Kindly highlight the journey of Lotto Sports to Indian market? Also, how do you see the Sports Lifestyle market is evolving in India? Kindly highlight few numbers to quantify the same?
Lotto has created a niche in the Indian Sportswear market targeting the value segment customers. We have grown significantly over the last 2-3 years at a healthy CAGR of 50%. Over the years, we have invested significantly in strengthening our in-house design capability and operational processes.
We foresee great opportunities in this segment and will continue to look at all plausible channels to foster growth. We expect the Sports Lifestyle industry to grow at a modest pace of 15% with growth fueled by Athleisure category.
The performance category will also continue to grow at a modest pace too. Consumers are investing time in understanding the quality and features of sports apparel and sports footwear and then making informed purchase decisions.
There has been a rapid expansion in e-commerce specifically for the footwear market and we forecast the same growth in the online channel for the next few years. We expect the retail industry to register a growth rate of 12-14% over the next few years owing to factors such as higher incomes, better standard of living, job creations. We believe that the industry is shifting towards being more organized and branded as otherwise a few years back.
Kindly shed light on your current distribution in the online as well as offline space. Also going forward what would be the strategies to scale up the distribution?
Lotto business witnessed steep growth in last few years due to high distribution exposure. Lotto grew at ~50% CAGR, owing to accelerated growth in the distribution channel, primarily enabled by SIS and E-commerce channel. This helped Lotto develop strong brand recall in the market.
Going forward, we see a huge opportunity in distribution channel both online & offline. We expect e-commerce to grow steeply at 20% CAGR and offline distribution business to grow at a modest pace. Currently operating at all major online channels and SIS, we plan to expand our reach even to the remote areas to serve our customers better. We would continue to increase width of our portfolio. We foresee open footwear to contribute strongly to the top line and bottom line growth. We would look to grow at an accelerated pace aided by both Retail & distribution channel.
Kindly also shed light on your product categories and best selling price points. Also going forward what are the plans to expand the brand further?
Nowadays, we see customers looking for valuable products at affordable prices across all product categories including footwear, apparels, and accessories. We have seen a huge traction in performance and athleisure products. Besides huge demand for performance products, there is a spur in demand for lifestyle category as well.
Additionally, both men and women prefer simpler designs that are stylish with comfort-giving technologies such as memory foam in-socks, knitted shoe. In apparels, Carbon Fibber is one of the leading materials in sportswear applications, because of its resistance to heat, thermal insulation, high strength, excellent air permeability as well as its waterproof desirable properties.
We look to maintain a balanced mix of footwear, apparels, and accessories across all channels to foster growth. We would keep on increasing our portfolio range in all categories and bring in newer designs and technologies to serve our customers better. We certainly believe in providing customers with high-quality products at economical prices.
What are the major retail challenges as far as Sports Lifestyle category is concerned?
Retail industry though growing through is constantly transformation. There is a growing need to reduce costs and to increase efficiency in operations. As customers become more demanding, there is also an extra pressure to exceed their expectations of the product, service and overall experience.
Primarily, retail has significant associated costs including rentals, talent etc. putting downward thrust on margins. Across brands, there has been a decline in brand loyalty among customers which poses a unique challenge for modern retailers as they find a new and innovative way to appeal to buyers. With e-commerce has taken a huge leap forward, customers not only expect the same products to be available at similar price across all channels but also want seamless and integrated omnichannel experience. Though marred with challenges, retail poses substantial growth opportunities.
Who do you see as your major competition within the same space?
Indian sportswear market, though lucrative seems to be cluttered with brands in all major customer segments. We see a lot of brands operating at a broad price range to widen the product reach & capture maximum possible market share. Amidst this, Lotto has created a space for itself in the value segment which though congested with brands like Metro, Power, Sparx etc. has a significant opportunity for major brands to co-exist. We have a very loyal and significant customer base, those who prefer good quality products at an economical price range. We believe this segment is large and fast-growing among others. Following this approach, Lotto has already tasted success in some of offline EBOs. With quality products, innovative designs and economical prices Lotto is all geared up to take a significant chunk of this market and outpacing its competitors.
At last, kindly highlight your growth plans?
Lotto will continue to invest in expanding its presence across all sales channels viz. SIS, Online, Key accounts and retail. We expect additions to retail space to continue at an accelerated space over the next years across Tier 2-3 cities. As of now, we run around 40 EBO and plan to add another 60 stores every year. We look to grow distribution by a healthy pace fueled majorly by e-commerce channel.
We also would continue to invest in Product designs, Innovation, and product quality to provide customers the best product at a reasonable price.