Liberty Shoes has started seeing favourable numbers amid a gloomy economic sentiment—benefits of a recent company strategy that involves a revamped supply chain focussed on slashing inventory turnover and chopping marketing spends on sub-brands by almost 60 per cent.
“A brand like ours performs better even when the economy is not so good, because we have positioned ourselves as a value for money product. If there is a cut (in demand), it happens from the higher bracket price points,” said Anupam Bansal, executive director of the Liberty group, in an interaction with The Hindu on Friday.
He believes that Liberty differentiated itself from the competition by shuffling its production cycle from a demand-forecasting system — based on extrapolating sales and holding inventory for a three-month cycle based on prior trends — to a JIT (just-in-time) inventory system geared towards maintaining constant supply for the best-sellers, viz. 20 per cent of the products contributing 80 per cent to the top line.
Unwilling to comment on how competitors’ reacted to this strategy, he avers that it resulted in the supply chain lead-time dropping from 6 months to just 21 days, a massive saving in stock-carrying costs, the biggest chunk of a fashion company’s cost of production.
“There is no point in keeping huge inventories and incurring stock carrying costs when you don’t know for sure what will be sold tomorrow,” Mr. Bansal adds.
Liberty maintains 10 brands in its portfolio. However, advertising spends on sub-brands — including Fortune, Coolers and Footfall, to name a few — were actively reduced from 90 to 30 per cent of the marketing budget, in a move to consolidate the parent brand.