Written By Yashi Gupta

The numbers are not working in Walmart’s favour either. More than a decade after entering the country, Walmart has accumulated a loss of Rs 2,500 crore. In the year ended March, Walmart India posted a net loss of Rs 299 crore while revenue grew 20 percent to Rs 4,926 crore.

Flipkart plans to cut Walmart’s store size by half to turn the remaining space into warehouses for its online business, according to an Economic Times report. Sources told ET that Flipkart could entirely convert some stores into fulfilment centres.

Walmart started its operations in India in 2009 and currently operates 29 stores with the size of 50,000 sq ft. In July 2020, Flipkart acquired Walmart’s cash-and-carry business and announced the launch of a new B2B marketplace, Flipkart Wholesale. This reverse acquisition was expected to accelerate its expansion in the food and grocery segment and strengthen its supply chain.

However, the falling relevance of brick-and-mortar stores in India has now prompted the e-commerce firm to convert twenty-nine of Walmart’s cash and carry stores into wholesale and warehousing centres. Before the acquisition, Walmart was planning to cut its store sizes from 50,000 to 45,000 sq ft. The then President and CEO of Walmart India, Krish Iyer, had said in 2019: “Customer centricity and availability of right real estate land parcel help us determine the location and size. At a couple of locations, we have developed smaller stores of 45,000 sq ft more so to help us meet the member needs of those unique geographies based on the availability of right land parcels.” This strategy gave it an advantage in terms of market penetration to serve the customers optimally.

The latest decision was taken to adapt to the changing consumer in behaviour and mounting losses. According to the latest data, Walmart’s stores generate half of their revenues from online sales or sales teams visiting B2B members for orders.

“The existing stores serve local businesses and Kirana stores but combining it with online will help address the entire catchment area better,” said Devangshu Dutta, founder of strategy consulting firm Third Eyesight. “So they are making the assets work a little harder and clearly it is a logical move to combine their online strength with a brick-and-mortar presence.”

The numbers are not working in Walmart’s favour either. More than a decade after entering the country, Walmart has accumulated a loss of Rs 2,500 crore. In the year ended March, Walmart India posted a net loss of Rs 299 crore while revenue grew 20 percent to Rs 4,926 crore.

Flipkart has also announced absorption of 5000 of Walmart’s employees on Friday. It said that Walmart’s employees would be given corresponding roles in Flipkart with matching terms of compensation, responsibility, and profiles.

Source: cnbctv18

Written By Samreen Ahmed

Grofers, which has a strong play in the private labels segment across categories, is likely to follow this strategy in the fashion segment

Grofers is replicating this BigBazaar kind of model giving more options to increase the amount of spending they get from households, says Meena.

Online grocer Grofers started selling apparel and footwear for better margins. Grocery forms the largest chunk of consumer spending and highly competitive but fashion offers better profits, according to ecommerce experts.

“From a scale and stickiness perspective grocery as a segment is very attractive but from a margin perspective, it is quite competitive. In all of food and grocery sales across the country, even in large cities where internet penetration is high, grocery still remains focussed largely on offline. This segment also requires deep pockets,” said Devangshu Dutta, Chief Executive Officer of Third Eyesight./

The SoftBank and Tiger Global-funded company has started selling low-priced items in apparel, footwear, non-clothing and travel accessories categories to expand its basket size. It has already seen a 40 per cent increase in its overall basket size as compared to the pre-Covid era.

“This category is important as it is the second largest after electronics in online shopping and attracts new customers on board.

While there is good margin in fashion, it grows further when it comes to private labels,” explains Satish Meena, Senior Forecast Analyst at Forrester Research. The private label brands have been providing an opportunity to make fashion more affordable to the masses and these changes in pricing are driving more customers to online platforms, said a RedSeer report.

Grofers, which has a strong play in the private labels segment across categories, is likely to follow this strategy in the fashion segment.

With 1,200 products across all categories, the private labels segment constitutes more than half of the company’s sales. Currently, its own brands form 40 per cent of the business, and the company is expecting to grow this to 60 per cent.

Grofers is replicating this BigBazaar kind of model giving more options to increase the amount of spending they get from households, says Meena. Apart from fashion and lifestyle products, it has also forayed into the winter assortment category selling blankets, comforters, room heaters, beginning mid-October.

According to RedSeer, while the fashion market is growing at a CAGR of 11 per cent in the country, online fashion is growing the fastest at a CAGR of 32 per cent. With players such as Myntra and Ajio already having a stronghold in the segment, it will be challenging for Grofers to make a mark in this new category.

“We don’t expect this to be a great strategy as category leaders like Myntra outperforms Grofers both in offering (variety) and price,” says IDBI Capital in a note.

