TRANSFORM OR DIE
Business Today|May 31, 2020
TRANSFORM OR DIE
The coronavirus pandemic is forcing companies to reimagine and reinvent
AJITA SHASHIDHAR AND SONAL KHETARPAL

A typical lockdown day for Saugata Gupta, Managing Director of the ₹7,315 crore fast-moving consumer goods (FMCG) major Marico, is a series of Zoom and Microsoft Teams meetings. Most of them are about dealing with the enormous challenge of supplying essentials like Saffola oil and Parachute hair oil to consumers across the country. As traditional distribution networks have ground to a halt, the FMCG major has been desperately inking deals with third-party distribution companies to quickly create bridges to reach consumers.

The quickest way, Marico realised, was to set up a tile ordering facility where call centre workers ring up retailers and take orders directly instead of going via distributors. Yet, in the midst of all the chaos, when Gupta looks at Marico’s Q4 results — with 7 per cent dip in sales and 3 per cent in volumes — he can’t help think what else he could have done to reinvent the business and reduce risks. His answer so far: think hard, think short, and do it quickly.

Across India, in the wake of the Covid-19 pandemic and the lockdown, businesses, big and small, are seriously rethinking about how to transform themselves to survive the crisis. While companies such as Hindustan Unilever (HUL), PVR and Pidilite are looking at conserving cash to save themselves, for retailers such as Arvind, Croma and Titan, it’s all about setting up a robust omnichannel business model. Mall owners such as DLF and Nexus Malls are preparing to go all out to reassure consumers that shopping with them is safe.

“The pandemic is a black swan event as one can’t predict what will be the fate of people and businesses on the other side. However, I wonder whether organisations can move to a quarter-on-quarter planning cycle instead of annual plans. Risk management has to be given far more importance,” says Gupta. Most large corporates are accustomed to working on three- to five-year plans and yearly budgets. Gupta is hinting at moving from longterm planning to thinking for the short term.

Gupta is not alone. Suman Saha, Chief Operating Officer, Raymond Apparel, backs short-burst planning cycles. The pandemic has made most apparel brands’ decades-old strategy of planning for two major fashion cycles — spring-summer and autumn-winter — redundant. “We are a multi-channel brand company. Our way of doing business is seasonal. We walk a few months backwards in terms of actual demand; and it has been a successful model. We think what is going to be produced ahead of time and our channel partners tell us the quantity they need and we produce on that basis,” says Saha. “Now, outlets are saying, orders are confirmed, but my demand has gone down. Therefore, the biggest re-invention for apparel brands will involve shorter market cycles. Companies will be forced to produce shorter lead time products or re-engineer the supply chain really well so that they are closer to demand.”

That will mean greater complexity and more permutations and combinations of offerings through the year. Instead of spring-summer and autumn-winter, there will be summer, monsoon and winter collections in India, or even Diwali, Eid and New Year collections. The biggest pain point for most apparel brands has been pile-up of inventory. “When the lockdown was announced, we were creating a collection for July-August-September, which is autumn-winter. For this collection, our partners had booked in January-February, and we had confirmed orders. Going forward, we may need to delay our product ordering cycle to as late as May-June, so that we have a lot more inputs. If trends are changing, if consumer reaction is changing, this will help us factor in all that,” says Saha.

Staying Relevant

While Marico and Raymond are looking at strategic matic tweaks to their business model, the rest of India Inc. is considering ways to re-imagine and re-invent the way they were doing business before coronavirus brought it to a standstill.

As health and hygiene become mantras on the other side of the lockdown, consumer goods companies are rolling out new product ranges. Marico has not just extended its brand Mediker to hand sanitisers, it has also launched Veggie Clean, a vegetable and fruit cleaning solution, which promises to remove germs, bacteria and chemicals present on surface of fruits and vegetables. Godrej Appliances is launching a high-temperature washing option (which promises to kill germs) in semi-auto-washing machines. HUL has launched extensions for three of its brands – Lifebuoy Germ Kill Spray, Domex Wipes and Surf Excel Anti-Germ Wash Booster. ITC has launched Savlon Surface Disinfectant Spray and Savlon Hexa, a stronger hand sanitiser variant.

A bigger challenge for FMCG majors is re-imagining the supply chain and distribution network, which has come to a virtual standstill during the lockdown. For retail, hospitality or multiplexes, it is a question of survival. The retail sector, which accounts for 40 per cent of consumption, took a $30 billion hit due to Covid-19 in March. With the third phase of the lockdown, retailers have been out of business for all of April and much of May. According to the Retailers Association of India, by end-February 2020, business had dropped to 20-25 per cent and there has been a further dip of 15 per cent in the last month and a half. With earnings being virtually zero, and the new normal likely to be all about social distancing and people largely staying indoors, these businesses are desperately looking at ways to stay afloat. From contactless shopping in malls and consumer durables brands launching Covidrelevant products to food companies creating more eatat-home moments and five-star hotels delivering exotic meal experiences in homes, Indian businesses are letting loose their imagination in order to stay relevant.

The biggest challenge for a lifestyle major like The Titan Company is how to attract a person sitting at home to buy a piece of jewellery, watch or perfume. Titan MD C.K. Venkataraman says his teams have been thinking hard to find ways to persuade people to celebrate occasions at home and dress up for the same. At a time when all its retail stores have been forced to shut down, the company is using the virtual route to woo consumers. “We are using videos to get people to experience our products such as jewellery. Once a consumer selects an earring online, one of our sales team members does a video demonstration. After the lockdown is lifted, we will also encourage home trials,” he says.

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May 31, 2020