Draft Pre Read

Deep Dive on Apparel

TIDE
TURN THE

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 COVID has impacted lives in 3 big ways

Copyright © 2020 by Boston Consulting Group. All rights reserved.

SOCIAL HEALTH AND INCOME
DISTANCING HYGIENE UNCERTAINTY

1
11 uber themes of consumer behavior change emerge
REVERSAL OF ACCELERATION OF NEW
PAST TRENDS EXISTING TRENDS HABITS

1 5 9
Bringing the Embracing digital
Remote way of living
Outside Inside services & experiences
10
Social 6
Accelerated adoption of
'D'o 'I't 'Y'ourself
Distancing e-commerce and O2O

7 11
Strive for Health & Superior hygiene & clean
Wellness living: a new norm
Health &

Copyright © 2020 by Boston Consulting Group. All rights reserved.

Hygiene 2
Trust in brand
8
Rise of 'Smart shopper'
above all else
3
Trading down &
bargain hunting
Income 4
Uncertainty Shopping for Utility

Wild cards: linked to recovery period High potential fundamental shifts: linked to positive reinforcement

2
 APPAREL
Implications for brands and marketers

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 Apparel industry has been growing1
4,705
PATH TO
4,188
INR Cr.
2,592 2,910 3,283 3,717
RECOVERY

2015 2016 2017 2018 2019 2020

• Likely to witness reduction in spend, post COVID Apparel industry experiencing
• Modern trade accounts for 77% of sales, while online contributes 13%; unprecedented changes
online contribution to grow faster

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Consumer sentiment post COVID2

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Eventual winners need to take decisive

Group. All Group.

Expected spend 25% 21% 23% 15% 16% action now to prepare for the New

Boston Consulting
on apparel in Reality post-crisis
next 6 months A lot less Somewhat About the Somewhat A lot more 1 2 3

Consulting
less same more

© 2020 by
2020 by Boston
• Spend reduction in apparel is expected across demographics
• More prominent reduction in older age and non-metros

Copyright
Modify Accelerate Strict focus

Copyright ©
supply chain/ digitization of on cost
sourcing business management
1. Euromonitor; 2. BCG COVID-19 Consumer Sentiment Survey (India) 4
Understanding baseline behavior
PRE-PURCHASE PURCHASE POST- PURCHASE

1 in 4 pathways are purely

Planned
68% Bimonthly purchase cycle
68% digital; Digital influence growing;
purchase Single Social media used more by
channel
pathways younger consumers
Women buy more Men buy more formals; Share of Little stickiness towards the same
casuals, celebratory key trigger to upgrade online Online small but brand; Women buy new brand 2 in 3
occasions key trigger to latest trends 7% sales growing times
Male 36 38 26
Female 48 32 20 Latest Trends Better pricing

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Celebratory Upgradation Functional and Variety and variety
13 19 drive online
WoM more important for women; Brand
buying 41 24
Use reviews from shopping websites specific (%)
Male Female
Social media more prominent for men
33 28
Male 33 29 38
Female 25 30 45 Better prices
Online media Traditional media WoM
Men are brand conscious and
women experiment more
Lack of touch-and-feel and fit issues
Pricing/promotion important for both
key barriers to online shopping
Women care more about design, trendy brands
Men associate high quality with preferred
brand
18 24 Fit Issues Brand
26 20 13 9 52 35 specific (%)
Pricing Design Brand Quality
promotion(%) (%) (%) (%) 43 39 Touch-feel

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 Across categories, spend will decrease; likely
higher inclination towards utility led shopping
Post COVID,
Change in spends in next six months
consumers Distribution of survey A lot Somewhat About the Somewhat A lot
less less same more more

expected to
responses (%)

Women's
31% 17% 22% 15% 15%
clothing
cutback in

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discretionary
Men's
21% 24% 25% 17% 13%
clothing

spending Children's
clothing
23% 23% 22% 14% 19%

Benchmark1 33% 41%

Note: Question text: “How do you expect your spend to change in the next 6 months across the following areas?”
1.Benchmark to compare performance with other categories. Calculated based on top 2 box and bottom 2 box scores
across categories
Source: BCG COVID-19 Consumer Sentiment Survey (India), March 23-26 2020 (N = 2,106); representative of top 35% of
Metro-tier 2 (towns above 5L population; top ~100 cities) population in India 6
 Certain consumers plan to increase spend, anticipating higher
disposable income and discounts
47 % customers ,planning spend increase, 70+% customers likely to repurchase the
look forward to promos and sale offers same brands
Reasons to increase expenditure on apparel Future brand choice
( for those who plan to increase expenditure) ( for those who plan to increase expenditure)

