With the prevailing conditions of Lockdown and its extension on 15th April, till 3rd of May 2020, businesses have taken a severe hit all over India and across the world. According to reputed studies by think tank across the world the current crises will result in a 9 Trillion Dollar losses for the economy worldwide which isn’t possible for any one country or for the world as a whole to fill this gap. As a result, several developed economies like Germany, France, Italy, Spain, Great Britain and US and several nations of G7 may go into recession with chances of recovery from April 2021 onwards. With no cure in sight for this pandemic, right now further prevention and social distancing seems to be the only strategy in place to fight this virus. World over businesses are learning to fight this deadly pandemic and planning to come out of the lockdown in a slow and sustained fashion lest the disease flair up again and put us back from where we began. According to IMF among the large economies China and India will show a growth between 2 to 3 % which is good news for the planners and Government officials. A sharp recovery is expected from country like India which may follow the W pattern instead of the V pattern which was envisaged earlier. So businesses will have to live with post COVID norms and adapt their businesses to this new reality. In India too Government has allowed a partial lifting of Lockdown for various business in the Green Zone and restricted lifting in Orange Zone which will be followed by lifting of lockdown conditions on several businesses from 3rd May onwards, provided the social norms for workers and staff are put in place by the business and factory owners. We conducted a survey among the innerwear trade among the manufacturers to find the impact this lockdown has had on their business. This survey was polled on Google between 10th and 17th of April among 300 manufactures of Intimate wear, nightwear, loungewear, athleisure, Mens innerwear from Mumbai, Delhi, Tirupur, Coimbatore, Ghaziabad, Ludhiana, Bangalore, Kochi, Chennai etc.
To the first question whether the businesses will shrink once the market open up All the respondents were unanimous in their call that businesses will shrink in immediate future.
When questioned on the size of the workforce and staff and Labour contractors in their organistaion
The data is fairly representative of this trade as 29% have a work force of over 500+ labour force and 21.5% of the organisations have between 101 to 500 people working in their organisation so it is fair to report that Intimate wear is a labour intensive industry employing a large workforce of migrant labours that work as tailors, masters, skilled crasftmen, packers, and other staff who manage the admin, accounts, marketing and sales in any organisation.
The next question posed to them was the percentage by which they think their businesses will shrink?
About 50% of the respondents were of the view that businesses will shrink between 21 to 40% and about 25% of them consider it shrinking even beyond 40% upto 60% even. A small percentage however held out that business will not be so impacted to a reasonable extent within 20%.
The next question asked them about the time frame it would take for the businesses to normalise post COVID Lockdown?
43% of the respondent think it will take anywhere between 3 to 6 months for the businesses to stablise post this Lockdown, however 21,5% think the recovery may come a bit earlier than that. Within 3 months perhaps. And about 36% think the recovery is a long road from 6 to 12 months or more.
The next obvious question is about the expenses to tide over this period and the steps the companies are taking to face the liquidity crises
About 18% would try and reduce staff salaries as a means to control cost, while 11% would think of reducing staff even, reduce travel, reducing marketing and Branding spends, reducing space, lowering the rentals and to 29% of the respondent would apply all these to reduce cost due to lower expectations of business.
Will you be able to maintain your staff without Government Support?
79% of our respondent answered in affirmative that they would require some form of Government support to maintain the current level of staff incase the lockdown persist further (most of them replied prior to 15th April when this lockdown was extended till 3rd May.
Have Buyers cancelled your Orders??
63% of our respondent mentioned that they have received cancellation to their prior orders whose supplies would have been done in April 2020 from their Distributors and Retailers. This signals a wide spread distress in the field.
Percentage of cancelled Orders??
When asked about the percentage of the orders being cancelled to get a sense of distress in this sector we got a whopping 39% who hadn’t received any cancellations, which agurs very well for this sector recovering well before the other sectors of the garment industry. One fact has to be kept in mind that Intimate wear, undergarments are a need based functional item which humans cannot do otherwise. The buying cycle is huge (almost 70%) during the summer months from March to July. Therefore, there is a huge pent up demand because of the lockdown and the fact that most people were utilising loungwear, boxer shorts, bermudas, pyjamas and basic bras and panties and underwears during this period of lockdown, the summers are here and the temperatures are soaring beyond 40% already in most parts of India by now. So there will be a lot of demand once the economy opens. About 21% have responded about 30 to 50% cancellation which we feel will be a stock correction and the distributors and retailers will reorder or perhaps order more from the same brand over more basic and VFM items. The consumer may defer purchasing for a week or so but he will have to come back to the market for replishment and new buy. Equal no of respondents also feel that there will be stock correction between 16 to 31%