THE 'RIGHT' FOOT FORWARD

Sanjeev Agrawal, MD, Skechers, South Asia, knew that they were amongst the last few entrants in the rather competitive branded footwear segment here and needed to be aggressive. And, consumer-centric promotions and building a distribution network were viewed as key for their success.

US-based Skechers is globally well established for its product repertoire in running, sports and leisure segments, and the top management of this brand wanted to quickly establish that recall in the local markets, too. As part of this strategy, they have been running commercials on television channels as well as print, but of equal importance is their partnership with numerous marathons and fitness-related events across the country. Skechers entered the local market about a year ago.

Agrawal also repeatedly highlighted that while broader consumer spending patterns in the economy may be sluggish, but in the premium segment, where Skechers operates, demand has been rather brisk and even ‘exceeded’ their forecasts. In addition, demand from ‘fashion conscious’ consumers including children and young adults have also been strong.

The domestic footwear market is valued at more than $ 10 billion (nearly Rs 60,000 crore), in terms of annual sales, and while the proportion of the premium segment is still small, but it’s quickly expanding, point out analysts tracking this sector. And, a key factor that has contributed to the above trend is that footwear is increasingly viewed as an essential ‘element’ in the overall appearance, and no longer simply viewed as an accessory. 

Agrawal of Skechers, South Asia, said, “We are currently following a twin strategy of expanding our dealer network, as well as enhancing awareness of our brand.”

Right ‘fit’ for distribution

Skechers currently imports its entire product range from its factories located overseas, and are priced from Rs 2,000. And, it reaches consumers in SEC A and higher income segments via its four franchise outlets on a pan India basis, as well as its presence in 225 multi-brand outlets in chains like Reliance Footprint, Metro, Lifestyle and Planet Sports, and online.

 Agrawal highlighted that ‘surprisingly’ demand from consumers in Tier-II and smaller towns like Surat, Kochi and Aligarh, amongst others, were rather strong, given the ‘novelty’ of this recently launched brand in the interiors of the country. 

In addition, the distribution constraints faced by their rivals in these smaller towns had also helped them to grow quickly.  Agrawal also explained that the return on investment for franchised and multi-brand outlets has been “better than satisfactory” and it would help them considerably in their dealer expansion plan.

Challenges faced

Agrawal pointed out to rather high store rentals in the key metros across the country and it often made it unviable for their franchisees to open outlets at such locations.

In addition, an expansion in the multi-brand outlet segment was proving to be a “challenge” for this brand, as several organised chains had slowed down their expansion plans in the current uncertain environment. Agrawal, said, “We are exploring various options to expand our distribution reach.”

Expansion strategy

Franchising is a key element in Skechers’ expansion strategy here and senior officials highlighted that local entrepreneurs are in ‘tune’ with local trends and purchase patterns, and their personal rapport with customers in that region would be key to aggressively driving sales. In turn, Skechers’ team works closely with its franchisees, in terms of assisting in store layout, training in product knowledge and customer service, as well as ensuring adequate supplies of the product range.

The company is keen to expand its franchised network to 10 stores, shortly, on a pan India basis (refer box – A win-win partnership’). Agrawal, said, “It’s a symbiotic relationship with our partners and we are confident of our success.”

 In addition, Skechers is keen to gain a larger presence in the traditional ‘mom and pop’ shops and they have appointed several distributors to achieve this goal.  Apart from that, an expansion via multi-brand outlets is also on the cards and will depend largely on the expansion of organised retail chains in both metros and smaller towns.

Clearly, Skechers is set to ‘transform’ the premium domestic footwear segment with its product repertoire.

Interview

“expand our
network to 50 FRANCHISEd stores”

Skechers entered the local markets just a year back, and Sanjeev Agrawal highlighted their strategy to carve their niche here.

Kindly highlight your presence in the Indian footwear market?

Skechers entered the local footwear market in October ’12 and we have been focussed on expanding our dealer network as well as creating greater awareness for our products.

As part of that strategy, we are expanding our presence and plan to open 10 franchise stores on a pan India basis, shortly.

Your target audience?

We are targeting consumers in higher income segments - SEC A and A+, as well as those well educated and in the 18 to 35 years age group. We also currently import all the products in our range.

The local footwear market is largely dominated by the men’s segment and how does this impact your strategy?

Footwear for men is generally more expensive vis-a-vis the opposite sex and the resulting higher share in this market.

Women increasingly prefer ‘open’ toes and we have responded appropriately in our product range. As a result, our women’s footwear sales are broadly double of the industry average.

Growth opportunities in India?

On an average, consumers purchase one or perhaps two pairs of shoes each year, to supplement their existing range, which would be 3 for men and five for women. To leverage the growth opportunities from this replacement cycle, we plan to open 50 franchise stores over the next three years, and they would be smaller outlets measuring about 1,500 sq ft, and present in malls and the high streets.