Currently operational in 27 cities, Grofers claims to have acquired 1.8 million new customers since the lockdown. “We have seen a spurt in demand from non-metro markets as online grocery has become a mass household phenomenon. We have witnessed an increase of 54 per cent in orders in smaller cities like Indore, Agra, Panipat,” said the Gurugram-based company.

According to reports, the company is also in the process of raising up to $60 million from investors as marquee players such as Tatas, Reliance, and Amazon make big bets in the online grocery space.

Customer trends during Covid-19 pandemic

* 1.8 mn new customers

* 40% increase in basket size

* 54% rise in orders from Tier II/III

* 64% first time online grocery shoppers

* 20% first time online shoppers

Source: Company

Source: business-standard

Written By Dheeraj Tagra

At a time when India is seeing a growing number of young entrepreneurs eager to innovate and take risk in the shape of ‘start-ups’, it is sad to note that the apparel manufacturing sector has not attracted these youngsters. If we do see some intervention in the textile value chain, it is mostly on the retail side and little bit on the tech side. Over the years, there are very few professionals who have taken the plunge to be entrepreneurs and run a factory successfully.

While entrepreneurship is being encouraged greatly these days, the definition of MSME is enhanced and many Government schemes are inviting investments in apparel manufacturing, why has the apparel industry been left behind in getting new ‘entrepreneurs’ is a question many are asking. The fact remains that the Indian apparel professionals lack entrepreneurial skills and feel safe working with established companies rather than using their experience to upgrade the industry.

It is also pertinent to mention here that the second generation of established players are not much enthusiastic to continue in the apparel or textile manufacturing sector; so having a fresh entrepreneur, for whom understanding the functions of the industry is difficult, is indeed a cause of worry for many.

At a time when India is seeing a growing number of young entrepreneurs eager to innovate and take risk in the shape of ‘start-ups’, it is sad to note that the apparel manufacturing sector has not attracted these youngsters. If we do see some intervention in the textile value chain, it is mostly on the retail side and little bit on the tech side. Over the years, there are very few professionals who have taken the plunge to be entrepreneurs and run a factory successfully.

Often, Indian apparel factories claim that a particular department/unit of their company is a separate profit centre for them and their teams runs its business as entrepreneurs, rather than just doing their stated job, but is that enough? What more can be done to encourage fresh entrepreneurs to be a part of the apparel industry, needs serious debate.

Many at small scale but none at the large level To its credit, the industry in the last few years has seen a few players that have started their own business and are surviving well. Majority of such entrepreneurs are those that have decades of experience in a particular department of an apparel unit, developed strong network as well as resources. And now they are utilising their strengths as a business promoter. In most cases these units are very small and operations are very much under the control of the promotor, so they are surviving, and a few of them have even grown reasonably well. There also there are few who are still struggling to create a place of their own.

Major obstructions

This is a hard fact, but the reality is that over the last 5 years, Indian apparel export is facing negative growth and it is very hard to grow for most of the established players. Very few companies have expanded in recent years while majority of the companies have seen standard growth. So, it’s natural that no one would like to invest in such an industry which does not promise growth on the base of past performance.

New players prefer to invest in other industries like retail, e-commerce as the variables are more manageable. One of the biggest constraints in apparel manufacturing or even in textile industry is managing a large labour base, besides being deadline driven and seasonal in nature (in export mainly).

Government push

It is heartening to note that the Government in the last few years has announced various initiatives to promote entrepreneurship across the manufacturing industry, that too at state as well as centre level like incubation centre, one district one product (ODOP), Mudra loan, Start-up India, Make in India, Single Window Clearance and various other kinds of subsidies.

The overall industry can expect to see more inflow of investment with initiatives likes proposal for creation of National Technical Textiles Mission for a period of 4 years (2020-21 to 2023-24) with an outlay of Rs. 1,480 crore and approval to introduce the Production-Linked Incentives (PLI) Scheme with the financial outlay of Rs. 10,683 crore for over a 5-year period.

Yet, experts believe that Government is not much concerned regarding new entrepreneurs in the apparel business as fresh investment by old players also serves the purpose of the Government – large-scale employment generation. According to information shared by Apparel Export Promotion Council (AEPC), there are 493 members who have established their companies from 2017 to date, but how many of them are actually new entrepreneurs, even AEPC is not sure about this.

Giving the obvious reasons for lack of fresh talent in the industry, Rahul Mehta, Chief Mentor, CMAI and MD, Creative Garments, Mumbai, argues, “The simple reason is the meagre profitability of the apparel sector. Garment manufacturing is a labour-intensive activity, involving largely hands-on working and day-to-day operations. Although the investment tends to be lower than most other industries, the returns do not justify the effort. Hence, whilst existing companies continue to operate, very little incentive is there for new entrepreneurs coming in.” He further adds that apparel industry is considered a traditional industry, and does not have the appeal of a ‘New Age’ industry – which most people of the younger generation would be interested in.

