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How to beat the potential impact of GST

It is that time of our journey now, similar to the excise duty introductions many years back when we all planned for potential impact of excise balancing what is good for consumers and the company.

In this note, we provide our perspective on how any fashion brand or retailer can beat the potential impact of GST. In case there is no GST impact, the approach can leave additional revenue and bottom line for the brand / retailer.

Fashion and lifestyle business like any other retail hinges a lot on the product. This may be over simplified but it is the fact. Money made in fashion is impacted largely by the red zone.

It is the red zone where maximum money is spent (biggest investment by a fashion business) in the form of promotions and discounts, leave alone additional non value adding resources of inventory, real-estate and digital assets. The budget that gets in here is 15-25% of sales which is the single largest spend in any fashion brand/retailer. Looking at differently, this budget is 4-5 times the net profit of a fashion business. There is so much out here.

Key causation of this spend is coming from “product decisions”. The product decision making process has been incrementally improving over the last few decades, but has not fundamentally moved. The processes of trade show, trade partner validation, internal reviews continue. Each of these inputs are valuable, but in the context of dynamic changes in the market and digital visibility of consumer tastes are so widespread and changing, views of few including those whom we think are close to customers come short.

How are we preparing ourselves for this to capture consumer signals?

Intelligence from consumer signals has transformed many industries, one note worthy is online advertising which used to be manually monitored years back. It is now one of the most efficient industries in terms of consumer relevance and effectiveness, driven by real-time intelligence. A good blend of intuition + real-time intelligence can make a huge difference to fashion business’s top and bottom line. It has been proven now across industries with long lead times too like healthcare, automobiles etc..

It will drive us all towards “effectiveness” than “efficiency”.

How does one incorporate this intelligence as part of product decision making? Let’s firstly differentiate ‘intelligence’ from ‘information’. Fashion is a unique business wherein most of product intelligence is in visual form and traditional analytics do not provide visual clues, also when traditional analytics analyses only our data (what we have done). What we have  done is a small fraction of what you have not done.

Where is the intelligence? Are we investing in intelligence or information? Most of the analytics tools are platforms of information.

How do you bridge this intelligence gap?

Most of the innovations are powered by real-time insights outside-in. One question worth asking is  “Do we have intelligence coming in from outside-in: globally and with Indian context into your product decision making? Retail visits by a few in organisations and few partner views is not going to get us closer to consumers more than ever before. Even those who share these insights are doing the same. This cascades. While these signals are important, they still distance us from reality.

It is time to consider tools that help the organisation get real-time insights from global sources of inspiration (for forward seasons) and competitive intelligence from domestic market (understand gaps) and keep making your product pipeline a ‘sense and respond’ model over ‘plan and deliver’, irrespective of how long is your calendar.

“Particularly when the target is moving, we can not have tools which are relatively stationary.”

In Closing

Our experience so far indicate the potential for a brand/retail to double up it profits by using intelligence outside-in and contextually applying it in their product decisions.
Stylumia is one such approach, fully focused on consumer signals and enable fashion brands and retailers take informed decisions where it matters.
We hope the impact of GST is the least and every brand/retailer prepare themselves not just for this impact but prepare well enough to meet consumer taste of fashion on an ongoing basis.


Article by Ganesh Subramanian