Indian Women Footwear Industry Report

Reevolv Advisory Services

Private Limited

Indian Women Footwear Industry Report

For any queries or detailed information

Contact us on +91 – 22 – 6002 2001 / +91 – 22 – 2436 3161

E-Mail at [email protected]

February 2015


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Table of Contents

Particulars Page Nos.

1. Executive Summary 4

2. Women Footwear Industry Overview

2.1. Market Opportunity 8

2.2. Growth Drivers 9

3. Business Dynamics

3.1. Business Model 11

3.2. Buying Criteria 14

3.3. Key Success Factors 16

3.4. Key Challenges 20

4. Competitive Mapping

4.1. Market Segments 22

4.2. Spread of Brands across Market Segments 23

4.3. SKU concentration of Brands across Market Segments 24

4.4. Brand Positioning and Distribution 25

5. Select Interviews 26

6. Consumer Survey

6.1. Overall 33

6.2. Market segments 37

6.3. Region wise 42

6.4. Tier I Cities 49

7. Equity transaction

7.1. Metro 56

7.2. Khadim’s 57

7.3. Tresmode 58


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Particulars Page Nos.

7.4. Famozi 59

8. Indian Market Player Profiles

8.1. Bata 60

8.2. Carlton London 67

8.3. Catwalk 72

8.4. Clarks 77

8.5. Inc 5 82

8.6. Khadim’s 87

8.7. Liberty 93

8.8. Major Brands (Aldo, Charles & Keith, Nine West) 98

8.9. Metro Shoes (Metro, Mochi) 107

8.10. Pavers England 113

8.11. Puma 118

8.12. Reliance Footprint 123

8.13. Skechers 127

8.14. Tresmode 132

8.15. Woodland 139

9. Annexure 142


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1. Executive Summary

How big is the opportunity in women footwear in India?

Market size across tier 1, 2 and 3 cities

No. Urban Conglomeration No of Cities

Market Size (Rs. Mn) –

FY2011

1 Tier 1 Cities 8

2 Tier 2 Cities 41

3 Tier 3 Cities 41

Total 90

Source : Reevolv Consumer Survey, Reevolv Research, McKinsey Global Institute - India’s urban awakening report

What drives the growth for women footwear in India?


5

What do women look for while buying footwear in India?

Buying criteria of women in footwear

What are the key success factors in women footwear in India?

What are the challenges faced by the industry?


6

What are the market segments in women footwear?

Key consumer insights from survey:-


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2. Women Footwear Industry Overview 2.1. Market Opportunity

Tier 1: Delhi-NCR, MMR (Mumbai Metropolitan Region – Mumbai, Navi Mumbai, Thane) Kolkata, Bangalore, Chennai, Hyderabad,

Pune, Ahmadabad (cities with population of more than 5 million).

Tier 2: Agra, Allahabad, Amritsar, Aurangabad, Bhopal, Coimbatore, Chandigarh, Dhanbad, Durg-Bhilainagar, Vishakhapatnam, Gwalior,

Indore, Jabalpur, Jaipur, Jamshedpur, Jodhpur, Kannur, Kochi, Kanpur, Kollam, Kota, Kozhikode, Ludhiana, Madurai, Malappuram,

Lucknow, Meerut, Nashik, Patna, Nagpur, Raipur, Rajkot, Ranchi, Srinagar, Surat, Thiruvananthapuram, Thrissur, Tiruchirappali,

Vadodara, Varanasi and Vijaywada. (Cities with population of 1 to 5 million).

Tier 3: Ajmer, Aligarh, Amravati, Asansol ,Bareilly, Belgaum, Bhavnagar, Bhubaneswar, Bikaner, Bokaro, Cuttack, Dehradun, Durgapur,

Erode, Firozabad, Gorakhpur, Gulbarga, Guntur, Guwahati, Hubli-Dharwad, Jalandhar, Jammu, Jamnagar, Jhansi, Kolhapur, Malegaon,

Mangalore, Moradabad, Mysore, Nanded, Nellore, Puducherry, Rourkela, Saharanpur, Salem, Sangli, Siliguri, Solapur, Tiruppur,

Ujjain,Warangal (cities with population of 0.5 to 1 million).