% consumers % consumers

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49 47 43
74 26

Will have higher Expect deals/

Expect prices to Buy same Buy premium
disposable discounts in
increase brand brand
income future

Note: Data at an overall fashion & footwear level, deep dive on individual categories is not available
Question text 1: “Please state the reason to spend more/ less in near future?” , Question text 2: “In the next 6 months, how do you expect the choice of your brand"
Source: BCG COVID-19 Consumer Sentiment Survey (India), March 23-26 2020 (N = 2,106); representative of top 35% of Metro-tier 2 (towns above 5L population; top ~100 cities) population in India

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 Clear shift towards online spending in apparel; more digital
touchpoints expected across pathways
Pre-COVID, share of digital has been Sharp spike expected in online
growing steadily spending in apparel post COVID
% of Urban fashion buyers (Pre COVID) Willingness to spend online in future3

Digital footprint1 Digital influence2 Digital buyers

53 38 9
20% 16%
More purchases Similar to usual Fewer purchases
2016 45% online than usual online than usual

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2020E 87% 49% 35% Fashion is an early online adoption category;
In online shoppers, 30% start with apparels

Likely to be an inflection point; Digital to

play a much larger role Forced adopters likely to convert into
– Mixed pathways likely to amplify it in regulars and drive growth, specially if their
the new normal with more access to need of touch and feel is met
digital touchpoints
Digital footprint : % of urban buyers with access to internet 2.Digital influence : % of urban buyers using internet at any stage of shopping 3. Note: Data at an overall fashion & footwear level, deep dive
on individual categories is not available. Source: BCG-Facebook-FashionForward2020-Mar2017
Question text: “In the next 6 months, how do you expect the choice of your brand"; "How much do you agree with each of the following statements about the coronavirus?" Source: BCG COVID-19
Consumer Sentiment Survey (India), March 23-26 2020 (N = 2,106); representative of top 35% of Metro-tier 2 (towns above 5L population; top ~100 cities) population in India

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In summary: Shifts expected in consumer behavior
PRE-PURCHASE PURCHASE POST- PURCHASE

45%
More utility led shopping Accelerated adoption of
Purchase triggers like to be more e-commerce and O2O
functional; less ethnic and formal wear Online
buying, triggered by celebratory occasions 10% 50%
purchase (%)
Trust in brand above all else
Likelihood of new adopters sticking, In the short term, consumers may
More digital In pathway if the digital experience is positive value high quality/ perceived trusted
brands, more than just latest design
With more time online, consumers and trends
Trading down & bargain hunting

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41%
will be more exposed to digital
catalogs and advertisements Increase
in time
spent
Consumers will engage more with online
online and social media content
(e.g. fashion hacks online)
Research may play a bigger role;
high salience of online channel
Recommendation being core,
digital influencers and online peers
will gain importance
47%
In the short term, consumers will
Expect look for offers, discounts as they
discount/
deals watch discretionary spending
Touch and feel to remain core
As pathways become more online,
shoppers will want the touch and feel
experience
Forced digital adoption by some may
continue, if their needs are met digitally

Likely magnitude
of change
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 Key imperatives for marketers and brands
1 2 3
SHORT - MEDIUM TERM MEDIUM - LONG TERM
3 4
Induce and incentivize Amp up digital Win
consumers in the near engagement online
term Enable easy shopping e.g.
assisted shopping, AR/VR for
virtual trial, live/video
Strengthen Explore free
shopping, easy payment etc.
positioning on near shipping/ returns, Strengthen digital presence (own

Copyright © 2020 by Boston Consulting Group. All rights reserved.

term use cases e.g. multi-pack, and social media)
work-from-home / freebies, discounts
comfort looks etc.

