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Jun, 13 2016

A small Wardrobe with Big Returns

Once considered as a need based purchase, footwear and bags have emerged to be a status symbol garnering a substantial mind and pocket share, Here we present a market overview of the burgeoning footwear and bag segment.

Once considered as a need based purchase, footwear and bags have emerged to be a status symbol garnering a substantial mind and pocket share of the young and aspiring Indian consumer. Evidently, this segment holds a lot of potential for the entrepreneurs who want to invest in this segment. Here we present a market overview of the burgeoning footwear and bag segment.

Overview via Listing

#Footwear sales 2015 posted a retail value growth of 17% ahead of its 16% growth registered in 2014.

#Footwear in India is expected to register a retail value CAGR of 8% at constant 2015 prices over the forecast period to reach sales of Rs1.1 trillion by 2020.

#As per current consumption rate, it can reach as high as 7-8 pairs by 2030.

#The production from current level of 2 billion pairs needs to upscale to 5 billion pairs at a CAGR rate of 30-40%.

#Both unorganized and organized markets are estimated to have an equal market size in value terms (Source: ICRA)

# The rising health and wellness consciousness boosting sports and adventure activities is driving demands for sports shoes and associated products.

#The number of international schools which demand branded footwear in the urban regions is also expected to increase driving growth in branded footwear in India.

Brand ranking of top footwear – for 2015

(Source: Euromonitor)

Market Overview

India produces 2000 million pairs of footwear accounting for 13% of the world’s footwear production stands second in line after China. The footwear market is driven by changing fashion trends, product innovations, increase in disposable income and retail boom among others.

Domestic Brands - Led by the mass

As per industry report by Euromonitor, footwear brands that emerged to be market leaders of 2015 are Bata India, Paragon Group and Relaxo Footwear. Bata India is the market leader with a retail value share of 5% in 2015. It opened 159 new stores in FY 2914-15 and plans to open 100 more stores in tier II and III cities. This evidently shows remarkable shift towards organised retail in the smaller towns.

The larger size, store design and in-house promotions of the new Bata stores that are aligned with global standards indicate that mass segment players to upscale their retail strategies by accentuating the shopping experience.

Metro Shoes, that run exclusive brand outlets such as Metro, Mochi, MSL have also partnered with global brand Crocs. Metro Shoes plans to franchise its Crocs EBOs.

Global brands

With FDI in retail stores being liberalised, India is witnessing a lot of global players making inroads in India. Mostly global brands are present through master franchise and licensing agreement with Indian brands. There are more than 200 international fashion brands in India with more than quarter of them are into footwear and accessories.

Bata is the oldest international brand to have ruled the Indian market for more than 80 years. Since 2006, the number of global footwear brands has increased exponentially. The year 2012 saw international brands such as Christian Louboutin (shoes) and Kelme (sports shoes and apparel). Bally entered India 2011 in association with Bird Group caters to high net worth individuals with an average ticket size of Rs.35,000.

Sports Footwear – Global & Domestic brands that are into franchising

Target Audience – 20-28 years age group

Some of the major sports footwear brands present in the Indian market include domestic brands namely Bata, Liberty, Woodland and global brands such as Adidas, Reebok, Nike, Lotto, Fila and Puma. Adidas and Reebok also forayed into the Indian market in mid-nineties. Bata had launched its sports shoe brand, North Star and Power in the years 1970 and 1971 respectively. Domestic footwear brand, Liberty introduced its Force 10 in 1990. Puma and FILA entered the Indian market in the year 2005 and 2010 respectively. Currently, the market is dominated by the four major brand, Adidas, Nike, Reebok and Puma which constitutes for 80 per cent of the total market share for sports footwear according to a study conducted by Earnst & Young.

Designer Sports Shoes

Fish fry and Black Label. Sounds like an order at the bar. Yet Fish Fry is Manish Arora’s high-end sportswear for Reebok, and Black Label is a range of shoes by Aki Narula for Puma and so is Moto Chic, a Shantanu-Nikhil sports collection for Adidas.

Major Apparel Franchise Brand Extension into footwear that comprises of 20% of their product offering

GAS, Louis Phillipe, Levi’s and Numero Uno have taken a step ahead by leveraging their brand value to introduce a line of footwear. Levi’s introduced its footwear range in 2008 retails through all Levi’s outlets, MBOs and shop-in-shops. Provogue has signed up M&B Footwear for manufacturing and marketing their men’s footwear collection. Benetton India joined hands with DCM group when it soft launched its footwear range in 2001. Luis Philippe shoes were launched in 2010 retails the footwear through its EBO, department stores and MBOs gears 7% of its total sale from this segment.

Business Trend – Bags

#The total market size of bags have gone up from Rs. 67.8 billion in 2014 to Rs. 80.7 billion in 2015 at a CAGR 16.8%. The handbags is up from Rs. 28.1 billion in 2014 to Rs.33.9 billion in 2015 at a CAGR 18.3%

#The key growth drivers include increasing numbers of women in the workforce, their rising disposable incomes, increasing fashion-consciousness and aspiration levels, and the growing influx of the foreign brands.

#From a need based product bags are increasingly becoming status symbols as a lifestyle product.

#Female customers are still the primary target consumer as well as the driver of absolute sales for bags and luggage.

#Traditionally backpack and handbag manufacturers in particular have concentrated their marketing efforts towards teens (aged 13-17) and young adults (aged 18-29).

#Handbags are still treated more as an impulse purchase and are more often available through shop-in-shop format in major fashion retail stores.

#In consumption pattern, the hike in the price point even for faux leather products indicate that the style quotient is top of mind for the ‘has-money-will-spend’ consumers as opposed to earlier when people would spend for high quality leather product with longer durability.

#Major apparel and footwear brands have also dedicated 3-4% of their merchandise for handbags. Designer clutches form an integral part of their couture as well as prêt line for Indian designers who are into ethnic wear.

#With luxury brands such as Louis Vuitton, Roberto Cavalli, Fendi, Dior, Aldo, Bally, Calogne coming in India, bags have emerged to be a status symbol. Even Indian designers devote a section of their

#Franchising brands: Baggit | Hidesign

#Young and funky Franchise

Happily Unmarried | Wildcraft | Fastrack

While Happily Unmarried and Chumbak targets teen agers and young adults through their funky accessories and gift items, they have a section of their offering dedicated to a full range of handbags, tote, slings, back packs, lap top bags, ipad sleeves and wallet. Happily Unmarried is present through 13 EBOs at prime location in Delhi NCR, Kolkata, Mumbai, Bangalore, Chandigarh and MBOs across India. They are looking for expansion through franchising.

Domestic brands in the premium category include Bastra, Holli, Longhorns, POEM, Satya Paul, The Leather Boutique, Kampanero to name a few.

2014 Bags Brands ranking – Top 5

2014 Handbags Brands ranking – top 5

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