Riding high on the boom, the footwear industry is offering lucrative business opportunities to investors in India. Take a look at some of the current trends in the industry.
A man is known by the shoes he wears” is an old saying. That's why for all those men out there to ensure that you leave a lasting impression on whosoever you meet, always be selective on the footwear. With the emerging trends and umpteen styles and designs across the categories of men, women and kids' footwear, the industry is bound to see rapid growth.
The footwear industry is swarming with numerous Indian and international brands and promises immense opportunity to aspiring entrepreneurs. Though the international brands like Woodland, Johnston and Murphy, Puma, Nike, Reebok, Adidas and Lotto have an edge over the Indian brands in the sports shoes category, Indian brands like Liberty, Bata, Red Chief have their own set of buyers. The industry is bound to grow over the years, believes Anupam Bansal, Executive Director, Liberty. He says that the current Indian footwear industry is worth Rs 22,000 crore, which holds great business opportunities.
In the retail sector the footwear industry brings a potential business opportunity for all investors. Gaurav Agarwal, Co-Managing Director, Johnston and Murphy, believes that the footwear segment is an extremely lucrative segment of the market because of the high average selling prices as compared to apparels. However, he feels that the footwear market is still at a growing stage in India and only a few brands and MBO's are catering to a huge customer base. It is the right time for new brands like Johnston & Murphy to enter the market and get a slice of the pie, he adds.
Talking about his brand, Manoj Kumar Gyanchandyani MD, Red Chief says the brand has been in the leather industry since 1995 and now it's an assemblage of potential manufacturing units with an unbeaten experience of 16 years. The footwear range of Leayan Global Pvt. Ltd was launched under the brand name Red Chief in 1997 to meet the growing demand for branded high quality leather footwear at an affordable price. The footwear & leather division has recorded impressive growth since its inception in 1995. Now the brand is into the EBO segment and has 30 exclusive stores and is moving further ahead.
Dynamics of footwear industry
Starting from the dynamics, such as the per capita income, economic growth and low cost of production owing to abundant raw material and a market with huge consumption, there are various factors which manipulate the growth of the footwear industry.
Bansal strongly asserts that the Indian footwear market scores over other footwear markets as it gives benefits like low cost of production, abundant raw material, and has a huge consumption trend. Market experts believe that the increase in disposable income not only in metro cities but also in tier II and III cities, change in shopping trends, popularity of online retailing, rise of fashionable and affordable brands and shift in consumer preference for style and comfort are some of the factors responsible for the rapid growth in the footwear industry.
Agarwal asserts that the footwear demand is closely tied to per capita income and economic growth. “We are already witnessing a big cultural shift where consumers have multiple footwear options in their wardrobe. There is a shoe for the office, eveningwear, casual outings and vacations,” says Agarwal.
E-tailing for penetration
There were days when the best way to shop for a pair of shoes was by going to the local market and purchasing the pair without trying them. From the early eighties to the present day the means of selling a product has developed by leaps and bounds opening indefinite avenues like exclusive brand outlets (EBOs), multi-brand outlets (MBOs) and E-tailing for promoting sales of products. Now, the same lot of buyers, who never bought a shoe without trying, are ready to splurge on online shopping, thanks to the growing popularity of E-tailing.
Johnston & Murphy is operating in all the segments; however, E-tailing is a growing channel and cannot be ignored if a brand has to establish a significant foothold in India.
While Liberty operates through EBOs and MBOs, there are a total of 400 EBOs, of which 75 are company owned. The brand is present at 5000 MBOs across India.
Rewarding prospects
Liberty has received a great response after adopting the franchise model. Of its 400 stores in 120 cities and towns, 325 are franchise stores. While offering its franchise Liberty prefers that the franchise owners should be young and contemporary in their outlook; should show keen interest in global footwear fashion; should have experience/ understanding of retailing, etc. Liberty operates in the fashion industry and the key challenge in this industry is that the forecasts often go wrong, especially at the individual item and retailer levels. While Johnston & Murphy provides an opportunity to the franchisees to associate with a world-class brand, it also provides full support in terms of marketing, retail information systems and staff planning allowing all the franchisees to access the best in class training and operations modules. The franchisees also have the option to sign for the brand's master franchise and distribution rights for a territory or region on demonstrating success.
Testing times
The key challenge in this industry is that the shoe market is unorganised which gives a tough competition to branded products. Bansal says that other than being unorganised the forecasts often go wrong, especially at individual item and retailer levels, which results in less profit at times. Likewise, Agarwal says that the Indian market poses several challenges such as high real estate costs, availability of retail space in prime malls and high streets and high taxation and import duty structures. He adds: “We have been severely impacted by the unfavourable foreign exchange rates since our product is mostly imported from countries such as Brazil, Dominican Republic, Mexico, Italy and China.”
Expansion via franchising
Owing to the boom in the footwear industry Johnston & Murphy plans to open 20 exclusive retail stores in the next five years. The stores will be a mix of both company owned and franchise stores. In addition to retail stores, the group also plans to place the brand at over 100 multi-brand footwear stores and 50 shop-in-shops in department stores. The brand is currently available across 10 cities in India at various premium footwear stores such as Regal, Rocia, Inc 5, The Collective and Shoe Tree. The first two exclusive stores will be launched this year in Mumbai and Delhi. Similarly, Liberty is looking forward to a 15-20 per cent growth year-on-year. Liberty plans to add 100 outlets year- on- year across India. Of these 30-40 will be in South India. The brand is also keeping a strong focus on entering Orissa, Bihar, and a host of other developing states.
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