The word “Recession” is the buzzword around the globe these days and has become the most famous word. As I can’t say that it has become the most famous “brand”. Recession means slowdown in growth or may be no growth at all. There is a positive side too; now companies are becoming more focused, realizing the value of managing costs and taking action to improve the customer loyalty and Brand image. Moreover despite the global economic slowdown, Indian retailers are hopeful of India growth story. As per Mr Tarun Joshi, CEO and MD of Brandhouse Retails said “Fashion retail has not been impacted in a big way. Not even 0.5 per cent of the working population has been hit in India.” “The Indian economy is more stable than other economies across the world and one must not confuse India with the rest of the world”, reiterated Mr Sandeep Kulhalli, V-P, Retail and Marketing, Tanishq.
I would be discussing certain measures which a fashion organization can take to tackle recession in an effective manner. First measure that the fashion organizations should take is to have greater focus on their core competences. This means that organizations should focus their efforts on those activities which they do well and outsource non-core activities. This will give twin benefits of improving quality and reducing costs.
Another measure which I will suggest is to manage the costs in an effective manner. Let me discuss the case of Future group here. As per the economic times, “It is the only Indian retailer that has managed to grow sales by 25%. Its operating margin crossed the 10%-mark, up 1.4% year-on-year, while manpower and operating costs fell 1.33% and 1.78%, respectively.” This was possible due to their early start of cost cutting efforts. For this they outsourced the non core functions like I/T and started optimizing the costs. Moreover its rentals are less than the other players. I will give another example, but of a Non –Fashion company. Infosys, In an internal communication sent to employees, Infosys CEO Kris Gopalakrishnan “has urged the employees as the stake holders in the company to help in cutting the operating cost and controlling expenditure.” For this the company has created a website and is seeking suggestions and ideas from the employees. Up till not the company has already received 1000 plus ideas.
Last thing which I will suggest is to do the customer profiling. This is the right time to utilize the spare time for building tighter bond with the consumers. Fashion companies should consider the different sub-groups of customers they have and how they differ in terms of types of purchase, cost of purchases, servicing needs, communication methods, total purchase transaction time, post-purchase needs, complaint issues, and others. This will help in profiling. Profiling helps in understanding everything from how to best service the customer to delineating the best methods for marketing, selling, and retaining these customers. The rule of the thumb is to never assume anything about your customers.
For more details on the concepts discussed in the article:
References:
http://www1.economictimes.indiatimes.com/News/News-By-Industry/Services/Retailing/Biyanis-sixth-sense-saves-the-day-for-Pantaloon-Retail-/articleshow/4279290.cms
http://www.mindtools.com/pages/article/newTMC_94.htm.
http://ibnlive.in.com/news/wipro-infosys-employee-cost-cutting-measures/79592-7.html. It is a snapshot of the page as it appeared on 20 Mar 2009 04:41:26 GMT.
http://www.ibef.org/artdispview.aspx?in=63&art_id=21574&cat_id=376&page=1
http://blogs.bnet.com/harvard/?p=1045&tag=nl.e808
About the Author:
Rahul Jain is an MBA from MDI (1998 batch) and holds his B Com (Hons) from Delhi’ Hansraj College. He is also a qualified fellow company secretary and is currently working as Director in - Sundeep Global Ltd and Sundeep Knitwear Industries Ltd. He is visiting faculty for various Education Institutions such as MDI Gurgaon, AIMA, JIMS, NIFM, Pearl Academy of Fashion, TIME, ICSI, ICAI for subjects including Financial Management, Financial and Management Accounting, Security Analysis & Portfolio Management, Corporate Finance, Corporate Strategy, Personality development etc. He has written numerous research papers and articles. He is the CEO of www.globalexperts4u.com
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