward time in terms of supplies and inventory. “A key issue for the apparel sector is that a large part of the spring-summer collection has already arrived for most players. Inventory levels are high, but footfalls have dropped significantly.”

For businesses that have an online presence, the outlook is not as devastating. Online retail is expected to grow significantly over the next few days, as the world of business and commerce moves online. Examples abound of businesses moving their operations online, with some even starting a ‘work from home’ apparel collection.

Apparel companies in India struggle with Covid-19 demand shock

Business Today reports on the new ‘work from home’ line launched by Label Life, a women’s apparel brand. The style in comfort concept being marketed by Label Life is one of many creative ways that apparel brands have found to navigate the current circumstances. Operating in a thriving ecommerce market like India, these businesses are more likely to find a way out.

Companies that rely on brick & mortar stores, meanwhile, have another variety of challenges to navigate. For them, the option of generating sales has all but been written off under the lockdown, shifting their priority to damage control measures. Jain details the various ways in which these businesses are looking to cut costs and manage with minimal revenues.

“Retailers and brands are trying to manage vendor payments cycles, discussing delay in rental payouts with landlords, trying to stop all kinds of frill expenses. Most players are also trying to use this opportunity to rationalise their underperforming stores as well,” he explained.

The retail sector is not alone in its struggles, of course. Other sectors are also having to be creative, both in terms of maintaining some revenue flow under the lockdown measures and in terms of ensuring the survival of their business in light of financial strain, which is all but inevitable at present