Prominent footwear brands are fast moving to smaller towns and finding Indian tier-II and III cities as the hot business destinations. Let’s find out why brands are moving to these cities and what is changing for franchise players in these locations.
For over the last few years, people in tier-II, III cities have witnessed a huge transformation in their lifestyle. This has created the demand and urge for branded wearable. Not just fitness, clothing or QSR players have found these markets hot but footwear brands have also seen the dividends. Factors like growing disposable income, improved lifestyle, brand awareness and least affected country by slowdown in economy have majorly attributed to the rise of the shoes players in these towns.
Both unorganised and organised markets have almost equal market share but recently the big ogranised players have seen more penetration in smaller towns which have traditionally been unorganised players’ paradise.
As per market research firm Euromonitor International, footwear is expected to perform strongly over the forecast period with a constant value CAGR of 7% growth and sales expected to touch Rs 860 billion by 2019. The Government of India announced a number of initiatives for the footwear industry in the budgets presented for financial year 2015 and 2016 including cut in excise duties of footwear products. Footwear is expected to become more affordable and government initiatives to attract foreign direct investment would also help propel growth of the industry.
Brands entering tier-II, III towns
Indian and foreign brands are aggressively penetrating the smaller towns having already exhausted the most part of metros and tier-I cities. Prime footwear brands like Bata, Liberty, Clarks, Woodland and others are spreading their operations in these locations.
British brand Clarks, which entered the country in April 2011, finds a huge potential in these cities. “I can say that there is a big potential for a brand like Clarks in India. We have seen some extraordinary responses from Indian tier-II customers for Clarks as customers can easily make out the difference in brand heritage, quality and comfort which is our biggest USP. There are at least 100-200 tier-II cities in India and based on the so far response from customers, we are confident to expand in such cities quickly and successfully. Also, emerging markets are a core strategic focus for Clarks in India. We focus on tier-II and III cities for expansion as we see a lot of potential for the growth of global brands in this market,” says Lokesh Mishra, Vice President, Sales & Operations, Clarks India.
Even Woodland is currently working on a strong franchise model to grow its presence in smaller cities and reach closer to the customer. The trend of smaller towns catching up with its bigger counterparts in organised retail has been witnessed in the last two to three years.
With leading brands eying increased presence in these towns, the locations are expected to throw a large number of franchise opportunities for entrepreneurs. Almost all major players expand their physical presence via the franchise route in India.
“We will continue expansion in tier-II and III markets through company-owned retail stores as well as actively seek out franchise partners to give the best to these markets. We are looking at expanding our retail outlets to 150 from the current 60 stores in the next five years which will be a mix of company-owned and franchise stores. We already work with the leading franchise partners in India and we will only look at expanding our franchise base to take the brand to smaller cities,” adds Lokesh Mishra.