As per the Images India Retail Report 2009, the overall Indian footwear market stands at Rs 16,000 crore, registering a growth of 16 per cent over the last year. The market is expected to grow at a CAGR of over 20 per cent for the period spanning from 200
As per the Images India Retail Report 2009, the overall Indian footwear market stands at Rs 16,000 crore, registering a growth of 16 per cent over the last year. The market is expected to grow at a CAGR of over 20 per cent for the period spanning from 2008 to 2011. While according to a new research report conducted by RNCOS, the Indian footwear retail market is projected to grow at a CAGR of about 19 per cent between 2009 and 2012.
Thanks to the increasing brand awareness, entry of international brands and growing fashion consciousness towards the stylish and contemporary shoes that has brought in a transformation in the India’s footwear market. With the influence of branded market, the consumers today are no longer worried about spending heavily on quality and fashion footwears, which are available in low, medium to highly priced range. Gone are the days when people used to go abroad or buy trendy and high-end footwear from online portals. Foreign brands started pouring in the Indian market when the permission for 51 per cent Foreign Direct Investment (FDI) in single-brand outlet was allowed in early 2006.
In the retail domain, footwear is considered as one of the most organised sectors. At present, M&B footwear, Action Shoes, Shoe-tree, Metro shoes, Khadims, Zedds Footwear, Liberty, The Loft, Bigshoebazaar, Reliance Footprint, Major Brands and Murjani Group are some of the domestic brands that are also increasing their foothold in the market. They are not only bringing some of the internationally recognised labels in the market but also making their presence in the Tier I, II and III cities to give consumers the better accessibility to a wider range of footwear.
Besides domestic labels, a number of globally renowned brands are also present in India that caters to the niche premium and sports footwear segments. Adidas, Reebok, Woodland, Nike, Puma, Bata, Pavers England, Red Tape, Staccato, Netherland-based Ecco and Germany’s brand Llyod, UK’s Clarks, VI-GA, Caterpillar, Merrell, Jimmy Choo, Gucci, Lee Cooper, Moschino, Ffarna, Le Bose, Florsheim, Tommy Hilfiger, Sketchers, Rockport and Egle, Crocs, Carlton London, Merrel, Aldo, Nine West, Rider, Firangi, Dr Scholls, Charles & Keith, Greg Norman Shoes, Lee Cooper, Fratelli Rossetti, Lotto, Kappa, Hugo Boss and Marco Ricci are now present in India to serve different consumer segments. Besides selling shoes from casual to formal to sporty in their outlets, these shoe brands retail fashion and gym accessories also.
EBOs, MBOs retailing
Both domestic and the international brands are mainly retailed through MBOs, shop-in shops and exclusive/standalone outlets. Exclusive stores give better visibility to a brand in different styles while MBOs present the extensive range of brands, wherein the customers get a chance to pick any brand from low-priced to medium and high-priced footwear. MBOs present all the products of different brands under one roof while at exclusive outlets, the focus remains only on single brand products. For instance, in India, BigShoeBazaar.com is the first multi-brand outlet specialising in footwear and accessories with three distribution channels, franchisees, e-comerce portal and an online wholesale cash and carry. companies such as M&B footwear, Zedds Footwear, Bata India, Major brands, Crocs India follow retail formats like shop-n-shops, EBOs, MBOs and Kiosks to reach to the end consumer in a better way.
March in with franchising
To make an instant expansion in India, both domestic and international brands are exploring the franchise route to reach the untapped market. Adidas and Reebok are aggressively using the franchise route to make their presence on pan India basis. These days, many companies are interested to reach the consumers in the best possible way. They consider franchising as it gives them an opportunity to establish their brand presence in the market. In addition, the business model of minimum guarantee is very popular among footwear franchisors.
As per recent media reports, Bata India Ltd, a leading shoemaker, is now ready to roll out Bata stores on a franchise model. Another Hyderabad-based company, Zedds Footwear, is following the model of business format franchising to make a quick brand presence in the country. Talking about the franchise plans, Rafique A. Malik, Chaiman & MD, Metro Shoes says, “Definitely, we will grow through the franchise route. As we grow, we have no choice but to expand through the franchise model. However, we have to make sure that there is no dilution of our brand.”
