How accessories brands pivoted during the pandemic
By Nina Lekhi
It has been a year of so many firsts — the worst zero-revenue phase, zero sale for few, the longest work-from-home phenomenon, no travel, no outings, and the word ‘social’ being limited to social distancing! The lockdown questioned the sheer existence of the accessories category. Revenue was zilch, plus the operating expenditures led to immense losses in spite of reduction in rent and salary expenses.
Even when markets opened up, the average consumer budget had come down by 30-40%. There was a sharp decrease in disposable incomes; spending fell by 20-30% as compared to the pre-Covid times on similar items.
With one wave after the other, our only endeavour was to not let the pandemic or the lockdown knock us down. The ‘Made in India’ mission became a game changer during the pandemic, leading to a steady decline of the ‘Made in China’ craze.
While Covid-19 affected most markets, it gave local sourcing a massive push in the right direction. Imports became costlier because the rupee depreciated as compared to the yuan. The growing negative sentiment against China led to the emotional boycott of the China-made products by Atmanirbhar Bharat. Labour cost in China went up and was significantly higher than India. The pandemic turned the tables on brands that relied on imports, and helped homegrown brands hold their ground. Brands with zero dependence on imports and a focus on local sourcing were able to withstand this storm. It also helped us work on real time consumer insights.
Consumers now wanted ‘extra’ — extra value, extra quality, extra compartments for the new normal essentials — and that added an ‘extra’ to our manufacturing cost as well. It also called for extra efforts to price our products competitively to induce significant trials and consumption.
It is all about striking the right balance with scale and efficiency that would ultimately bring the cost down and provide better value.
Another significant development was the digital explosion. With offline markets shut for the longest time, the digital world was the only go-to medium for consumers for a category like ours. With a full house, work from home and for home, and being with kids 24×7, shopping and surfing the net became a ‘me time’ escape. This made it easier for brands to woo consumers across the country and to get their mindshare.
Two ends of the strap
The women’s handbags category is still under-penetrated. There’s a minimum level of buying irrespective of the circumstances, thanks to the craze women have for hoarding handbags! But there was market polarisation with two extremes — the luxury and mass segments gained a large share. This was fuelled by the fact that the pandemic led to a lot of high-end brands dropping their average selling price and resorting to heavy discounting to get rid of the piled-up stock. The bottom-most layer, whose income was severely affected, fell for the attractive price-value equation of mass brands.
The super-luxury watch market is the best example of how prestige brands bounced back better. Demand outstripped supply, since all that people had saved in terms of exotic summer vacations, luxury travel and outings, was now being splurged on expensive collectibles.
Thus, the mid-priced segment was getting eroded from both sides. Going forward, brands that will manage to occupy the sweet spot and create a better brand appeal with the right pricing will survive.
Another trend is to drift away from fast fashion to the more consistent classic fashion, and own products that offer value, not only in terms of price, but also the product lifecycle. Consumers want high-quality products that last longer.
The author is MD & chief design curator, Baggit