Branded footwear in demand

I still remember that one of my friends in the boarding school used to wear a pair of shoes bearing panther on it. It looked great. Whenever I used to ask him where he bought it from, the reply was always: from Germany, my sister sent it. I had no relatives abroad and my chance of getting panther inscribed shoes was not there at all.

But not anymore! It’s all changed.

adidas, Nike, Reebok, Puma, Fila, Converse, Geox, Egle, Hush Puppies, Lotto, Weinbrenner, to name a few brands, are all available throughout India. No longer, one does not have to ask a relative to send a branded pair of sport shoes from abroad for every brand is present in India and sold through the retailers who have organised themselves like never before. Name the brand and model: you have it even if it is a foreign brand. Liberty, Lee Cooper, ID, Metro Shoes, Firangi, bubble gummers, North Star, Marie Clair etc., manufactured with international standards, are easily available. Increase in the income of middle class, which constitutes up to 30 per cent of the nation’s entire population,  working women in cities, brand conscious youths, increase in the demand of sporting activities and abundance of workforce have led to the growth of footwear sector in India. adidas, Reebok, Fila, Nike, Lee Cooper etc. are being manufactured in India and these are sold in all the corners of the world. These bear ‘made in India’ tag as sports footwear companies presently get their shoes manufactured in India through domestic companies such as Lakhani and M&B Footwear. Demand for branded footwear from all the sections of the society - be it kids, teenagers, working women, sportspersons or even adults – is an all time high. To grab the attention of customers, companies are leaving no stone unturned: appointing celebrities, sportspersons as the brand ambassador for the product, increasing strength of outlets throughout the country etc.

Unorganised to organised

About 60 per cent of the footwear industry in India is in the unorganised sector. As process of production is traditional, product quality cannot meet the international standard. Indian footwear industry, traditionally concerned mainly with hand-made footwear is facing tough competition due to lack of standardisation, product deficiencies and lack of innovative and improved designs. Says Mr Marcelo Villagran, Managing Director, Bata India Ltd, “With  Indian consumers becoming more quality conscious, there is a perceptible shift from the unorganised to the organised sector. Also, exposure to international footwear fashion is driving growth for the organised sector. However, even today, 60 per cent of the footwear industry is still unorganised.” Indian footwear industry is undergoing a boom and is poised to grow at a whopping annual rate of 20 to 30 per cent in the next couple of years. Footwear and their components account for about 25 per cent of India's total leather products exports. Major markets include the UK, USA, Germany, Italy, France, Netherlands, Canada, Sweden and Russia. Of the total exports of footwear from India, around 64 per cent goes to UK, USA and Germany. Major production centres in India are Chennai, Ranipet, Ambur in Tamil Nadu, Mumbai in Maharashtra, Kanpur in U.P, Jalandhar in Punjab, Agra, Delhi, Himachal Pradesh and Kohzikode in Kerala. The present total installed capacity of 2.5 pairs a day is expected to touch one million pairs a day over the next four to five years. Says Ms Farah Malik Bhanji, Executive Director, Metro Shoes, “Of sales through organised retail outlets, footwear is the second biggest product segment, next to watches. Footwear has a 22 per cent ORP, which is driven by high levels of franchising activity and dominance of home grown players as well as MNC retailers.”

Big retail houses such as Future Group, Shopper’s Stop, Reliance Footprint etc. have already started retailing footwear from their outlets. Footwear outlets have made shopping a great experience by making available all the international designs and brands to consumers.

Major players

adidas: Founder Adi Dassler started manufacturing athletic shoes in early 1920s in a small town in southern Germany. Since then, the company has been synonymous with innovation and performance in athletic footwear, apparel and equipment. Today, adidas is €10 billion  ( approximately Rs 620 billion) company. In India, it started operation in 1996. adidas currently has 300 stores and, by 2010, it plans to increase the strength of stores up to 1,000 stores.

Nike: The company was founded in 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight and became Nike in 1978. Today, Nile operates in more than 160 countries around the globe. As of 2008, it employed over 30,000 people world-wide. Along the way, Nike’s established a strong brand portfolio with several wholly owned subsidiaries including Converse Inc., NIKE Golf, Cole Haan Holdings, Inc. and Hurley International LLC.

Bata: Bata Shoe Organisation (BSO) was founded by Thomas Bata in 1894. Bata was incorporated in India as Bata Shoe Company Private Limited in 1931. The company has emerged as the leading player in the Indian footwear industry and become part and parcel of the common man’s live. Bata India has more than 1,000 retail outlets across 400 cities and offers the best shoe shopping experience in India. Bata plans to add over 200 new international style shoe stores in the next couple of years.

