Good morning, having made it through Monday and Tuesday, you might be in need of a little extra zing to get through the week, so here we are.
Is that coffee you're sipping? Yikes! 😉
In Vogue Again
The years 2020 and 2021 represent the dark era for fashion retail pundits because it left them without anything to build a forecast upon.
As fashion retail is on a growth path lately and there is some data to chew on, the forecasts have made a comeback. And it's looking good.
How's The Weather?
Market watcher ICRA, in a recent report noted that through July and August 2021, the fashion retail segment's merchandise sales were up to 70-85% of pre-Covid levels. However, the average ticket sizes are still lower than what they were in FY21 (April 2020 to March 2021).
FYI, fashion retail was asphyxiating since the beginning of the pandemic as high-street malls and other outlets were forced to down their shutters.
Riding on the wave back of rapid vaccinations and an overall economic recovery, the sector may close the year with a 23-25% revenue growth.
What's On The Radar?
The extent of rental concessions in Q1 FY22 has lowered by up to 55% compared to the first wave, salary cuts are being rolled back slowly, and equity investments have been up since FY21, giving fashion brands the prowess to increase Capex.
🛒 Though the pandemic has accelerated online shopping, fashion retailers will continue to focus on expansion through stores. Checkout girls and boys, get your CVs out.
Feeling The Squeeze
Housing Prices - Stable 👌
Income Levels - Increasing 👍
Construction Costs - Increasing 😓
Builder's Margins - Disappearing 😖
Rapidly increasing input/construction costs cannot be absorbed infinitely, say real estate developers squeezed between stagnant prices and soaring material costs.
As a result, some price increase will become inevitable, setting off a domino effect of delaying /postponing demand fulfilment - a concern for the entire economy.
What's Going Up?
Apart from demand, everything. Lately, construction materials like steel, cement, resin, PVC pipes and cables, have all seen price hikes between 30% to 50%.
With the slow rising demand for property and the sector's hopes pinned on the upcoming festive season, touching that price tag is akin to committing suicide.
Spanner In The Works
Sunil Kumar, executive member, CREDAI Kochi, told the Times, "construction costs have gone up in two ways — the first being the higher prices of raw materials, which comes to around INR 350 per sq. ft. and second, INR 500 due to the unavailability of GST input tax credit."
"In effect, the per sq. ft. price has gone up by INR 850 in Kochi. A boom might be coming in Kochi too, but the question now is whether the market will be able to absorb the increase in construction costs," Sunil added.
🌏 The peril of rapidly increasing material costs in construction, is now a global phenomenon, BTW.
- RWAs urge Noida authority to penalise owners of vacant plots. Vacant plots bought and parked by investors solely for profit add to the housing crisis, while also being hazardous to the locality.
- Finance Minister Nirmala Sitharaman said that India has the highest Fintech adoption rate of 87% as opposed to the global average rate of 64%.
- Popular kitchenware brand Tupperware has drawn up aggressive expansion plans, including setting up of 1,000 retail stores across the country over the next five years.
- New Zealand is introducing rules designed to make property speculation less appealing to improve record low housing affordability.
Hot Seat
After numerous disruptions in real estate, proptech is now tinkering with shaping office environments.
The pandemic has got many companies re-thinking their office spaces and why or how should their employees use them.
How Does That Work?
After core product and employee costs, the third cost for enterprises is the real estate that its people occupy, and that is not an insignificant cost by any standard.
It is thus natural for many organizations to relook at their offices to better understand space-planning, scheduling, and space utilization, to optimise their business costs and performance.
New tech is now using employee hardware IDs within the office to understand where they spend most of their time - at their desk, in meeting rooms, collaborating with other colleagues or at the chai vending machine.
This is done by either using the ethernet or by triangulating wi-fi signals.
Sounds Intrusive!
Proptech startups creating such software reiterate that the technology is not so much about identifying who is in a location/seat at any given time, but rather the longer-term patterns of how staff use office space in general.
Did Any Good Come From It?
Here are some cool takeaways.
📌 Due to holidays, illness, out of office meetings and other stuff, at any given moment, 20% of desks are always unoccupied.
📌 Employees are delighted by the live-data application that tells them which meeting space is available at a given time.
📌 Aircons, lights and other power consuming activities can be controlled in real time, based on the number of employees in a particular section of the office.
📌 50% employees-only or other statutory restrictions due to health hazards can be automatically enforced and tracked.
While numerous applications and analytic tools are being developed, it seems tracking people is one way to solve pain points to make working spaces safer and more delighting.
Fashion retailers need all the support they can get right now.
If you have not recharged your wardrobe yet, you know what to do this weekend.
Have a fruitful mid-week. Cheers!
☕ The Crew@Ginger Chai