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Home  /  Strategy  /  Feature  / Endlessly Fab | JUN 17 , 2019

Faisal Magray

Feature

Endlessly Fab
Fashion is without boundaries and now its shopping points will reflect that limitlessness, with the omnichannel strategy at Bestseller India

Krishna Gopalan

Fashion forward: Bestseller is pushing boundaries in shopping tech with the futuristic ‘endless aisles’ and smart mirrors

Every week, Vineet Gautam gets at least two emails on what he calls whacky new ideas for his business. He makes it a point to go through them very carefully. 

“We are in the business of fast fashion and cannot afford to ignore anything,” says the 42-year-old. With his flowing beard, the CEO of Bestseller India, could easily be mistaken for a philosopher or a painter from a different era. His company, a €3-billion Denmark-based clothing company, runs six brands in India among which are Jack & Jones, Vero Moda and Only, in all bringing in a turnover of 15 billion each year. Its peers Zara and H&M do 12 billion and 11 billion respectively. Bestseller’s India journey started in 2008 and Gautam joined them on the first day of 2010.

Vineet Gautam CEO, Bestseller IndiaBestseller has a big play in fast fashion, defined as the reproduction of highly fashionable clothes at high speed. His six brands in India, Selected, Only & Sons and Junarose being the others, are present in over 1,440 outlets across 110 cities. Online sales contribute only 15% of the company’s revenue. Its offline presence is much higher than Zara’s with 25 stores and H&M’s with 40. 

When Gautam came aboard, Bestseller had four outlets with 42 employees, which today is at 3,400. Over the past three years, the company attempted to go omnichannel to provide a seamless shopping experience regardless of the consumer being online or in a store. 

It is an effort that employs technology in various forms, which is why an email from a start-up could be the next big idea. Though some baby steps have been taken, a larger part of the tech story will be out over the next year, which will include a wall screen that allows consumers to browse through Bestseller’s catalogue when the store is shut for the night. Buyers can place their orders, which will be delivered to their homes. There is also a smart mirror in the works, which will be placed in the trial rooms and will act as a fashion advisor. From exploring the market to getting on to the online bandwagon, this is a marked change in tack.

Omnichannel it is

The Bestseller office, housed in the The Lalit Residency campus in western Mumbai, is a beehive of activity. Dapper men and women stream in and out of meetings with the flow of visitors never abating. It is business as usual.

In his tastefully done up room, Gautam asks you to be seated as he wraps up a call. Dressed in jeans and a blazer with a white shirt, he smiles when asked about his shoes. Not surprisingly, it is Selected, a Bestseller brand launched in India two years ago. “In my opinion, the lines between online and offline have blurred and will continue to do so. They will converge sooner than we expect it to,” he says as he eases into the conversation.

One of the big things unfolding, as a consequence, is omnichannel, which to his mind, is just being channel-agnostic. According to him, each store has a limited catalogue since physical space is limited. “That means all sizes will not be available at one time,” he explains. In what is an early stage, Bestseller’s employees today can look at the entire catalogue across stores and warehouses to help a consumer. For example, if the shirt he is looking for is at a nearby store, the customer can perhaps be given that in a few minutes; else, it can be delivered at his home. 

Nitin Chhabra CEO, Ace TurtleTermed full inventory visibility, the experiment launched six months ago, is today operational across 24 stores and is called endless aisles. Endless aisles is a concept that helps a customer at a store browse through the entire range of company’s products — some of it may not be at the store — and order it and ask for it to be shipped home. Nitin Chhabra, CEO, Ace Turtle, an omnichannel technology provider, points out that in the west, offline and online worked in silos. They came together only after a certain level of growth. “In India, the whole omnichannel story is coming together,” he says. According to him, companies will start to recognise it as a separate function two to three years from now.

The question is how much companies will need to put in. “Investments need to be made in senior management bandwidth apart from software, that is which technology is to be used and hardware for any kind of handheld device,” explains Chhabra. There will also be money that goes into meeting fulfilment and training costs. For Bestseller’s 240 stores, just software costs could be between 10-15 million.

For Gautam, who has had stints at Wills Lifestyle and Benetton, this is the building block for the next omnichannel phase. By this August starting with Jack & Jones, it will be possible, for instance, to buy a shirt online and pick it up offline.

As inventory visibility spreads across Bestseller’s network of stores, comprising its own stores and shop-in-shops at department stores such as Shoppers Stop, Lifestyle and Central, the scale will increase from just 24 today to the 240 stores that Bestseller owns over the next three to six months.

The second part is convenience to the buyer, which kicks in when he types in his pincode. “Here, the consumer can be given the option to pick up the shirt right away at a store close to where he is or can choose to wait for it to delivered,” says Gautam. In the case of the former, the shirt is kept aside at the store and the payment can be made online or at the store. 

Now, this could be a case when the order is through Bestseller’s e-commerce site. “The plan is to allow the consumer to return it to our store or get someone from the store to pick it up. A replacement can be made at the store or online as well,” says Gautam. If it is through Amazon, for instance, returning a product (a shirt in this case) bought can be done only through them. 

