The organised arm of the Indian footwear industry is currently an upcoming and profitable retail segment. Today, India is ranked the second among the footwear producing countries
The organised arm of the Indian footwear industry is currently an upcoming and profitable retail segment. With lot many international players considering India as a potential market place. Today, India is ranked the second among the footwear producing countries, next to China
Tanu, a beaming youngster of today, enjoys an interesting passion, for the latest footwear collection. Ever since her childhood, be it a special occasion or otherwise, she could not resist buying unique and stylish shoes. For her the most valued gift from her family is a footwear.
Surprisingly..., when asked to name some exclusive branded footwear outlets in the country, she could not name any.
The footwear sector in India is mostly unorganised, inhabited by small retailers offering a large variety of locally made footwear.
Though globally this sector is well organised, with top brands operating through the franchise business model, in India 80 per cent of the industry is still unorganised.
While researching on the status of this sector, our team of experts discovered that till recently, there was not a single store in the country, which could be regarded as a complete organised store. This article looks at the footwear industry in India and what needs to be done.
ORGANISED footwear retailing in India is a recent phenomenon and it is estimated to be a Rs 2,000 crore industry. Though retailing in footwear is flourishing, franchising is still in its initial stages in India, with few footwear brands readily adopting franchising as a business model. Bata was the first organised franchise chain in India and is considered as pioneers of Indian franchising.
By and large the prominent players of the footwear industry treated India as the second’s market. With a significant change in behaviour of the consumer, the branded footwear and international players are compelled to restructure their retail strategies and product preposition for India.
Over the years Indian footwear sector has noticed a change in demand from low to medium and high priced products, and as a result more and more global brands in footwear are being attracted towards India. The sports shoes segment is also witnessing a paradigm shift as large global brands like, Reebok, adidas and Nike, are looking forward to Indian market with their aggressive expansion plans. India, therefore, appears to be one of the largest and fastest growing markets. Though having a very strong holding on the manufacturing sector in the footwear industry the domestic marketis still struggling at a nascent stage. But, still we have to come a long way in making it run in a very smooth manner. The opportunity exists for home grown brands to evolve and capitalise on local market especially in lifestyle and premium segment, wherein the margins are considerably high. India as such is evolving in retail and brand planning and with very few international players in this segment the opportunity is galore.
Mr Susil S Dungarwal, CEO, The LOOT, Jay Retailing and Merchandising, opines, “Footwear retailing is really growing at the rate of 30 per cent and the trend will continue for the next few years.”
Specifying the reason for why franchising is not flourishing in footwear sector, Mr Inder Dev Musafir, Director, M&B Footwear, says, “There are not many examples of multiple stores in the footwear retailing business, which is the reason why there is an absence of franchise opportunities in this sector.”
Increasing brand consciousness
Small kiosks in M-Block market in Delhi offers the same quality of footwear, which is also available in the air-conditioned store next door and moreover enjoys the same clientele. The Indian footwear sector still has to go a long way in building a name to match to their manufacturing abilities in this sector. Globally footwear carrying a name and a logo is increasingly seen as a status symbol but still in India not much of people actually abide by this notion. According to an estimate, at least 96 per cent of the world's footwear output is 'branded'. A brand stands for certain values, qualities and price points that can be used to judge an individual's status. Indian consumer still has to develop a stronger brand preference and loyalty. According to Mr Andreas Gellner, managing director, adidas India, “Indian customer today has his ear to the ground, and is very aware of international movements in fashion and technology. He is not willing to settle for anything less than the world's best brands. After all, he is not just buying a brand, he's buying into a community and a channel of expression through the brand's universal value.” Similar are the views of Mr Harkirat Singh, managing director, Woodland, who maintains, “Branded footwear market is growing tremendously with people becoming more brand conscious and ready to pay some extra money for quality.”
This shows how the behaviourial pattern is changing about the whole concept of branded products in India.
Global footwear brands foraying into India
Key brands foraying into footwear sector following Indian retail boom, are making a beeline for setting up shops here. Internationally reputed footwear speciality store, 'The Athlete's Foot,' has recently forayed into the Indian market by opening its first store in the country at Bangalore on 11th February 2006.
`The Athlete's Foot' is the world's first franchisor of athletic footwear and is recognised as a world leader in athletic footwear franchising. In India, ‘The Athlete’s Foot' has tied up with Planet Sports, who pioneers the concept of 'sports lifestyle retailing.’
The store will house brands like Nike, adidas, Reebok, and Puma. The highlight of the store is the "fitprint system" that provides a customer an analysed data of his feet and the kind of footwear he or she should wear.
