Business Today

All pumped up

Shoe retail is becoming a battleground as new entrants try to muscle in on market share.
Arunima mishra   Delhi     Print Edition: July 6, 2014
General Manager Nissan Joseph says Crocs India grew 200 per cent in two years
Shoe shine: General Manager Nissan Joseph says Crocs India grew 200 per cent in two years. PHOTO: Vivan Mehra

With the 150-year-old bespoke shoe maker John Lobb launching its 'By Request' service in the country in June, Indians can now be part of a clientele that includes aristocrats and opera stars. The company, acquired by the Herm├Ęs Group in 1976, will sell shoes in India at Rs 70,000 to Rs 6 lakh - in line with its global prices - through the request service, which lets customers choose from over 150 designs and personalise their purchase by selecting the leather, colour, width and sole.

Through its partnership with Mumbai-based retail company Regalia Luxury Retail, John Lobb will introduce its brand and services to Indian customers. It plans to open an exclusive store in the country later. London-based Thomas Collette, Commercial Director (Europe, Middle East and India), John Lobb Bootmaker, says India is "a fantastic opportunity" for his company. He says this is the first time such an exclusive shoe brand is entering the Indian market. "Price consistency is key for JL, as we do not want to create divisions between our markets," he says.

The footwear retail business in India is bustling with activity. International brands, including Pavers England, Clarks, Crocs, Skechers, Aldo and Charles & Keith, are expanding in India, while home-grown Liberty Shoes and Reliance Footprint are innovating to stay ahead. Tata International, the Noel Tata-led company, is venturing into a branding and distribution model for footwear.

Rs 25,000 cr size of Indian footwear market

In 2013, US shoe brand Crocs sold more than 54 million pairs worldwide. That number is expected to increase in 2014. While organised retail reaches only 5,000 postal codes, e-commerce companies reach 25,000. To reach out to smaller cities, Crocs is launching a virtual store in association with Jabong.com, and building a retail distribution partnership with Amazon.com. It has roped in Bollywood starlet Yami Goutam to promote its brand. The maker of the iconic clog has expanded its product portfolio by introducing beach, office and casual product lines. Revenue from clogs is now less than 30 per cent of what it earns from its fashion line.

Nissan Joseph, General Manager, Crocs India, says: "Crocs grew 200 per cent in the Indian market in the last two years, though it was launched way back in 2002. What did not work for the company was its India line of shoes, because Indians wanted the global style." Its shoes are priced between Rs 1,400 and Rs 7,000. According to industry insiders, in the past 12 months, Crocs India's turnover has crossed Rs 100 crore.

Joseph says India will be one of the top 10 countries for Crocs soon. It continually runs digital campaigns in the country, and has a mobile app called Crocs Mix & Match. In three years, Joseph says, Crocs will more than double its exclusive brand outlets (EBOs) from 35 now to 80. It will also double its presence from the current 400 multi-brand outlets (MBOs) such as Lifestyle, Shoppers Stop and Reliance Footprint.

Footwear marketers cannot ignore the fact that customers have access to information about recently launched designs globally. Like Crocs, British shoe maker and retailer Clarks launches its global line simultaneously in India. It has sold 400,000 pairs in two and a half years of operation in India. It currently has 50 EBOs. Women customers account for two-thirds of the shoes it sells.

Liberty Shoes CEO Adesh Gupta (left) and Director (Retail) Anupam Bansal
Liberty Shoes CEO Adesh Gupta (left) and Director (Retail) Anupam Bansal are ready for battle
Clarks has a city-wise strategy. For instance, in Mumbai, Delhi and Bangalore, its women's shoes sell the most. Its bestsellers are multi-coloured sandals. Competitors now emulate its USP of half-sizes.

S. Ramprasad, CEO of Clarks Future Footwear, a joint venture between Clarks and the Future Group, says customers like the contemporary designs of his company's products. "It's not extravagant or loud, and we have extra-wide shoes that fit men well," he says. "Theme-based product displays help us sell more at the Clarks stores."

He adds that Clarks has 500 stores in the UK, which has a fraction of India's population. It takes time to build that big a retail exposure. Trainers from the UK come to brief Indian floor staff every quarter on new season launches and on what customers like. Clarks relies on the Future Group's expertise on the Indian market to identify the best locations for new stores.

