The USD 35 billion Indian footwear industry has become an attractive destination for many global players. Growing at a CAGR of 15 per cent, the industry is likely to touch USD 60 billion mark by 2015, reveals ASSOCHAM report. While international brands largely dominate the higher end of the spectrum, the lower end of the market is dominated by home-grown as well as unorganised players.
Emerging Trends in the Market
Indian consumers have become more fashion and brand conscious. Due to fast changing fashion trends young professionals tend to update their footwear collection every two to three months and maintain a separate budget of their salary only for shoe shopping.
Stressing that Indian footwear market is dominated by the men's segment, Alok Rai, Director, Milano Impex (owns two brands Egle & Louis Alberti) says, “The prime reason is merely because they have a tendency to not indulge in buying quantity whereas the women tend to spend lesser in comparison to men as they indulge in buying volumes.”
There is a demand of unique and quality products. Nissan Joseph, General Manager, Crocs India, shares, “Crocs, in a short period of five years has gained immense popularity in India and is known for its vibrant colors, comfort and innovative styling.”
Sanjeev Agrawal, Managing Director, Skechers South Asia, says, “There is an increase in demand for high performance footwear, and this is what made brand Skechers enter India. We are also working on categories such as sandals and slippers in the open toes category to suit the requirements of the Indian market in the casual footwear range.”
Online footwear shopping is also a fast emerging trend and currently accounts for about 8 per cent of the overall industry and is expected to reach nearly 20 per cent by 2015.
The online format also gives buffer on test marketing before serving in their early stages. American Swan, Flipkart, Snapdeal and Yebhi.com are the customised solution for discount and online purchase. US-based Vans Shoes has tied-up with online portal myntra.com to widen its consumer reach.
Brands such as Steve Madden, Lotto, Hush Puppies and Puma chose to license the brand, while others like Pavers England, Gucci, Reebok and Adidas formed joint ventures with Indian partners. Over time, few decided to move their existing entities into wholly owned subsidiaries.
Brands are also using franchising options to present in India. Crocs India recently opened its 30th store at Khan Market, New Delhi. “Opening of the store in a premium location is a part of our strategic growth plan where we want to be easily accessible to our target group and also showcase our wide and latest range of products.” The company is using franchise format in India and looking to expand in tier I and II cities.
Anand Rajput, Store Manager, Geox has similar experience at Khan Market store. “This is a happening place for the upper segment shopaholics due to its posh location.”
Format Strategy: MBO vs EBO
According to Joseph, “The retail market is high on competition, so it always keeps you alive. Here it is needed to adapt innovative formats to meet customer’s preference. Retailers more often choose MBOs, which is an increasing trend whereas EBO is the face of the brand.”
Asking about the best suited format for footwear companies, Rai states, “Since we need to ensure our reach to target audience, presence is mall is more desirable.”
Indian footwear market is seeing remarkable growth. Going forward, not only do we see more global brands customising their product range for Indian flavour, but India also becoming the testing ground and an inspirational source for global product range.