Franchising in the footwear industry offers a lucrative opportunity to the budding entrepreneurs, who wish to take up the franchise of a popular footwear brand. As the brand is already established in the market, it helps the franchisees to reach the end consumer easily. Talking about the type of business model it offers, Manmohan Agrawal, Director, bigshoebazaar.com, says, “We have three kinds of franchise models. First is the lat 23 per cent commission model, second is mg+ commission model and third is mg or 23 per cent commission, whichever is higher.”
Mahtani reports, “Our business model varies from full management of shops being run by us with our regional managers supervising it.”
Franchisors ensure uniformity by giving an identical look, feel, ambience and customer service at all the outlets. While ensuring uniformity in all outlets, Andreas Gellner, MD, Adidas India, elucidates, “Adidas stores are designed as per Adidas’ global retail guidelines and provide high visibility. The brand offers advice and assistance to its franchisees on every facet of retail operations. All new franchisees are provided with a detailed return on investment.”
Business back-up & training
For successfully operating the stores, the companies provide complete business support and training to the existing and aspiring franchisees. For instance, Adidas India provides a comprehensive and multi-tier training programme, aimed at developing a generation of world-class retail professionals called the Adidas Retail University (ARU). Based on a globally successful retail training programme, ARU is a pan India training initiative with the objective of training all front end sales staff, thereby equipping them with the adequate knowledge and skills to deliver a first-class shopping experience to consumers at Adidas exclusive stores. It covers topics such as customer service, selling skills, visual merchandising and shop management. The objective is simply to set the industry standard in customer service at retail. Bigshoebazaar provides point of sale (POS) training for store manager for entering sales orders and calculating the stock reorders. Outlet staff training is also provided for the retail outlet/visual merchandising upkeep, soft skills for dealing with various customers and cross-selling and up-selling products.
Sourcing products lines
Chennai, Bangalore, Vellore, Hyderabad, Kanpur and Agra are the key footwear sourcing hubs for international brands in India. The international labels that are present in India are now focusing more on increasing their sourcing of products from India. Also, few companies are setting up their design and manufacturing facilities in the country. The reasons behind sourcing the international product lines from India are competitive labour costs, escaping high import duties and localising the design element.
“We have a specialised merchandising team which liases directly with the manufactures of the brands to take care of the stocks and the assortment,” clarifies Agrawal.
Mahtani states, “With design studios in Dubai and Dusseldorf, we have the latest trends coming to our buyers based in India. We then source our products from various manufacturers globally.”
On the other hand, Adidas is looking at significantly upscaling its footwear production facilities in India.
Toe the line to defeat competition
To minimise the risk in today’s business landscape, existing Indian players are now polishing their products to resist the competition from the international labels. Not only Indian, but international footwear companies are also aggressively focusing on increasing the marketing and promotional strategies of their brands to target the larger customer base. They are concentrating on signing/hiring in sports players and film celebrities as their brand ambassadors, conducting brand promotion through print and electronic media advertisement campaigns or using the social networking websites to reach consumers in the best possible way. To lift up sales, some companies are focusing more on providing unlimited discounts, off season sales and brand loyalty programmes to hold on to existing and target new customers. Also, the companies focus on off-season sales, which help them clear the dead stock and add on the new stock in their outlets.
Murli Desingh, Deputy Manager, Crocs India, says, “We believe in building brand’s visibility and sustaining its awareness. This is basically via PR activities, press conferences (featuring new season launches, new store), grassroot events, various event sponsorships and print media.”
On beating stiff competition, Vinayak Mahtani, MD, VI-GA, says, “The entry of international brands in the Indian market will assist local retailers in improving their benchmarks. Retailers, who have been surviving with no expertise in the footwear trade, will suffer. However, footwear retailers who have a clear-cut plan and vision along with professional operations will have the opportunity for exponential growth.”