Regarding Government schemes, he is of the view that most of the Government schemes are for refund of taxes, and not really for making the business more profitable. Hence, these would not incentivise fresh investments and that too from new entrants.

What could be the solution!

To bring fresh approach to a stagnant industry, new entrepreneurs are a must and to encourage this, Government schemes have to be devised accordingly. At the same time, proper guidance and hand holding by existing players is also required rather than looking at these new players as just a competition.

Akhilesh Anand, MD, Carnation Creations, Coimbatore who is among the successful entrepreneurs to have grown in last few years, is of the view that first of all, any professional planning to start their own business should have clarity regarding what they wish to do and why. After this they should build partnership with like-minded people so that both the sides have a common vision and their team should also align with the same vision. He further adds that along with positive aspects, budding entrepreneurs have to think and plan for negative aspects also. “Whatever age a professional has, his/her thought process should be young, should have a knack for rapidly accepting the changes and be innovative at all levels,” he reasons.

A proper ecosystem having equal focus on export as well as domestic market should also exist to promote new players in this industry. With the recent labour reforms and strong focus on skill development, one can expect that managing labour, one of the most difficult aspects of the apparel manufacturing industry, will be easy in coming years. And it will help to attract entrepreneurs in the trade.

Dr. Biswajit Acharjya, Assistant Professor, Entrepreneurship Development Institute of India (Ahmedabad) agrees that Indian apparel manufacturing industry has been missing new entrepreneurs in the last couple of years in India. “The need is to strengthen and properly execute the labour law on a national level. Major textile and apparel units run on electricity which costs more compared to other mediums, especially CNG gas. At the same time, India is having limited water facilities in specific areas. We need to create sufficient water preservation through rainwater or recycling seawater. Infrastructure also needs to improve,” he says. He further adds that there is always a mismatch between the State and Central Government policies in India, which is again a concern. “Existing entrepreneurs should play an active role in mentorship for the new, like job training, grooming and assurance for future responsibility,” he argues.

Apart from Entrepreneurship Development Institute of India (EDII), there are other institutes in the country also dedicated to entrepreneurship like Institute of Entrepreneurship Development (IED), The National Institute for Entrepreneurship and Small Business Development (NIESBUD).There is a strong need to push for entrepreneurship, with a focus on the apparel sector.

Devangshu Dutta, CEO, Third Eyesight, a leading consultancy company, is of the view that the textile value chain has not really been seen as a strategic area by the Indian Government for many years, regardless of the political composition of the Government at the centre.

“Textile and apparel exports have grown at a compounded rate of around 7 per cent annually, a rate almost half of overall exports, when some other major sectors have grown 12-15 per cent, or even as high as 22 per cent annualised in the case of the automotive sector which was virtually non-existent in the export basket 20 years ago,” he says and further adds that India has some critical disadvantages against other competing nations – it is logistically distant from most developed markets, and it is not part of any trade bloc that would give it duty-free access.

To fight against these disadvantages, its natural advantages of entrepreneurship, design and product-development capability and vertical value chain need a lot of support. The Government must also stop seeing the sector in terms of its individual components (fibre, yarns, fabrics, apparel), and must see it as a chain in which we should be focused on the end-point (finished products) to maximise the value captured by India.

“There is no dearth of entrepreneurs in India, and the apparel business has relatively low barriers to entry. If the overall operating environment is cleaned up and made less cumbersome, our firms will do much better. A strategic push is also needed to be funded by the Government for technological upgradation of Indian apparel businesses, not only in terms of manufacturing but also in terms of the improvement of business processes, human capital and digitisation – it will not be expensive in the larger scheme of things but will go a long way in making Indian entrepreneurs and their teams better equipped to deal with the rapidly changing business environment,” he says.

Closing the debate on a thoughtful note, Deepak Mohindra, Editor-in-chief, Apparel Resources opines, “New ventures require professionals at its realm, those having the foresight to see and adapt to new consumer needs and changes and well-honed skills to take calculated risk. The existing stalwarts are largely not willing to take up this challenge, neither have they trained the generation next to take up these kinds of challenges. And that forms the basic handicap in building entrepreneurs and entrepreneurship. Building entrepreneurs requires not only a basic understanding of the industry but also support that has to come in from all quarters – Government, industry stalwarts and the banking system, which has to believe in them and back them as they have backed them in IT sector.”

Source: apparelresources