Footwear industry to cross Rs 38k mark by 2015 as players gear up and move towards diversification.
The footwear industry in India, according to a recent study by ASSOCHAM, is booming. Growing at a compound annual growth rate (CAGR) of about 15 per cent, the Indian footwear industry is likely to reach the Rs 38,000 crore mark by 2015 from the current level of about Rs 22,000 crore, says the report titled ‘Indian Footwear Industry: An Analysis’.
The boom is attributed to an increase in the spending power of the middle class and the rising demand from tier II and III cities as well as the rural markets.
The report further shows that India produces nearly 300 crore pairs of footwear annually, exports over 10 per cent and accounts for about 15 per cent of annual global footwear production, which is over 2,000 crore.
“The domestic footwear market is driven by growing fashion consciousness together with increased disposable income among India’s urban middle class, which contributes to about 45 per cent of overall footwear market, making India the second largest global producer of footwear across varied segments after China,” said D S Rawat, Secretary General of ASSOCHAM.
“Low cost of production, abundant availability of raw material, ever-evolving retail ecosystem, buying patterns and a huge consumption market are certain basic features that set apart the Indian footwear market,” he added.
Driven by larger penetration into tier II and III cities and the growing rural market, various premium footwear brands are foraying into India’s non-metro market, which holds enormous growth potential and accounts for about 55 per cent of the overall footwear industry.
“The Indian footwear industry is poised to grow positively and with the influx of international brands and consumers gravitating towards organised retail, we see a shift in customer and retailer attitude. The Indian consumer’s shopping is now occasion-specific rather than need-specific, and this has increased the frequency of purchase,” said Farah Malik Bhanji, Executive Director, Metro Shoes.
She added, “Retailers, on the other hand, are offering more styles with excellent product quality. There is also a shift in focus from only urban centres to the tier II and III markets, where people have an increased fashion exposure and the ability to purchase branded products. Modernisation in Indian retail has also brought about a great emphasis on customer delight. Customers expect the highest degree of service standards, including after sales service, and are more vocal with their feedback. The retail dynamic of the country, too, has seen a great change. Malls and e-commerce have been major game changers in recent retail. While malls have helped develop shopping as a leisure activity, e-commerce has brought about convenience to the shopping experience.”
The online fever
The footwear industry is divided into various segments – formal, semi-formal, casual and sports. Adidas, Bata, Balujas, Converse, Da Milano, Lee Cooper, M&B, Metro, Nike, Provouge, Puma, Reebok, Red Tape and Relaxo are certain well known footwear brands in India.
Most of these brands have their exclusive outlets and account for about 55 per cent of the footwear market, while multi-brand retail outlets account for about 30 per cent.
Apart from brick-and-mortar stores, online shoe shopping is a significant segment that is fast emerging in terms of footwear sale and currently accounts for about eight per cent of the overall industry and is expected to reach about 20 per cent by 2015.
The study suggests that consumers in India have become more fashion and brand conscious and due to fast changing fashion trends, young professionals tend to update their footwear collection every two to three months and maintain a separate portion of their salary only for shoe shopping.
“In today’s time, technology has lot to offer and it has the power to shape the retailing trend in the upcoming future. The trend of e-stores and fashion portals undeniably is opening new retail opportunities for manufactures as well as customers. In fact, e-commerce is expected to fast catch-up with the growth in overall trade market. We have recently launched our e-store and online sales have surged by over 20 per cent on a month-on-month basis in the last four months. For the online portal, we have plans to stock up limited edition products. We will be having a lot of limited edition products – the ones that we think are commercially not viable for mass production – on sale, and those will be exclusive for online buyers,” said Harkirat Singh, CEO, Woodland.
Another new entrant in this arena is Puma, one of the leading sportswear brands, which has gone online with its store offering products including footwear, apparels, bags and accessories. The store features the latest collections along with the existing ones. Most of the products from the existing products are on discount.
Diversification: The Key
With the market growing and more demand coming in, consumers are also looking towards a complete solution. In fact, this has led to the emergence of the concept of footwear and apparel together, or footwear and accessories, including bags, belts and wallets, together.
One such example is Metro Shoes, which recently diversified into accessories and opened a brand new showroom in Raipur, which showcased both footwear and accessories. “Metro Shoes is a key player and contributor in the organised footwear market space in India and it was a natural extension for us to be able to provide for all fashion needs under one roof. With Metro Accessories, we hope to give our customers access to various fashion accessories like bags, belts, wallets, sun glasses and flip flops at a single avenue and enhance customer experience and delight,” Bhanji said.
Another brand emerging on this block is Woodland, which started off by diversifying into apparels along with footwear and then bags. “Woodland, primarily a brand known for its sturdy, durable shoes with futuristic designs, has now made its mark in apparels and accessories as well. We also have more specialised products like Yoga collection, Kids collection and now, Woods collection. Furthermore, we are in talks with a German company called BNS to do a line of skincare and foot-care products for us. It is not cosmetic but skincare solutions. We will start test-marketing early this year and will launch the products by the end of the year,” Singh said.
The footwear industry sees a bright future as more and more companies diversify into various verticals and also cater to specific interests.
Live: People Reading Now