Time and again, strategists have quoted fashion industry as one of the most dynamic and trend driven industries, which anchors itself on the foundations of continuous innovation.

Ironically though, the same industry has gradually matured into an industry where brands are constantly struggling to create a point of differentiation for themselves and oftentimes, they become so closely positioned with others that they struggle to create unique brand associations in a consumer’s mind.

Without a need of specialised supplier capabilities, ever increasing technological advancements, and emergence of e-commerce, the key differentiators (product quality, unique product attributes, established sales channels etc), which earlier served as barriers for anyone to enter the branded arena, are now taken out of the equation. This phenomenal purge of barriers, coupled with a sizeable growing market and high retail margins has made Indian branded apparel retail a profitable proposition. As a result, while the market has witnessed emergence of multiple D2C and B2C brands in a very short span of time, many of these brands have also perished in a red ocean of cut-throat competition. Many of them started with unique, potent ideas and were even able to position themselves strategically well within certain niche segments, however, these segments often imploded due to minimal share of wallet or were captured by line extensions offered by already existing brands.

And yet, together these new players have flooded the branded market with multiple product lines/categories, and this phenomenal increase in supply has dented the ability of established brands to command a premium. Differentiating attributes are constantly becoming a blur, and the market has gradually shifted to price wars. The most benefitted parties are either value formats or e-commerce marketplaces apart from a handful of successful D2C brands. Brands are desperately trying to carve their niche and remain profitable, while retaining their identity in this era of finding their relevance. And in their attempt to do so, their leaderships are expected to generate ROI (return on investment) both in terms of financial returns as well as building brand equity in the longer run.

The presented article tries to explore a contrarian approach, outside the defined boundaries of existing business models and explores how the herculean responsibility to navigate the brands through these troubled waters, calls out for a requirement of new age CEOs and their four horsemen.

The Strategist

From board room meetings to coffee talks, strategy remains to be one of the most frequently used jargon in any industry. It has been used over the years in various contexts and have been twisted to one’s own whims as and when required. Managers and leaders have been using this term to define an idea, a vision, and oftentimes a plan of action intended to dent their competitor’s advances.

From strategic initiatives to strategic roadmaps, ‘strategy’ is now served in all new avatars possible.

However, strategy has been primarily defined as sustainable competitive advantage for a business/firm and has four main dimensions when it comes to strategic management, i.e., strategic analysis, strategic formulation, strategic implementation and control systems. Unfortunately, domain experts fail to recognise the sequential nature of these dimensions and oftentimes anchor their understanding of strategy on either formulation or implementation only. By nature, apparel retail remains as an industry which heavily depends on experience curve of their functional managers/ leaders. And while their business expertise is unmatched, their strategic viewpoint remains bound by rationality.

For a new age CEO, it further complicates the things as he is heavily dependent on these functional heads to craft a roadmap while simultaneously knitting strategic priorities in BAUs (business as usual). The methodology usually followed includes forming a taskforce to chalk out strategic priorities, which then translates to strategic initiatives. And yet, statistically many of these initiatives fail or are shut prematurely. What sits at the core of these failures, is the dissonance between experience and expectations.

While these functional leaders are unmatched in their business expertise, they oftentimes fail to identify the right framework required in the context for analysis. The hypothesis is formed based on experience curve(s) and they fail to leverage multiple strategic frameworks, making these strategic initiatives a guesstimate at best.

A strategist thus, is a necessity for a CEO to shoulder the responsibility of crafting a well-defined strategy, which helps the business become both profitable and sustainable. A strategist provides an unbiased view of the industry, firm’s current position, internal/external factors affecting profitability and threats to business. They offer an opportunity to diagnose existing mechanisms and identify bad fits at early stages, which can become catastrophic in the longer run and may damage brand equity. With multiple frameworks including VSM (value stream mapping), value chain analysis, PESTELG, VRIN etc at their disposal, a strategist can generate powerful insights to reduce risks in the times of rapid shifts and increasing threats to a firm’s profitability and sustainability. Whether it’s a decision to extend a line, enter a new segment, launch a new brand, restructuring organisational structure or identifying core competencies within the firm, a strategist can help organisations rationalise these decisions and offer a safe passage through troubled waters.

The Economist

A firm’s leadership is aware that they operate within the economy and their profitability thus, is affected by macroeconomic developments and shifts. This wisdom though, is not always translated into actionable insights, leaving businesses vulnerable when they should instead be hedging against some of these external influences. The responses often come as reactive measures rather than proactive plans. Functional managers are accustomed to certain macroeconomic factors, including fluctuations in dollar exchange rates, but remain ignorant to multiple other factors which impact the industry structure and firm profitability.

