COVID-19 has fast-tracked the retail industry in India by a decade, revolutionizing the way brands operate, run, and grow their businesses, as well as how consumers choose to purchase. 

A survey by EY shows ~77 percent of consumers have chosen, recommended, or paid more for a brand that provides a personalized experience. It is also estimated that more than half of the customers will expect brands to anticipate their needs and make relevant suggestions before they make any purchase. While this gives the apparel industry an opportunity to innovate and boost sales, it also comes with a question: How should the apparel industry operate, attract customers, and sustain the momentum in 2022 and beyond?

India’s apparel market is expected to touch Rs 5,781 billion by 2024 (as per a report by BCG and RAI). The study also states that the wardrobe of consumers will continue to evolve and shift towards comfort wear owing to the pandemic and ongoing work from home scenario. While the apparel industry faced a slowdown in 2020, it did observe new changes like digital fashion shows, the rise of video commerce, online shopping, among others. However, apparel is one of the industries where consumer buying behavior is a blend of physical and digital channels i.e. phygital. 

While there has been a rise in e-commerce platforms, brick-and-mortar will still remain relevant. We cannot discard physical evidence as a whole as things will return back to normal sooner or later. However, there is no denying that the pandemic has made digital commerce stronger. Companies that leveraged digital technologies thrived. 

A report suggests that there has been an increase in online buying, however, differences were seen in income groups on the priority of buying channels – modern retail was still the biggest channel of purchase for high-income groups whereas low-income groups have moved towards local shops/boutiques post-Covid. Thus, the apparel industry will also have to re-innovate in order to meet customer demands and sustain momentum.

Some of the factors that retailers can consider to sustain momentum are as follows: 

-    Growing Relevance of Dark Stores: An interesting trend that is gaining traction will be sales outsourcing using Dark Stores. Developed countries have started using dark stores to move sales to emerging markets for a huge reduction in costs. In simpler terms, a dark store will allow retailers to offer their products anytime and anywhere. As retailers strive for customer acquisition and retention in real-time across multiple touchpoints, they should look at incorporating dark stores to increase their profit margins.

-    Strengthening Online Brand Presence: There is no denying that the rise of social commerce holds a lot of potential in influencing people’s choices. We are in an era where consumers have instant access to the latest trends. Given the fact that digitization is gaining rapid momentum, retailers will have to start looking at ways to augment their digital presence and engage with their customers at every stage of the consumer acquisition funnel (awareness to delight stage). Retail players who have built an online presence or are in the process will definitely have an added advantage in terms of customer engagement. 

READ MORE: The Rise of the Organic Apparel Market in India

-    Shift in Focus From Top Tier Markets: The apparel industry should accelerate expanding to tier-II and tier-III cities as there has been a paradigm shift in consumer behavior and consumption pattern in these markets. The demand is rightly complemented through infrastructure support, investment potential in these cities, unaddressed demand of organized brands, lower real estate cost, availability of cheap labor, expansion of logistics networks by e-commerce players, easy finance, etc. 

A report by ICICI securities indicates tier-II and tier-III cities are seeing a growing trend, in terms of a bigger volume of e-commerce sales, with a significant increase to 46 percent YoY. Thus, it boils down to the fact that retailers will need to evaluate pivotal changes in their consumer value proposition and business models to set them apart for a successful future.

-    Leveraging the Right Technology: Undoubtedly, technologies like AR and VR, if leveraged effectively, can play a pivotal role in the consumer buying journey. For example, a leading apparel store had launched a studio in India that used AR to display outfits to customers. While having an online brand presence is extremely important, innovations like AR-based virtual try-ons can help drive sales. As curation based on personal taste is gaining relevance, apparel retailers will have to leverage technology to enhance the online and offline experiences of customers coupled with the right digital marketing channels and seamless checkouts. 

-    Growing Relevance of Mobile, Video, and Social Media Commerce: People have spent a larger amount of time on mobile shopping and many of them even experimented for the first time driven by multiple factors such as lockdown restrictions, affordable smart devices, access to the internet, rise in disposable income, infrastructure support by e-commerce players, among others. Being one of the most important customer-facing industries, the apparel industry can leverage video commerce to engage with its customers. Social media platforms are excellent options for brands to be present close to their customers and reach out to them on their favorite channels through a fully integrated digital commerce offering. 

-    Wardrobe Preferences of the Indian Audience: This is an important factor that should be considered for brands setting up their shops/outlets in India. Wardrobe preference shifts very quickly in the apparel industry. In fact, a report by BCG and RAI indicates that COVID-19 has resulted in wardrobe getting casualized – there is a fast growth of categories like athleisure where consumers are preferring comfort over formals. Though we don’t know how long this trend is here to stay but technologies like deep learning, ML combined with AI-based recommendations can help retailers to plan strategically by predicting trends and the health of the inventory. AI-based inventory management systems can help make demand forecasts more accurate and also improve a retailer’s ability to satisfy a customer who walks in the store whether physically or online. This will enable brands to further reduce waste, produce and deliver adequate products at the right time, and provide better personalization to customers.

Moreover, certain aspects that the apparel industry has to consider to remain relevant include: re-imagining the trends influencing the future that will include a change in the technology landscape, a shift in consumer buying behavior, ways of incentivizing customers, wardrobe preferences of consumers, long term business ambitions, supply chain agility, digital capabilities, among others to plan the way forward.