Liberty: Liberty Shoes Ltd is the only Indian company that is among the top five manufacturers of leather footwear in the world with a turnover exceeding $100 million (approximately Rs 4 billion). The products are marketed across the globe through 150 distributors, 350 exclusive showrooms and over 6,000 multi-brand outlets.

M&B Footwear: The company has one of the most sophisticated, state-of-the-art manufacturing facilities in India. Brands marketed by M&B Footwear are sold in over 1,000 stores across India including some of the top large format retail stores such as Shopper’s Stop, Lifestyle, Westside, Pyramids, Reliance, Central and Big Bazaar.

 Metro Shoes: The company commenced business in 1986 with a few showrooms. Today, metro outlets are present in 28 cities across India with 74 stores. The company plans to reach the target of 100 stores in a year’s time. A leader in fashion footwear, the company has recorded a gross turnover of Rs 1,550 million ($39 million) for the year ended March 31, 2007.

Puma: Established in Herzogenaurach, Germany in 1948, Puma distributes products in over 80 countries. Puma is the global athletic brand that successfully fuses influences from sport, lifestyle and fashion. Puma’s unique industry perspective delivers the unexpected in sport lifestyle footwear, apparel and accessories through technical innovation and revolutionary design.

Reebok: Reebok is an American-inspired global brand that creates and markets sports and lifestyle products built upon a strong heritage and authenticity in sports, fitness and women’s categories. In India, Reebok started its operations in 1995. Reebok reaches out to its target customers through its 500 exclusive Reebok stores, 200 shop–in-shop outlets and 2,500 dealer outlets.

International footwear and impact

The arrival of international footwear majors in India almost a decade ago gave a strong competition to traditional footwear manufacturers, which were more or less connected with leather products. However, the entry of foreign brands also brought essential changes for existence and growth of the industry in terms of experience, technology and design, helping thus local brands as well. Acknowledgment of international brands by Indian consumers further led to the introduction of more world-class footwear brands into the country. World-class technology being bought into use by Indian manufacturers has made international brands to consider adn get their footwear manufactured from India itself increasing thus the employment opportunities in this sector. Says Mr Andreas Gellner, Managing Director, adidas India, “When adidas started its operations the category of athletic footwear in India was very nascent. The arrival of sportswear companies in India basically designed and developed a new category in itself. Companies like ours have significantly invested into building manufacturing capabilities in India from tier-I to III manufacturers. These significantly improved local manufacturing capabilities, in turn, benefit all the footwear companies and also the Indian brands.” With the manufacturing of international brands, India has an extra edge over its rival manufactures in USA and Europe for there is surplus labour available in the country. Opines Mr Villagran, “As international brands enter the Indian market, they will impact the customer and bring in more trendy designs. To meet these evolving needs of the Indian consumer, Bata is also introducing new and trendy collections sourced from our international collection and launching them in our stores.”

 The footwear industry, being a labour intensive industry, generates huge opportunities for employment. Aiming to meet the requirement of skilled manpower in footwear industry, the government has plans to set up Footwear Design and Development Institutes (FDDI) in Chennai, Kolkata and Haryana.

EBOs and MBOs

Whether the product is sold through exclusive brand outlets or multi- brand outlets, the ultimate goal of the company is to reach out to the large chunk of masses and increase the sales. In the past, footwear companies laid more importance on MBOs. But, these days, EBOs are becoming more popular as one can feature, in this format, all the products under one single roof. Opines Mr Gellner, “In our internal mid-term plan, we foresee EBO to be the driving force for the company’s growth in the years to come.” A retailer who runs a multi-brand outlet gives to every product equal importance. It’s really difficult for him to make a comparison between products being sold in the outlet for his aim is to sell all the products, rather than a particular brand. Or, he would loose on his profits. Through EBOs, huge variety of models can be featured easily giving more options to customers without any fear of customers’ mind switching over to other brand or brands. However, multi-brand outlets provide vast variety of brands and models under one roof; cater to large section of customers and save consumers’ time. Opines Ms Bhanji, “Certain brands are popular with certain type of customers. The retailer, therefore, prefers keeping sufficient number of brands to cater to various types of customers. Hence, we prefer MBOs for EBOs serve a very limited customer base while MBOs provide exposure to all types of customers.” Every footwear company is looking forward for a growth and has planned different strategies towards EBO and MBO.