A Digital Future for Textile Industries
Digital option via disruptive marketing approach would yield better realisation for textile firms.
Indian textile companies must look at digital avenues as part of disruptive marketing efforts to reach out to domestic and global consumers rather than being private labels to global retailers.
Being at the crossroads in the aftermath of demonetisation as well as global concerns with regard to the Trans-pacific partnership-the Indian textile industry is in an already over-leveraged position within a task on hand. Over the past several years, textile companies had opted for the Technology Up-gradation Fund Scheme (TUFS) to modernism their manufacturing capacity keeping the future growth in global markets in mind.
But with limited success in the domestic market as also lower realisation, the companies have not been able to been robust repayment capacity to service its debt over the past few quarters. According to a study of 35 textiles companies, interest coverage ratio (ICR), which was over two times in 2015 and early 2016, had deteriorated to 1.4times, indicating lower ability to service interest costs.
The lower realisation and margins was a result of higher volume and wafer-thin margins with supplies of private label to global retailers. To add to their woes, the brick and mortar retail foray for many has not been an encouraging experience, but e-commerce may be the way to go.
At a marketing summit held last week, it was observed that the post demonetisation days have clearly showed how the country is set to leapfrog a few stages to embrace the power of the digital medium. Mobile technology is being rapidly adopted and marketers have an incredible opportunity to enhance the game of digital communication and deliver great customer experience at each point of the journey.
A recent report by KPMG on marketing stated that keeping the consumer in mind at every step of design, the conversation has been transformed in to a human machine conversation, with artificial intelligence (AI) powering apps, websites and other touch points. The marketer’s role will now shift to new methods of marketing technology. Here, marketers will have to make significant investments to understand and use the technology.
To conclude, textile companies will have to adopt the new digital order and redefine their marketing efforts to improve their brand building with improved realisation yields for their products and justify their scaling up of capacity undertaken at a higher leverage.