As companies roll back work-from-home and cities fill up with people, premium innerwear brand Jockey is also trimming its distribution network in smaller towns to focus more on its traditional markets.
Indeed, before COVID made ‘lockdown’ a part of the popular lexicon, Jockey was mostly popular with the urban crowd, particularly young, urban males.
But, when the pandemic depopulated cities and sent office workers to tier-2 and tier-3 cities in search of lower living costs and family support, Jockey too decided to follow suit: Page Industries, the company that owns rights to the brand in India, went on a spree to expand its network in smaller towns.
For example, in the three years since the pandemic, the company has doubled the number of its exclusive showrooms to 1,372 from 770 and its retailer network from 67,000 to 1.2 lakh.
“We had to be there in Tier 2-3 cities,” explained Managing Director VS Ganesh, looking back upon the company’s decision to spread out across small-town India.
Now that the pandemic is over and office-goers are returning to cities, Page Industries – which also manufactures and distributes Speedo sportswear in India – is scaling back its presence in some of the more remote towns.
The company shrunk its retail network by around 2,300 in the three months ended September.
“..these outlets, though it was recording some sales, were not as profitable or viable for us to service those markets, so there has been some rationalization,” said Ganesh.
The cuts are happening in the company’s multibrand dealer network, rather than its exclusive outlets, which is still growing.
Ganesh said Jockey was not planning to cut down on the markets but only on the number of shops.
“..It’s not that we are not there in tier 3, tier 4 cities.. but in a city with less than 50,000 population you can have 4 outlets, you don't have space for 8 or ten outlets..,” he said.
This rollback of expansion strategy comes amid a significant slowdown in demand for the somewhat premium-priced products that the company sells.
Though an essential commodity, the innerwear industry is also feeling the heat of low consumer sentiment that has already dragged down growth in several other industries.
For example, sectors such as fast food, consumer goods, automobiles, clothing and accessories have all seen their growth shrivel as people put off as many of their purchases as they can due to economic uncertainty. This is, in turn, blamed on the overall climate of economic slowdown
Gender Differences
Interestingly, amid the overall decline in demand, it is the women’s innerwear category that is proving to be comparatively more resilient.
The company attributed the resilience, especially in the bra segment, to its innovative ad campaign “that helped create awareness” and a new approach by sales associates towards the consumers.
“We have done a lot of work as far as store associates are concerned. This is one category where they work as solution providers more than saleswomen..I'm proud of the efforts our sales team and learning and development team have taken collectively to make them solution providers to the consumer,” said Ganesh.
The company’s ad campaign titled #KnowsMe, highlighting the importance of knowing your body and choosing your inner wears accordingly, also worked well for the category.
At the same time, the men’s innerwear category has been under persistent pressure in terms of demand over the last year, said the company.
Though the company did not mention any specific reasons for this categorical decline, it reaffirmed that a dip in demand does not hint at a loss of market share for them in this category.
“I don't think customers have downgraded [to other brands], the quantity they've been buying has reduced..even peer companies are under pressure as far as volume is concerned,” said Ganesh, adding that the current decline is fuelled by an overall “control on the spends seen across the FMCG and other industries.”
However, the company also pointed out that there is some traction in the premium section of the men’s innerwear category.
“…people who have the money are actually spending..,” said Ganesh echoing the trend seen across several industries including the fast food and footwear industries.
The management of Jockey also said it expects demand to come back in full form as innerwear is an essential commodity that should draw demand and recover sales faster than any other industry.
“..we want to have sustainable sales, we are taking actions on that front..when the market recovers we will be the first to bounce back..,” Ganesh explained.