The advantage for Bestseller, he says, is that “the product comes back faster to me and is back in the system.” Today, it takes anywhere between two to seven days for it to come back. In the new scenario, it is never more than two to three days and, in exceptional cases, the same day if the customer is close by. The product therefore spends less time in transit and that reduces costs. It leaves Bestseller more time to sell it.

In an ideal scenario, the company can also use the “inventory-in-transit” method, where the delivery boy collects the shirt returned by the first buyer and ships it to the other buyer who has requested for the same product. To check and match the shirt, the delivery boy can carry a handheld device. He will then repack it and print the label for the package. In the normal course, the package will get back to the depot but if the location is en route or in the vicinity, it will be delivered there. 

Rakesh Biyani Joint MD, Future RetailAccording to Rakesh Biyani, joint managing director, Future Retail, that manages multiple formats, apparel distribution in India is complex with the number of locations to be reached coupled with the large range that needs to be handled. “Having many touch points makes it very convenient for the consumer and that is what makes omnichannel necessary,” he says. For all the talk, omnichannel, barring a handful of retailers such as Future Group, Puma and Max, has still been slow to pick up in India. The reasons are a combination of inability to change the existing mindset and the investment to be made in technology.  

It is broadly gathered that the investment is a combination of technology, fulfilment centres and management bandwidth. At the top end, it could be in the range of 700-800 million for a large player.

Tech to play out

The real technology story at Bestseller started a little over three years ago. It began with Gautam getting a call from Ganesh Subramanian, founder of Stylumia Intelligence, a Bengaluru-based start-up. Its AI-powered tool, called Stylumia Market Intelligence, has the ability to interpret data collected from videos, social media and e-commerce sites. It could help predict which fashion trend was more likely to work. Stylumia helps other brands with this too.

Ganesh Subramanian Founder and CEO, Stylumia

Bestseller decided to first experiment with Vero Moda, a premium range for women. The challenge here was which shade of a particular colour would work. One of the early projects was for yellow tops, a colour that was generally liked. “We fed the engine with data and then proceeded to ask which shade of yellow was the best option,” says Gautam. The option suggested was a lighter one and the results were encouraging — that season alone saw a 15-20% increase in sales.

So far, Stylumia has worked with Bestseller on at least 30 new trends. “In 2018, when the Jack & Jones team was working on new trends for a festive launch, they came across the checker board pattern through the our platform. This collection was one of their top performers,” shares Subramanian.

On another occasion in 2019, the Vero Moda team was unable to decide whether to launch a bold trend such as snake print for summer. It was data-driven insights from Stylumia that validated the potential of the trend, which is now a top-selling category of prints for the brand.

“Stylumia helped in identifying the trend of long line T-shirts. It performed 60% better than other products made in the same season,” he says.

Gautam believes that data is handy when it comes to being more decisive. “You can come to a decision in a day, when earlier you had to speak to a lot of people and time taken was unpredictable. One still does a lot of informal research but data becomes a key enabler,” he says, adding, “in the case of fast fashion, hit rates are normally 60-70% and we moved it to 80%. The trick is to use data smartly and not depend on it alone.” 

Biyani thinks technology is more about hygiene today and not so much a differentiator. “It can lead to high levels of consumer delight if done well,” he says. That can never be understated in the case of fast fashion, which has changed the concept of seasons. 

Samarjeet Singh Co-founder and CEO, IksulaAccording to Samarjeet Singh, co-founder and CEO, Iksula, an e-commerce solutions company that works closely with Bestseller, it was the norm five to 10 years ago to have at best two seasons each year. Presently, Bestseller has four to six seasons and competitors such as Zara has seven to eight. “There is a high cost of going wrong. You could end up being stuck with unsold stock, leaving no option but to sell it at a discount,” he says. For mass fast-fashion brands, who work on a net margin of 3-4% at best, this can be fatal; for premium brands such as Bestseller with net margins of 8-10%, the risk remains the same. A majority of the inventory — 65% — has to be sold in 45 days; else the clothes have to be sold at a discount. The fast-fashion business is about fast launches and quick liquidation.

On omnichannel, a company wants a large proportion to sell from its own site instead of a marketplace, but that’s not easy. “Customer profiling is a lot easier since one knows how much time was spent by a shopper looking at a particular design. On the marketplace, that information is never shared with the brand,” says Singh.

Bestseller has looked at other ways to use technology smartly and the association with IBM could change the story. Last year, the two worked together to take a closer look at why off-shoulder tops from Only were not working. “The feedback from the market was that prices were high but that was not convincing enough a reason,” says Gautam. IBM undertook a comprehensive study of the sales model and concluded bright red was the most preferred option, while duller colours were pulling down sales. The partnership between the two is work in progress, says Gautam, but for now the technology gives data to the buyer, which was earlier not available.

Early next year, Bestseller is set to unveil the smart mirror working with a multitude of vendors including IBM. According to Gautam, the screen behind the mirror will read your product, making it “smart.” The approximate cost for each mirror is $1,000. That, he says, will ask you to try a jacket based on a shirt that you are trying or suggest other shirts that you could consider. 

The first ‘shopping wall’, a touchscreen one, will be out in two months at Bestseller outlets in Delhi and Ahmedabad. Fashion lovers won’t then need to rush to the stores before its closing, they can simply head to the towering screen and click on ‘buy’.

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