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Mar, 01 2009

Increasing foothold

Franchising has proved to be the right mode of entry for international brands into India and footwear industry is no exception. After testing the Indian waters and finding it suitable for their brand, international companies are setting up their base ther

Diverse demographics, influence of media and lifestyle and ever changing consumer preferences and congenial environment for doing business have made India a favourite destination for international tie ups. International footwear brands have entered into India through franchising route and joint ventures; wherein the ratio varies, through 100 per cent subsidiary, revenue sharing model or master franchisee model. While before testing the Indian waters, these companies have made their presence in other countries as well. These companies have been strategically planning their expansion and increasing their foothold in the markets suitable for their brands.

International brands

Lee Cooper, Geox, Merrell, Aldo, Rider, Nine West, North Star, Hush Puppies, Marie Claire, Firangi, Marco Ricci, Vi-Ga, Lotto, Charles & Keith, Dr Scholls are some of the international brands that are present in stores across the country. Indian companies like M & B footwear, Major Brands, Reliance Footprints, Bata, Sports Station India, have entered into franchise agreements with international companies. Also, brands like adidas and Reebok have entered through 100 per cent subsidiary. Of international brands in India, Purnendu Kumar, Associate Vice President, Technopak Advisors, says, “In sports - Reebok, Nike, adidas, Puma, New Balance, Converse etc, and in Leather - Aldo, Nine West, etc are present in India. International footwear industry is growing by about 5 to 6 per cent per annum.” Highlighting the reasons of India becoming a favourite destination and estimating the size of footwear industry, Andreas Gellner, MD, adidas Marketing India, says, "As per our estimate, the branded sportswear market is approximately Rs 2,500 crore. India as a market is in a very exciting phase of retail development. With increasing purchasing power and a growing preference for premium brands, there is a promise of high growth for global brands like adidas. India`s potential as a market is no secret and there are a growing number of brands that are chasing the `Indian dream`.”

Major Brands is the master franchisee of three international brands and have brought Aldo from Canada, Nine West from America, Charles and Keith from Singapore. Apart from India these brands are available in Middle East, Far East, Canada and Europe. Of Pavers England`s presence in India, Utsav Seth, CEO, says, “It is a joint venture in action involving innovative plans from start to finish in all aspects.”

Care and caution in adopting a brand

While we examine the suitability of a product or a brand for trade, we must dig deep into the nitty-gritty of the brand product and its conditions of tie-up agreement. Examining of papers becomes all the more critical when it comes to finalising the deal with the international firms. The business model and intricacies have to be looked upon carefully and deeply in order to avoid blunders and which may lead to strained relations later. Hence a thorough research of the credentials of the company, whether indigeneous or international, profile of product and terms of agreement, should be conducted before entering into an agreement.

In fact, every company has its own ways to conduct the research and decide which brand they would like to partner with. According to Pavers England, retail experience and product profile are important factors to consider, while, Major Brands feels that the strength of a brand, and its success rate should be considered. Kamal Kotak, Director, Major Brands says, “Most importantly, we saw the success of these brands in Dubai and Singapore, and if these brands have been a success there, they have chances of doing fantastically well in India as well. Else, we do our research internally, for instance, which are the competitors in that category, what pricing should be fixed, do we need to change the product design, what kind of sizes do we require in India, where the stores should be opened, hence such kind of research is carried out.”

Promotional strategies

The awareness of a particular brand to its target customer, calls for strategic promotional and advertising tool. Commenting on the strategies, Kotak, says, “We do lot of work on the marketing front for these brands in India. For all seasons, we come out with new advertisements, … We are now introducing new loyalty program. Also, we get forms filled by customers at stores and then they are given free gift vouchers. So, we try to push the customers so that they become a part of our data-base and enjoy the benefits. As per the pricing is concerned the average retail price is Rs 2000 to 5000.” Talking about adidas, Gellner says, "Our marketing strategy in India is in line with our global marketing strategy. We invest significantly in signing and leveraging our association with locally relevant assets like Sachin Tendulkar, Virender Sehwag, Sania Mirza, the Delhi Daredevils and the Mumbai Indians." Working in accordance with the international partners` format, Pavers England too has their strategies in place. Seth, says, “Pavers England Footprints is responsible for the brand presence in India through a combination of marketing activities. We do marketing, brand and sale promotions, establish stores and provide customer service.”

Time for change

Every season demands a change in attire, and so does the footwear. The much fashion conscious Indian is particular and fully aware about which footwear goes with which outfit, thereafter, creating a need to design and manufacture footwear according to the changing season. Going by the circle of nature, the change in design happens four times a year for the four seasons, namely summer, spring, autumn and winter. While companies have their own plans to introduce new footwear line for every season. Pavers England introduces new collection thrice a year in tune with the season, while Major Brands introduces it four times a year.