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2.2. Growth Drivers

3. Business Dynamics

3.1. Business Model

3.2. Buying Criteria

3.3. Key Success Factors

3.4. Key Challenges

4. Competitive Mapping

4.1. Market Segment

4.2. SKU concentration of Brands across Market Segment

4.3. SKUs per Brand - Spread of SKUs of the brands across product type and market segments


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4.4. Brand Positioning and Distribution

Brand Positioning Target Customer Significant Presence

M SP P L

Bata

Carlton London

Catwalk

Clarks

Inc 5

Khadim’s

Liberty

Major Brands - Aldo

Major Brands - Charles & Keith

Major Brands - Nine west

Metro Shoes - Metro

Metro Shoes - Mochi

Pavers England

Puma

Reliance Footprint

Skechers

Tresmode

Woodland


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5. Select Interviews

Owner of a footwear shop

Questions Answers

What do women look for while buying footwear across age groups? •

Do customers buy impulsively?

Do you see a change in buying after ecommerce has come?

Is there a brand loyalty across consumers?

Do customers in India have a tendency to wait for a sale / discount season before making a purchase?

How many pairs of footwear do women customers buy in a year?

What category of consumers tends to buy from organized retail?

Is there any seasonality wherein you witness higher sales in women footwear?

In case the inventory is not sold, do brands accept return of goods or the retailer offers such inventory at a discount?

Do brands supply goods directly or are the goods supplied through a distributor?

How many days it takes for the distributor to deliver goods once the order is placed?

What are the brands you sell?

What are the margins offered to retailers by established brands?

What type of footwear is fast moving?

Do footwear companies take feedback from retailer?

Is there any seasonality in sales?

Is there any after sales service you offer?

Store Manager, Branded footwear exclusive outlet

Questions Answers

What is the typical size of a footwear store including storage space?

What is typical cost of fit-outs in a footwear store?

How many SKUs one should keep in a newly opened store?


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What is the credit period given by brands or local manufacturers?

How many footfalls are there during weekday/ weekend and what is the conversion ratio?

What can be the strategy to improve conversion ratio? •

What is the average price point for a typical woman buying footwear?

What type of after sales services stores offer to customers?

How many employees are required per store?

How is the employee incentive structure?

How are goods delivered to stores?

Are customers brand conscious?

What is the preferred location for a new footwear store if one starts with a branded footwear outlet or if one starts with unbranded footwear?

What type of footwear has higher sales in your store?

Store Manager, Branded footwear exclusive outlet Questions Answers

How many times do brands launch their new collection?

Do you see a change in buying after ecommerce has come in?

In case the inventory is not sold, do brands accept return of goods or the retailer offers such inventory at discount?

Which are the highest selling sizes in women footwear?

Footwear manufacturer

Questions Answers

For which brands do you manufacture footwear?

When was the company incorporated?

How many designs of footwear you have ready to select at any point of time?

From where do you get details about current trends and fashion in women footwear?

Do you import women footwear from other countries?

What is the size of your manufacturing team?

Do you share the same footwear designs which you manufacture for your major clients with others?

How do you sell your own footwear brand?

What type of raw material do you use?

Where is your manufacturing plant located?


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What is the main buying criteria of your clients i.e. footwear brands?

What is the margin offered to the retailer?

What is the credit period offered to retailers?

Is there any return of goods policy?

What is your suggestion for new entrants in women footwear retail?

Do you offer box for SKU?

Who bears the logistic cost?

Store Manager, Luxury Brand

Questions Answers

What is the change in customer profile for luxury products?

What are the buying criteria of an individual who buys luxury products? •

What is the buying process of luxury products in India? •

What are the key attributes of sales team in luxury? •

What is important while selling luxury products?

How important is training for your sales team? •

Who are your target consumers? •

Is there any seasonality? •

What is your branding strategy in India? •

Store Manager, Luxury Brand

Questions Answers

How do luxury brands choose location for store? •

Do you believe that there is market in Tier II cities?

What is the impact of e-commerce?

How does your distribution network work?

How do they deal with counterfeits? •

What is the difference between luxury brand and fashion brand? •


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6. Consumer Survey (Sample Questions)

Reevolv has conducted a primary survey of women customers across age groups. The respondents

are from tier 1, 2, 3 and other cities across India. The sample size is 763.

6.1. Overall

1. How many pairs of footwear does she buy in a year?

2. From where does she prefer to buy footwear?

3. At what price does she buy footwear and how long does she use it?

Casual vs. Formal vs. Party / Evening / Special Occasion Footwear

4. What does she look before selecting footwear retail outlet?

5. What does she look before buying footwear?

6. When does she generally buy new footwear?

7. Which are the top brands she buys?

8. Does she struggle to find footwear? What according to her are the gaps in the footwear industry?

9. Does she buy footwear online and from where? If No, is she willing to buy in the future?


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7. Equity Transactions 7.1. Metro

Month & Year

Investor

Investor Company Name

Instrument 1

Instrument 2

Amount invested – Instrument 1 (Rs. Mn)


Total Amount invested (Rs. Mn)

Instrument 1 – Equivalent stake (%)