Bata India's footwear collection has evolved over the years. Rajeev Gopalakrishnan, Group Managing Director, Emerging Markets, Bata India Ltd, said at his company's 81st annual meeting recently: "Bata's turnover has doubled from Rs 1,000 crore in 2008 to Rs 2,000 crore this year [2014]. It's growing at a CAGR of approximately 15 per cent. The large-scale expansion and renovation of stores, addition of accessories like bags, sunglasses, belts to our product portfolio, focus on improving customer service, addition of new value-oriented products, consolidation of manufacturing processes, and focus on the non-retail sales division, all together has yet again enabled our company to reach milestones in 2013."

E-commerce companies, such as Myntra and Yepme, are pushing sales of private labels. Yepme, which sells only private labels, expects to earn 50 per cent of its revenue from footwear this year. It has doubled this year's advertising budget from Rs 26 crore in 2013 to Rs 44.5 crore this year, and roped in Bollywood actor Farhan Akhtar for a television commercial. Prices of women's shoes range from Rs 149 to Rs 899. Yepme sources footwear from Agra, Delhi, Kolkata, Mumbai and Himachal Pradesh. It designs and sells it through its private label. Co-founder and CEO Vivek Gaur says: "In case of MNCs, there's hardly any opportunity to scale up, because of the high cost structure. Also, online has a future, as the brick-and-mortar model will always have the disadvantage of occupancy." He adds that online customers choose from a larger variety. "We sell 5,000 men's pairs and 2,000 women's pairs a day," he says.

Like their global counterparts in India's Rs 25,000-crore footwear business, home-grown players are aggressively expanding to increase the share in the organised market from just 15 per cent at present.

85 per cent Share of unorganised sector in Indian footwear

Almost 60 per cent of Liberty Shoes's revenues (Rs 500 crore in 2013/14) come from the domestic market. Since 2010, the company has reworked its product portfolio and has adopted a high-fashion, low-inventory strategy. It has a share of around 25 to 30 per cent in the organised footwear market. It sells 50,000 pairs daily, and adds 50 stores every year.

It has introduced features such as Nature's Spell to make its stores more appealing to customers. Nature's Spell is a fragrance that counters the smell of leather products that typically pervades stores. Liberty CEO Adesh Gupta says: "Fragrances can transform emotions and heal bodies. They also elevate the state of mind, and influence emotions and behaviour. The fragrance of Nature's Spell has been marvellously crafted, with the scent of delicate white tea mingled with spicy ginger and fruit." He adds that the response from customers has been overwhelming.

Another home-grown player, Reliance Footprint, which belongs to Reliance Retail, is aiming for a leadership position. Started in November 2007, the venture reaches customers through more than 165 MBOs and 174 EBOs, and plans to add 50 stores each year. It sells more than 60 brands, and has private labels (Mancini, Toska, Monza) for men's, women's and children's shoes, beachwear, and sportswear. It sells 15 to 20 per cent below the price band of the branded footwear, and sells in the northeast. CEO Gopalakrishnan Shankar says: "Our products are relevant to people who can afford a good shoe and are willing to move up the value chain. We will grow 40 per cent to 50 per cent every year. We will start the payless format, a western format, from August to have a value-fashion positioning in India."

{blurb}Many Indian companies in the business have aggressive plans in place. The Rs 10,000-crore Tata International's leather products contribute about 10 per cent to the company's revenue. The turnover of the footwear business is about Rs 680 crore this year. Over the next three years, the company aims for Rs 1,500 crore over the current business model, the majority of which is the made-to-order business. It currently produces 5.5 million pairs of shoes a year and wants to increase that to 10 million in three years.

About 85 per cent of the Indian footwear market is dominated by the unorganised sector. Liberty's Gupta says: "Today customers are more brand-conscious, hence... the growth of the organised sector is likely to be 27 per cent a year. With MNCs coming into the Indian market, we see a change in customers' perceptions. They will have more choice." He adds that his group aims to cater to all classes of people.

Anupam Bansal, Executive Director at Liberty, says his company plans to take on the competition by expanding its retail reach through company-owned and -operated outlets, as well as franchise stores. "We plan to bring in a big change in merchandising, to make our products more fashionable, youthful, colourful, affordable and comfortable, because Indian consumers are price-conscious."

He says it will not be easy for international brands to increase market share, because they would have to spend a lot on brand-building and reach. "MNCs today have little or a negligible market share in India, as they do not have a national footprint. With 1.3 billion people in India, where Liberty sold 11.5 million pairs in 2013/14, we still have huge scope for the penetration of Liberty-branded footwear through distribution."

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