Gellner, however, seems quite optimistic of the entry of foreign labels in India. He believes, “It is a good sign that more brands are entering India, which will offer consumers more choices. However, the key is to stay customer focused, which benefits the brand and eventually the industry. The Adidas brand’s mantra is simple, invest in the brand, focus on our consumers, relentlessly pursue innovation in product and retail experience and focus on the financial performance by streamlining back end processes.”
Most of the international brands that plan to capture the bigger share in the Indian market must pay attention on offering their products by adding on local touch and feel in it.
“Localisation is important; however the brand must retain its international appeal in terms of the quality offerings and the retail experience. Keeping in mind the local tastes and preference is very crucial while stocking at individual store level. Offerings at a store in Delhi will be different as compared to a store in Ujjain or Satna,” says Gellner.
Visual merchandising lifts sales
Companies today should work more on customer retention tactics. If the visual appeal of a store is impressive, it will catch the eye of a passerby and lift up the sales. Talking about the key role of VM in enticing the customers to the stores, Desingh believes, “Visual merchandising today forms a critical element of retailing. Besides the facade and windows, which are clearly done up with an objective to attract passer-bys and induce walk-ins, there is also in-store decor that is designed to enhance the customer’s comfort and convenience while shopping and overall, offer a superior shopping experience.”
Also, many companies change the VM of their stores during the festive seasons and it usually includes changes at in-store level. “We focus on regular updation of our store windows and also update visual presentation of merchandise in our stores. The merchandise in our stores is laid out according to sports categories like football, running, tennis, training, etc. We make sure - by deploying VM techniques and through in-store communication - that the consumers get the right brand message and also feel invited to shop,” opines Gellner.
Picking the right location
To position a brand in the market, it is important to open the stores at right location, which attracts maximum footfalls. Considering this, most of the companies nowadays prefer to open stores in highly visible and trafficked areas such as high streets and shopping malls to draw high footfalls in the stores.
“As a strategy, Bigshoebazaar stores purposefully allocate franchisees in areas where footfall is high. All our outlets are in high footfall malls and high street retails hubs,” adds Agrawal.
Bigshoebazaar helps the franchisees in finding out location and they suggest them in negotiating the lease and rental for the location.
“Retail rentals in India are amongst the highest in the world. While the economic slowdown led to some correction, we feel that there is still scope for the rentals to come down. However, our growth plans are intact and we continue to invest in the market. Selection of location in terms of malls and high streets depends on multiple factors, including footfalls, our existing stores in the area, other labels and anchor brands present, etc,” considers Gellner.
Stepping forward to expand
Leading global brand Aokang recently announced its plans to set up a factory and open 100 exclusive stores and 500 points of sales in the coming five years. Zedds footwear recently entered into franchising by opening it first franchised outlet in Hyderabad. Metro footwear would soon be launching its new brand ‘Mochi’, and it would open its stores 40 stores by 2010-2011. Talking of his company’s expansion plans, Rajesh Rawtani, Director, Zedds Footwear, updates, “We plan to open four company owned and four franchised outlets by 2010.”
On the other side, talking about the scope of the industry, Desingh feels, “Standing at the threshold of a retail revolution and witnessing a fast changing retail landscape, the Indian footwear market is set to experience the phenomenal growth in coming years. Most of the international brands have identified India as one of the fastest growing footwear market, which has pulled them to mark their presence in our markets.”
He adds, “The Indian footwear market scores over other footwear markets as it gives benefits like low cost of production, abundant raw material and has huge consumption.”
Rafique A. Malik, Chairman & Managing Director, Metro Shoes, adds, “Fortunately, it is one of the most organised industries and a lot of scope is there, as people have become much more aware about the footwear as a fashion accessory.”
The Indian footwear market is likely to see a double-digit growth with the increasing dominance of many foreign labels in the market. Seeing their growth in India, domestic companies are now focusing on different strategies to make their presence felt in the country. To reach the consumers in a better way, the companies are chalking out their ambitious expansion plans to target the value for money consumers.