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Are you tired of your daughter's tantrums pestering you for the right stilettos that bear an uncanny semblance to her cocktail dress? Today, the footwear industry has spoilt consumers in matters of their choice. The footwear segment lies at the core of th
WITH increasing affluence, consumers are spending as much on footwear as on apparels. Though the market boasts of many domestic brands, foreign brands such as Nike, Adidas, Puma, etc., have also been able to carve out a niche in the Indian market. Let's have a sneak peek at how the footwear market is marching ahead in the league of numerous retail segments.
Miles to go
The frequency of footwear shopping has increased dramatically and if industry sources are to be believed, the footwear industry is expected to double to Rs 20,000 crore in the next five years. The demand for domestic footwear brands is projected to grow faster. Take the growth story of home-grown brand Liberty Group as an example. The Liberty group began in 1954 from Karnal, Haryana, with the aim of delivering great products at affordable prices. In 2003, the brand forayed into retailing with the launch of Liberty Retail Revolution. The brand, over the years, has emerged as one of the most trusted and sought after footwear brands with a turnover of Rs 600 crore.
Anupam Bansal, Executive Director, Liberty Group, believes: “The retail sector in India is going through a consolidation phase; from Rs 17,000 crore to Rs 20,000 crore, the Indian footwear industry is growing at 10 per cent annually and attracting huge investments from national and international players. The trend of buying shoes has gone up by 30 per cent. Consumers are gaining fashion sense, graduating to the branded products and need different pair of shoes for every occasion. Thus, the consumer trends are very positive for the footwear industry and this industry will continue to grow.”
According to Indian Footwear Market Forecast 2012, the demand for high quality footwear produced in Europe and other parts of the world is expected to slow down as people will look for lower priced products. This is a good sign for the Indian footwear industry as India, along with China, is the main supplier of low-priced footwear.
Ved Vyas Chhabra, MD, Touristor Shoes, feels: “The huge untapped footwear market and the growth of tier-I and II cities through the economic growth of the middle class and that of urban centric youth of India, are the main reasons that have triggered the growth of the footwear industry.”
International brands have also gained prominence in the Indian market, as they are in accord with the latest designs and trends. For instance, Woodland, a brand that spells adventure and excitement in the consumer's mind. Woodland was born in Quebec, Canada. When launched in India in 1992, it created a new category of 'outdoor adventure sports' shoes, a specialised footwear category that it still owns. Today, the company has developed a customised product line, especially for India, along with their retail footprint.
On what makes him bullish about the Indian footwear market, Harkirat Singh, Managing Director, Woodland, says: “The Indian footwear market has substantially grown and matured rigorously. Presently, India enjoys the status of being the world's second largest footwear producing country and the third largest consuming nation. In addition, the industry has gained a gradual upsurge in the retailing of footwear with the rise of e-commerce and the growing trend of online shopping. The trend of fashion portals undeniably is opening new retail opportunities for the manufactures as well as the customers.”
Indians spend about 8-10 per cent of their income on footwear and accessories. Banking upon this opportunity, Louis Philippe (a fashion brand owned by Madura Fashion & Lifestyle) added footwear in its portfolio. On how the franchise model has proved a successful business model, R Parthasarathy, Head, Retail Business Development (Madura F&L), says: “Louis Philippe was launched in 1989 and we explored the franchise business model then. Today, we have a network of more than 500 franchisees and it is growing. The companies should focus on building brands. Franchisees bring in their capital and entrepreneurial skills to exploit the business opportunity the brand provides. It is like outsourcing certain services.” Footwear accounts for 10 per cent of Louis Philippe's revenues.
Big retailers like Reliance Footprints, Bata and Liberty are in no mood to slowdown and are opening their stores rapidly, even in smaller cities. According to industry sources, Bata and Liberty plan to open 100 stores per year, Woodland wants to target 60-70 stores annually and Louis Philippe contemplates the opening of 20-25 stores in three years. Liberty, with an annual turnover exceeding Rs 600 crore, figures among the top five manufacturers of leather footwear of the world and produces more than 50,000 pairs a day. “Helping us dress up the feet of the fashion-driven and quality-seeking customers in more than 25 countries, which includes major international fashion destinations like France, Italy and Germany, is our worldwide distribution network of 150 distributors, 400 exclusive showrooms and more than 6000 multi-brand outlets,” says Bansal. The brand has received a tremendous boost in franchising. Of the 400 stores in 120 cities and towns, 325 are franchise stores. This, however, gives them enough ROI.
The footwear market is relatively less risky than the apparel business. In India, Liberty is present in 120 cities and towns with 400 stores (325 franchise stores and 75 company owned stores). However, 85 per cent of stores are on high streets, 10 per cent are in malls and five per cent are in discount and highway stores. The company welcomes anybody with an investment of Rs 10-15 lakh and an area of 800-1,000 sq ft. The franchise owner should be young and contemporary in outlook with a keen interest in global footwear fashion, an experience/ understanding of retailing but not necessarily footwear retailing.
Touristor Shoes showcases its presence in 24 cities with 12 franchise outlets at present. The brands target locations are Delhi, Chandigarh, Dehradun, Haridwar, Guwahati, Hyderabad, Bengaluru, Chennai, Cochin, and a host of other cities. “Expansion of stores through company-owned and company-operated (COCO) model has its limitation, especially in the matter of store administrative functions and management of the same. The franchising system reduces administrative functions and HR related functions considerably. Moreover, the franchise stores are successful as the entrepreneurial skills of the franchisee and his knowledge of the local market help to generate the required business,” says Chhabra. The proposed area for a Touristor Shoes outlet should be on popular high streets or at malls in metros and class A and B cities. The area should be between 750 sq ft and 1,200 sq ft, and the total amount of investment will be between Rs 20 lakh and Rs 30 lakh.
Woodland has more than 350 + company-owned and company-operated stores across India, of which about 250 are on high streets, remaining 100 are spread in malls and plazas. The brand is also present in over 4000 multi-brand outlets in a number of countries. “The entry of numerous international players has also resulted in providing a significant boost to the Indian footwear market and the demand for Indian footwear will continue to grow in future as well. With the rise in purchasing power and the growth of image consciousness among youngsters, the market is booming,” says Singh.
Caution against missteps
The footwear industry is booming but there are certain points that an entrepreneur should keep in mind. Chhabra thinks that a high percentage and non-uniformity of VAT/excise duty/service tax rates in various states can be some of the downbeats of this industry. However, Singh sees an optimistic picture of the footwear industry. “There are no significant negatives; instead the global footwear market is expected to reach $ 195 billion by 2015, with volume sales exceeding 13 billion pairs by 2012,” Singh says.
Also, according to Bansal, footwear retailing in India has remained focussed on men's shoes; there exists a whale of opportunity in the exclusive ladies' and kids' footwear segments. This is surprising as globally women are known to be the key decision makers for buying footwear. The ladies footwear segment still remains the most untapped as nearly 80-90 per cent purchases happen in the unorganised market largely due to the dressing habits of women for whom the consideration of durability and comfort are less important than colours and designs that go with their dress.
In the face of increasing competition from leading multinational players, domestic footwear retailers have also woken up to the opportunity that the segment offers and are realising that exposure to shopping standards abroad have made Indian consumers demand the same formats and experience here. Responding to this challenge, major domestic players have significantly transformed their retail formats to become more lifestyle- oriented and are positioning themselves as vibrant and contemporary Indian brands.