While macroeconomic factors exist and affect the firm, microeconomic factors are more resonating for firms to understand demand and supply relationships. Whether it is a decision to increase product prices, offer promotions or to mitigate ripples from demand shocks, an economist can offer wisdom which currently the businesses lack for making these decisions right. Consider an apparel retailer who has a core offering of menswear T-shirts priced at ₹299. This retailer has witnessed multiple pricing changes over time and is now at the crossroads of a pricing decision, trying to evaluate impact on sales if prices go up by another ₹50. Regression analysis on historical data and deriving the demand for the new price point can be one of the simplest insights which can help them effectively gauge impact on their top and bottom lines, thereby shifting the focus from pure play margin based go no-go decisions. Another relevant phenomenon which is often overlooked by businesses focused on push sales models is marginal utility of consumption. Whether it is a brand which can command premiums or a D2C business focused to cater a niche segment, there is only so much they can push to a consumer. Marginal utility is correlated with CLTV (customer lifetime value) and other metrices on which brands try to build their loyalty programmes, and thus needs to be closely understood as a concept by marketers when they plan their campaigns.

The Research Analyst

In the age of emerging AI, business analytics has taken a pivotal role in organisations. Though leaders in Indian apparel retail have understood the power of analytics, they primarily are relying on the insights generated by multiple existing solutions within their IT landscape. Many of these solutions offer AI based insights to various business use cases and are helping businesses on multiple fronts. Surprisingly, the businesses keep struggling with the same set of issues, unable to get rid of these adaptive problems.

In their quest for excellence, brands have built multiple layers of technology over their operations, hoping that it will work as a competitive advantage for them. However, being highly imitable and ever evolving by nature, technology fails to meet these expectations and dissonance between user capability and credibility of a technology remains. This dissonance essentially originates from users/businesses being unable to understand that business analytics is not a hunt for a perfect solution, but in fact a discovery, where insights previously unknown are discovered from existing data. With minimal understanding of data analytics and in their attempt to find a quick fix, functional managers oftentimes struggle to leverage these tools and end up generating what we can at best call ‘information’ not ‘analytics’. Another issue with this fragmented information generated from multiple solutions is that it fails to collectively generate a powerful insight for business which they can convert to a profitable proposition. These systems/solutions oftentimes witness data mismatch and thus credibility of the insights generated is highly compromised.

The biggest issue of them all, is that these systems ignore changes happening in external environment and only focus on historical firm data to come up with some standard analysis/charts, thus only educating functional leaders of an inside view of the organisation without focusing much on the freely available information in public domain which may impact firm profitability in the longer run. Threat of substitutes, threat from competition, increasing buyer power, etc are some of the key aspects ignored when it comes to analysing a firm’s profitability.

“Firms are drowning in information but starved for knowledge” – is one of the famous quotes by John Naisbitt, author of one of the bestsellers Megatrends: Ten new directions transforming our lives, which best describes the situation. And a research analyst is the most feasible solution for this.

A research analyst (not business analyst) is neither burdened with the tasks of generating insights for functions nor with finding quick fixes to existing business problems. The objective shifts to a discovery driven process which leverages data mining and helps generate powerful, previously unknown, actionable insights for business. The analyst also gathers freely available information from external environment and helps businesses gauge impact of multiple external forces by building data models. The applications may include finding best response to competitor advances, impact on existing business, markets where your competition is vulnerable, segments which remain untapped, innovations which may disrupt business as-we-know-it in near future etc.

The analyst can also help functions understand how to leverage existing solutions and generate insights through prompt engineering, thus offering a dual benefit for a profitable and sustainable business.

The Marketer

While the role of a CMO (chief marketing officer) remains highly misunderstood in Indian apparel retail, and nearly all the product-positioning-pricing-promotion decisions are made in functional siloes by product managers; the role must evolve to critically assess and execute these decisions which heavily impact a firm’s profitability and brand equity. Currently the playfield is restricted primarily to marketing campaigns, social media marketing, market research and customer feedback/loyalty. Whether it be a new line extension or offering sales promotions, it is critical that product managers work closely with CMOs to assess impact of many such incremental initiatives taken for topline growth. Usually, product extensions originate from muted growth in existing segment and/or to seek growth by catering to new segment(s), however this ideology fails to recognise the criticality of brand reinforcement and oftentimes creates confusion in a consumer’s mind, thereby significantly diluting the point of differentiations and brand identity in the process, which prove suicidal in the longer run.

Brands often forego their value proposition and venture into products/ categories which are bad fit to their existing identity. Here, the damage does not stop only at wrong fits, but also gets translated in media campaigns and communications. For example, consider retailers who keep boasting their new AI powered stores to offer consumers an experience of augmented reality, while the market keeps getting disrupted by the likes of Zudio. This serves as a reminder that customer centric brands having clear value propositions will always supersede those who focus on other metrices. However, in a quest to work closer to market, leverage technology, and achieve incremental topline growth, businesses keep digressing from their value proposition, brand identity and established associations.

A marketer thus can help brands understand the impact of these ‘harmless’ initiatives on current business, cannibalisation which brands can expect within portfolios, dilution of brand equity, change in CLTV and many such key performance indicators. They can also help brands leverage the power of digital marketing, which is oftentimes misunderstood as social media marketing (SMM), wherein SMM essentially remains as a subset of much larger domain of digital marketing. From price to promotions and from market to customers, a marketer thus becomes a pivotal piece of the overall success of a business.