‘Retail inventory has piled up’

Incentivise creation of jobs, MD of Clarks India urges govt.

The domestic footwear industry was among the earliest to be impacted by the pandemic as the COVID-19 lockdown restricted people’s movement. It is limping back to normalcy following a shift in marketing strategy, according to N. Mohan, MD of British shoemaker Clarks India. Edited excerpts from an interview:

Footwear was the among the earliest to be impacted by the pandemic. Are you back on track?

COVID-19 severely affected the retail industry, more so the footwear industry because people did not step out of their homes for a very long time. As an industry, we witnessed a sharp drop in sales throughout the period. We are confident that the business will be back to previous year levels in 2021.

How was your sales performance over the last nine months?

With the announcement of lockdown towards the end of March, all malls and high streets were shut… closing down our stores in major metros and other cities for an uncertain period.

There were ‘no sales’ till June, except for some States where the regulations were not so stringent.

The business gradually started with some sales coming from our e-commerce channel after the restrictions were eased but didn’t speed up due to consumer sentiment being at an all-time low. However, the major thrust to our business came from the pre-festival and festival season in September-November due to pent-up demand, helping us 70-75% of our previous year’s numbers.

How did you address the situation?

The pandemic led us to revisit our plans and pivot our strategy around three key areas — product, selling environment and communications. Growing ‘remote-working’ led us to retrieving more athleisure products from our archives, which would provide comfort while being fashionable.

These products would suit western and traditional outfits, providing flexibility to our consumers.

We shifted our focus from brick-and-mortar to ‘unified commerce’ and towards digital. New processes were introduced to activate our omni-channel and B2B businesses, which helped us reach 75% of last year’s actuals.

What kind of losses did the industry suffer from April to December on account of cancellations by overseas buyers?

Worldwide, due to frequent lockdowns, many brands and retailers are sitting on a huge inventory. Consequently, industry exports are down by 34.8% and imports by 50.3%.

In India, many brands will end up with 55 -60% of last year’s sales.

Also, there is a huge change in the type of footwear now preferred due to the change in lifestyle and people adapting to the new normal. It may take at least two seasons more for inventories to normalise. From spring- summer 2022, things will rebound as by then, customer confidence will improve. I sincerely feel there will be a huge demand thanks to the ‘revenge shoppers’ that will help the industry bounce back.

Have you started getting orders for the forthcoming season?

We have started placing orders for the next season, which are 20% lower than the previous spring-summer 21 season, but we feel our autumn-winter 21 season will be much stronger and with the advent of vaccines, customer confidence will go up.

Your expectations from the Budget?

Conducive policies in terms of ease-of-doing business, increased focus on by incentivising people creating jobs and limited restrictions on imports of finished leather goods will help. In fact, the Centre should introduce a floor price to stop cheap imports and under-invoicing.

We also believe unless the Indian industry is exposed to competition, we will not be able to improve the quality of products.

We must enhance India’s image as a preferred manufacturing hub in terms of quality and productivity.

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