Hong Kong-based Esprit and Hong Kong-registered Tommy Hilfiger are one of the most high profiled of the clothing and footwear franchisors making an entry early in the trend.
Tata International, recently, launched Europe's premium luxury brand 'Lloyd' at Mumbai. Global brands, including Reebok, adidas, and Nike, are already in the casual footwear segment, while another brand Sketchers is waiting in the wings to enter India.
Clarks has, recently, opened its exclusive outlet in India. Brands such as Lotto, Marco Ricci, and Valis are also doing good business. Clarks has its own stand-alone store and the company has aggressive marketing plans.
Reebok, which commands around 47 per cent of the premium sports shoe market in India, already has franchise stores in India, and is planning to open one store per week. Reebok is also increasing the size of its stores from an average size of 800 sq.ft two years ago, to an average of 1,500 sq.ft now. For adidas too, India is the largest market in the south-east Asian region. Mr Gellner informs, “adidas enjoys very strong brand equity in the Indian market. Our brand is associated with technological innovation and of course quality. At adidas the focus is our passion for sports, the athlete, and the product. This passion comes loud and clear in every interaction between the consumer and us.” There are stores like Khadims, Shoe Tree, The Loot who have grown mainly through its outsourcing strengths, and, have retail outlets and franchised shops in both urban and semi-urban centres. These players are open with the idea of franchising their stores further as they hold an expertise in retail branding. More and more global companies are partnering with them to house their brands in their stores looking at the retail experience and brand positioning that these stores offer.
Organised footwear retail market
With all these brands entering the Indian footwear sector, the market will definitely grow larger and create a niche for itself.
“Almost 80 per cent of the footwear industry is still unorganised which is the reflection that we see in the footwear retail market also. The footwear retail market is still evolving, and the introduction of mall culture is the first step towards organised footwear retailing,” says Mr Musafir.
“Retail in India is witnessing a huge revamping exercise. Western-style malls have begun appearing in metros and second-rung cities alike, introducing the Indian consumer to a shopping experience like never before,” says Mr Gellner. While discussing the role of The Loft in footwear sector Mr Dungarwal elaborates, “In the past few years, footwear has suddenly become an important category, thanks to retailers like The Loft and Shoe Tree, etc. The Loft can be credited with uplifting the footwear category and bringing it to the front line.”
Highlighting the growth of the footwear industry in India, Mr Jai Prakash Desai, CEO, Metro Shoes, says, “The Indian footwear market is growing at the rate of 8 to 10 per cent per annum. More and more foreign brands are introduced in India.”
According to Mr Dungarwal, “The footwear manufacturers need to develop a marketing and retail driven plan. They really have to get more focused and skewed towards the retailers than the distributors, which is the case as of now. Once the manufactures are retail driven, they will automatically become customer driven and that will really give a boost to the manufacturers.”
Franchising in the footwear sector is not flourishing. Supporting this Mr Dungarwal says, “Since footwear is a specialised category, running this business model on the franchising format will be surely difficult. Footwear franchising is not developing as most of the brands are manufacturers and they give more importance to agents and distributors than franchisees.”
Similar are the views of Mr Desai, “Footwear retailing is a personalised service. The customers prefer to try the shoes to check the fitness and comfort before buying. Because of its inherent process no well-educated person prefers to do the job, although the situation is changing now. There are very few players with national presence in footwear retailing. Those with regional and national presence prefer their own staff which is well-experienced in shoe retailing rather than depending on a franchisee.”
While describing the company's requirements from a perspective franchisee Mr Musafir, says, “The only requirement from the potential franchisee is its management skills to run the show, for which the franchisee gets a commission on sales. In addition, the potential franchisee must give a security deposit to the company based on the size of the property.” This is something really unique about M&B footwear's franchise system.
Mr Gellner, while speaking for franchising in footwear industry says, “We have re-evaluated our partnerships, and today we work with a group of franchisees that share our vision and aggression. As a result, our retail channel is growing stronger and more focused day by day.” In contrast to Mr Gellner’s views Mr Singh opines, “Franchising in footwear is not growing as there are few brands offering franchising in footwear.”
There is no denying the fact that footwear franchising is in its nascent stage in India. At the same time we can not ignore the fact, that footwear sector is growing and with lots of international players entering the Indian footwear market the future of footwear franchising appears to be quite bright.
Selecting a footwear franchise
With very less franchising in India, the industry must look at getting their strategies in place for franchising in footwear.
Mr Singh holds, “Profit making is a major concern for every aspiring franchisee. One should look for the history of a brand, and the way it is