New stores soon

With year on year, these foreign brands have added their stores at all possible locations in India and are on their expansion spree. Pavers England Footprints has currently 25 shop-in-shops and none in stand-alone format, while by September `09 they intend to have 100 stores comprising both shop-in-shop and stand-alone. Major Brands too has plans to expand their foothold in India by opening more outlets in tier-2 cities whereas, it has stores in tier-1 cities already. Currently, Aldo has three stand-alone stores, Nine West has four stand alone and two shop-in-shops where as Charles & Keith has two stand-alone and four shop-in-shops and these stores are open in Mumbai, Delhi, Bangalore and Kolkata. Opening new stores across India, these three international brands would be seen opening in Pune, Delhi and Hyderabad this year, and this would come out to be ten stores approximately. In the coming years the company plans to open stores in Ahmedabad, Chandigarh, Ludhiana, Pune and Hyderabad. adidas has 425 exclusive stores and over 2,000 multi brand outlets in 130 Indian cities and has plans to add 200 stores this year.

USP

Indians are crazy about international stuff and there are reasons for the same. Be it the style, cut, colour, pattern or design, there is the classiness or sophistication about international brands. Whether it is apparel or footwear, Indian customers go gaga for their products. So, what makes these brands really stand out and stay ahead from their competitors? Talking about this feature of international brands, Seth says, “Pavers England has three decades of heritage, rich successful retail experience and the product quality, appealing designs and comfort, giving the value for money to our customers. In short, quality, design, comfort and price is our USP. Whereas, Kotak highlights the USP of his international brands, “Sourcing from quality suppliers around the world, product and designs being done internationally, giving the customers the feeling of true international standards and receiving the product which is quality checked by our franchisor, further makes us assured that we are receiving the right product and the designs are in accordance to the latest in the market.”

Tie ups

Entering the Indian shores have given way to new tie-ups and ventures, and India has grabbed the attention of the international franchisors and marketers which has further increased the discussions between Indian retail brands and foreign companies looking for tie-ups. Showing the similar sign of progress, Seth says, “We are in the process of discussion and we will be introducing a new footwear line this year.” Other companies too aren`t way behind; Major Brands too has their plans and discussions going on. Excited about the new ventures, Kotak says, “We are in discussions with couple of other footwear brands. Categories include one brand from USA for ladies footwear which will offer more comfort and the other brand which would be from Canada is for young teenagers where the pricing would be affordable.”

Franchising as business model

Indian companies have all praises for franchising a business model, which has given them a platform to explore the foreign opportunities and satisfy the ever increasing and changing Indian consumers` tastes. Talking highly about the franchise set up, Kotak says, “Owing to the franchise route our foreign partners have provided us the similar kind of infrastructure as they have provided to their worldwide stores, which is working quiet well for us, be it the pricing part or the sourcing part.” Kumar talks about the statistical aspect of franchising. He says, “International brands in India can have only 51 per cent as ownership. Most of the brands have come through franchising, which is working very well as they have strict control over the quality of service and store ambience.” Seth too comments on the benefit of franchise model and says, “A revenue sharing franchise model is good with less of investment and more rewarding with profit returns.”

Promising future

Struggling for takers on the same shelf, international brands have over the years established their right foot in the international market other than being popular in their own domestic locations. Looking at the positive future of Indian footwear industry, Kotak says, “In the future I would be looking at the concept stores coming up in India as in USA. So, I see the Indian footwear industry moving towards the direction of international footwear culture.” Predicting the dominance of which footwear category on the Indian store shelves, Kumar gives his view point, he says, “Sports will be dominated by international brands. Leather will be dominated by Indian brands (BATA/liberty/Action/Metro) at the mass and semi-premium segment and premium will be ruled by international companies.” Seth too is optimistic about the future and says, “The Indian retail market is the biggest opportunity any retailer will see over the next decades. We will find tremendous scope for good quality footwear in Indian market and we are looking at positioning our self in a very limited segment of aspiring customers who need comfortable, good quality footwear at a reasonable price.”

Slowdown – not a dampener

Although recession has hit the global economy, yet here the story is different, in words of company officials themselves. They do not think recession has made a heavy dent on their businesses. While talking about the impact of recession, Seth says, “No. It has rather helped. companies in UK look forward to the Asian market as an alternative as India is a promising market.” Ditto opinion is given by Kotak, who says, “It hasn`t really affected. As a partner we are associated with our foreign partners and our tie up and relationship is equally good. Though recession has had a huge impact but our partners have supported us because of our strategic advertising and our promise to them.” Further, he adds, “During this recession time, we have not reduced the amount of advertising and marketing activities. We have worked smartly with media partners to ensure that the brands are visible but at lesser costs. Also all our brands have shown an increase of 15 - 20 per cent in sales as compared to last year this time.” This indeed is a positive outlook and if we see from a broader view point, there are people who are buying as usual, and many made the most of the season ending sale quite visible as that, the recession hasn`t really dampened the spirit of shoppers to a larger extent.

Ending on a positive note, international companies are putting their best foot forward and India remains a promising destination.

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