Footwear retailer Bata is reinventing itself to get back into the fast track. The company has a three-pronged strategy: setting up 60 large-format stores every year (minimum area of 3,000 sq ft), closing down the unviable ones and increasing its focus on institutional business.
Defying the trend in the retail industry of putting expansion plans on hold, Bata opened 32 new retail stores in the first quarter of 2009. These new stores have a minimum area of 3,000 sq ft each.
The stores operate in a four-tier retail format under a new model -- upmarket flagship stores, smart and trendy city stores and super stores and traditional family stores. This helps the company service its customers better in places where currently it does not have presence.
"The large-format stores are mostly franchise-run. The new-design store interiors itself cost the company around Rs 2 crore per store," Bata chairman P M Sinha says. These new stores have helped Bata to bring its contemporary and trendy range of footwear sold in an international style outlet to customers even in small towns.
Rapid expansion and modernisation is one part of the story. The other is shedding flab. Bata has reduced the number of its unviable stores from 140 to 74 and is open to shutting down more such stores in future. The company has close to 1200 stores and 2,000 SKUs in India.
Bata India managing director Marcelo Villagran says, "In today's challenging market, our strategy of opening large format stores has been successful and we would continue to invest in expanding our retail business. Along with this, we have also focused upon providing our customers with a new trendy collection and better shoe designs. Our value pricing, coupled with improved customer service, has helped us to grow."
The company is also depending on institutional business heavily. "We will have shoes tailor-made for hospitals, military forces, factory workers, and airlines. We will also introduce a new range of sports shoes in India this year which will be comparable to the best sportswear brands available here," Sinha says.
The company has already set up a dedicated team headed by a retired defence man to secure contracts. The total market size for footwear used by the defence personnel is about 12 million pairs a year.
"The country has roughly three million defence and paramilitary personnel and each buys four pair of shoes per year, totalling 12 million pairs a year. That's a big market," Sinha says.
Defence authorities currently source most of its footwear requirement from unorganised players. After eyeing the defence segment, Bata is also moving aggressively into the safety footwear market as a new thrust area for growth.
The country has 45 million workforce in various manufacturing and mining sector and the company sees this as a good business opportunity. Parent group Bata Worldwide would be providing technology sourced from the Safety and Industrial Centre at Holland.
The Indian footwear market is estimated to be about Rs 10,000 crore (Rs 100 billion) in value terms and is growing at 10 per cent annually. Men's footwear accounts for almost half of the total market with women's shoes constituting 40 per cent and kids' footwear the rest.
According to industry estimates, the Indian footwear retail market is expected to grow at over 20 per cent from 2008 to 2011. Footwear is expected to comprise about 60 per cent of the total leather exports by 2011 from over 38 per cent in 2006-07.
The Indian footwear market is dominated by the casual footwear market that makes up for nearly two-third of the total footwear retail market.
