The apparel retail sector worldwide thrives on change, on account of fashion as well as season.

In India, for most of the country, weather changes are less extreme, so seasonal change is not a major driver of changeover of wardrobe. Also, more modest incomes reduce the customer’s willingness to buy new clothes frequently.

We believe pricing remains a critical challenge and a barrier to growth. About 5 years ago, Third Eyesight had evaluated the pricing of various brands in the context of the average incomes of their stated target customer group. For a like-to-like comparison with average pricing in Europe, we came to the conclusion that branded merchandise in India should be priced 30-50% lower than it was currently. And this is true not just of international brands that are present in India, but Indian-based companies as well. (In fact, most international brands end up targeting a customer segment in India that is more premium than they would in their home markets.)

Of course, with growing incomes and increasing exposure to fashion trends promoted through various media, larger numbers of Indian consumers are opting to buy more, and more frequently as well. But one only has to look at the share of marked-down product, promotions and end-of-season sales to know that the Indian consumer, by and large, believes that the in-season product is overpriced.

Brands that overestimate the growth possibilities add to the problem by over-ordering – these unjustified expectations are littered across the stores at the end of each season, with big red “Sale” and “Discounted” signs. When it comes to a game of nerves, the Indian consumer has a far stronger ability to hold on to her wallet, than a brand’s ability to hold on to the price line. Most consumers are quite prepared to wait a few extra weeks, rather than buying the product as soon as it hits the shelf.

Part of the problem, at the brands’ end, could be some inflexible costs. The three big productivity issues, in my mind, are: real estate, people and advertising.

Indian retail real estate is definitely among the most expensive in the world, when viewed in the context of sales that can be expected per square foot. Similarly, sales per employee rupee could also be vastly better than they are currently. And lastly, many Indian apparel brands could possibly do better to reallocate at least part of their advertising budget to developing better product and training their sales staff; no amount of loud celebrity endorsement can compensate for disinterested automatons showing bad products at the store.

Technology can certainly be leveraged better at every step of the operation, from design through supply chain, from planogram and merchandise planning to post-sale analytics.

Also, some of the more “modern” operations are, unfortunately, modelled on business processes and merchandise calendars that are more suited to the western retail environment of the 1980s than on best-practice as needed in the Indian retail environment of 2011! The “organised” apparel brands are weighed down by too many reviews, too many batch processes, too little merchant entrepreneurship. There is far too much time and resource wasted at each stage. Decisions are deliberately bottle-necked, under the label of “organisation” and “process-orientation”. The excitement is taken out of fashion; products become “normalised”, safe, boring which the consumer doesn’t really want! Shipments get delayed, missing the peaks of the season. And added cost ends in a price which the customer doesn’t want to pay.

The Indian apparel industry certainly needs a transformation.

Whether this will happen through a rapid shakedown or a more gradual process over the next 10-15 years, whether it will be driven by large international multi-brand retailers when they are allowed to invest directly in the country or by domestic companies, I do believe the industry will see significant shifts in the coming years.

A recent experience with one of the quick service restaurants took me back to my post-graduate class of Consumer Service Standards.

We studied five essential elements of service standards, which are:

1. A Charter of Service, including a description of the service the retailer intends to provide and, where applicable, the benefits customers are entitled to receive;
2. Service Pledges, focusing on such elements as openness, fairness, courtesy, professionalism, etc.;
3. Specific Delivery Targets for key aspects such as timeliness, access and accuracy;
4. The Delivery Costs; and
5. Redressal Mechanisms that customers can use when they feel standards have not been met.

The last, redressing complaints, is the most important and difficult aspect among these elements. It requires instant responsiveness and sufficient empowerment of staff to manage a dissatisfied customer.

Standard operating procedures requires staff to follow the procedures as they are written, whereas store staff need to immediately respond to a unique situation every time ensuring that personal judgement will be called for on every occasion.

To elaborate on how important is responsiveness and sufficient empowerment of staff; I will like to discuss a recent experience with a quick service restaurant. I will first describe my reactions as a customer to understand the consumer’s expectations and reaction when a retailer is unable to meet the same and then will analyze the same from a retailer’s and a consultant’s perspective.

I ordered for some salad which contains some soye chunks with diced vegetables in some dressings from a QSR. We quite often order from this restaurant and are quite happy with their products and services. However, this time the salad they delivered had only veggies; no soye chunks and no dressing.

So I called them back to tell that they have sent the salad without soya chunks and dressing and if they could replace the same. The boy at the reception said “Please give me your number and my boss will call you back”.

I was feeling really hungry as I didn’t eat breakfast in the morning (rather just had a toast), so in 15 min I gave them a call again which went unanswered. By now the loyalty for the restaurant and likeness for its products had evaporated. So I called again in 10 minutes to tell them to take their salad back and return the money. This time the associate was kind enough to ask if I would like to get the salad replaced, I said no you please take your salad back. Fifteen minutes latter a delivery boy came to return the money and I returned the salad.

Now let’s analyze the action and reaction of both retailer and customer to go to the root cause of the issue. The product delivered was wrong; however because of the previous good repute of the retailer the customer didn’t mind the mistake and called the retailer to replace the product. The associate at the reception took the phone number of the customer and said that store manager will return the call. Clearly, the service provider was not empowered to take the decision. By the time he was able to figure out that the salad needs to be replaced, 25 minutes had passed by and the customer had lost the patience. However, there were no apologies made by the retailer which is again because of the lack of the redress guidelines or lack of training for the same!

While SOPs are important to minimize the gaps in the service delivery, Redress mechanisms are essential to get things right in case a gap arises in service delivery. Complaint and redress mechanisms require empowering the employees who serve the customers. This enables them to take instant decision as and when the need be.

So while developing or reviewing the SOPs, it is important for retailers to ensure that complaint and redress mechanisms are not only weaved in the SOPs but also provide sufficient empowerment to service providers.