Deliver engaging and curated

content; Leverage innovative models
e.g. online launch and influencer
collaboration

Provide O2O platforms with

Incentivize pre and post seamless experience as
purchase advocacy e.g. peer pathways become more mixed
recommendation

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1

Induce and incentivize consumers in the near term

Consumers Apparel spending is expected Reduction across 47% customer are expecting
seeking more to reduce by 30-40% in the demographics; higher in brands to provide discounts/
value next 6 months older age & non-metros deals in the next 6 months

Brands are
starting to

Copyright © 2020 by Boston Consulting Group. All rights reserved.

respond

Update the brand message "Pack and hold" or "Pack Discount and move through
3 ideas to to appeal to more use cases and save" some latest unsold inventory, specifically
think about (e. g. WFH, Virtual) design to next season seasonal clothes

"The month of May might witness some consumer promos as brands will try to make up
for the lost sales. We do expect an early onset of end of season sales"
– CFO, Raymond Group
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2

Amp up digital engagement

Brand are quickly innovating to

More online
supports consumers Two ideas to think about
touchpoints for
consumers
Cause marketing: Launched a marketing
Show "what they like, where
campaign, 'Love has no fear' to give
50% digitally influenced positive brand recognition
they like"
consumers pre COVID; • Relevant curated
likely to accelerate campaigns; Leverage online
Virtual Fashion Show: Partnered with in entirety
Alibaba's Tmall to livestream the fashion

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event and panel discussions • Collaborate with influencers
41% rise in time spent for appropriate content
on mobile first
Social Media Campaigns: Introduced
multiple hashtags including 'Above Key Proactively capture feedback &
Consumers rely on peer Board Dressing' & 'Shop With Confidence' "close the loop"
recommendation and • Curate user generated
1 in 2 reviews to buy apparels content (e.g. Instagram
Virtual Clothing: Created digital clothing
challenges)
samples in place of physical ones,
eliminating textile waste • Incentivize
7x rise in fashion recommendations
livestream on Tabao ,
China (owned by Alibaba) Live Streaming Content: Streaming
workout videos, training programs and
expert tips from trainers
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3

Win online to gain share of the wallet

Clear shift towards online Re-imagine pathways : More

spending in near term digital, leverage O2O

Provide customer shopping

10% 50% Growth in fashion Four ideas to think assistance
ecommerce about
Baseline online Expected online
sale sale Replicate offline shopping
experience with tools like
AR/VR

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e-Com growth driven by
new shoppers historically; Brands are catching
40% Track online funnel and
share of first timers likely & responding well
to increase promptly address drop points
to the increased
demand

Sales associates driven

assisted shopping for product Leveraged AR/VR for virtual
recommendations try on and purchase

Launched WeChat mini

program store and offered
flash sales 13
Myntra: Driving customer engagement in lockdown

Collaborated with 350 fashion

influencers and celebrities to
create content on look books,
styling & product recommendation

Consumers can save their favorite

looks in the wish list and receive

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personalized content based on
their likes and dislikes

Introduced blogs on DIY Ideas,

Virtual party, Fitness and health
and parenting

We want to drive more engagement on the platform through content, while its shop-ability feature will
allow us to come full circle with our customers
– CEO , Myntra
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"Adidas original x tmall super brand day"- 5 day live
stream launch

Leveraged social Introduced online games to

media(stickers, video on collect redeemable celebrity
WeChat and micro-blog sites) cards to create perception of
to increase awareness affordability in sale

Copyright © 2020 by Boston Consulting Group. All rights reserved.

Launched "Sense of Ritual" KOL and celebrity live streamed
challenge online launch of superstar 50th limited
– Encouraged users to edition shoes
post stories on "stay at
home" to win discounts
– 190 Million discussion
threads on weibo

The live streaming attracted over 2.23 On Feb 21, Adidas Tmall sales hit 100M
million audience and won over 3.22 million RMB in the first 9 mins, and 200Mn RMB in
likes the first 10 hours
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 Gucci : Gamifying the real fashion
Embracing the technology Getting to know the clients better Stepping up the online presence

"Music to cook"
AR powered try on app
playlist in self isolation
for sneakers, accessories,
and décor
• Users can take pictures
with try on filters, save
and shop products

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Live podcast on health,
wellness and sex
education

• Launched 2020 DIY collection on Wechat

3D Immersive
experience Collaborating with
• 100K + followers in 7 days on wechat influencers to share
• Watch runway shows,
personalize items in content on "life in
• Personalized product recommendations lockdown" as #Gucci
DIY section and Play
based on buyer's zodiac sign Community campaign
Arcade Games
• Engaged followers by sharing
personalized monthly horoscopes
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 Thank You

17

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