Total equivalent stake (%)

Primary stake %

Secondary stake %

Cumulative stake %

Source : Company Filings and Reevolv Research

Month & Year

(Rs. Mn)

Pre-money

Debt

Cash and cash equivalents

Net Debt

EV

Post-money

Revenues

EBITDA

PAT

ROCE %

ROE %

EV/ Sales (x)

EV/EBITDA (x)

PE (x)


Note :

Enterprise Value has been calculated based on Pre-money valuation as we have assumed that the funds invested will take at least a year to yield profitability

*** - Enterprise Value has been calculated based on Gross Debt assuming that funds raised have not been fully deployed


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7.2. Khadim’s Month & Year

Investor


Instrument 1

Instrument 2







Primary stake %

Secondary stake %

Cumulative stake %

Source : Company Filings and Reevolv Research Note:

** - Excluding amount invested in secondary stake buyout

Month & Year

(Rs. Mn)

Pre-money

Debt


Net Debt

EV

Post-money

Revenues

EBITDA

PAT

ROCE %

ROE %

EV/ Sales (x)

EV/EBITDA (x)

PE (x)

7.3. Tresmode


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Month & Year

Investor


Instrument 1

Instrument 2







Primary stake %

Secondary stake %

Cumulative stake %


Month & Year

(Rs. Mn)

Pre-money

Debt


Net Debt

EV

Post-money

Revenues

EBITDA

PAT

ROCE %

ROE %

EV/ Sales (x)

EV/EBITDA (x)

PE (x)


Note :




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7.4. Famozi

Month & Year

Investor


Instrument 1

Instrument 2

Amount invested – Instrument 1 (Rs. Mn) - Primary

Amount invested – Instrument 2 (Rs. Mn) - Primary





Primary stake %

Secondary stake %

Cumulative stake %


Month & Year

(Rs. Mn)

Pre-money

Debt


Net Debt

EV

Post-money

Revenues

EBITDA

PAT

ROCE %

ROE %

EV/ Sales (x)

EV/EBITDA (x)

PE (x)


Note :




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8. Market Player Profiles - Sample

8.1. Bata

8.1.1 Overview

Description

Company Name

Founder

Year of Inception/ Incorporation

About Company / Brand -

Brand(s)

Product Portfolio

Raw Material

Number of Outlets

Production Facilities -

Distribution •

Marketing Strategy •

Online Sales

Future Plans •

Source – Company Website and Reevolv Research


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8.1.2 Locations

Tier I Cities

State Wise Region Wise

Others include : Kerala , Punjab , Gujarat , Bihar , Assam , Haryana , Rajasthan , Odisha , Madhya Pradesh , Jharkhand , Jammu & Kashmir , Chhattisgarh , Himachal Pradesh , Chandigarh , Goa , Puducherry , Meghalaya , Tripura , Mizoram , Sikkim , Arunachal Pradesh

Source – Company Website and Reevolv Research


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8.1.3 Product Mix

Overall

Brands Segment

Overall

% of SKUs Price Range

Bata

Ballerina

Sandals

Slip - ons

Sneakers

Total SKU's

Angry Birds Slip - ons

Sneakers

Total SKU's

Bata Lite Slip - ons

Total SKU's

Bata Walk Green Ballerina

Total SKU's

Comfit Sandals

Slip - ons

Total SKU's

Hush Puppies

Loafers

Sandals

Slip - ons

Sneakers

Total SKU's

Marie Claire

Ballerina

Sandals

Slip - ons

Total SKU's

Naturalizer

Ballerina

Loafers

Sandals

Shoes

Slip - ons

Total SKU's

North Star Ballerina

Shoes

Total SKU's

Power Sandals

Sneakers

Total SKU's


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Brands Segment Overall

% of SKU Price Range

Sandak Ballerina

Slip - ons

Total SKU's

Scholl Sandals

Slip - ons

Total SKU's

Sun Shine Slip - ons

Total SKU's

Sundrop Sandals

Total SKU's

Source : Company Website and Reevolv Research Note: These are indicative numbers. The actual numbers may vary

Segment Wise

Brands Segment Mass Semi Premium Premium

% of SKUs Price Range % of

SKUs Price Range % of SKUs Price Range

Bata

Ballerina Sandals Slip - ons Sneakers

Angry Birds Slip - ons Sneakers

Bata Lite Slip - ons Bata Walk

Green Ballerina

Comfit Sandals Slip - ons

Hush Puppies

Loafers Sandals Slip - ons Sneakers

Marie Claire

Ballerina Sandals Slip - ons

Naturalizer

Ballerina Loafers Sandals Shoes

Slip - ons


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Brands Segment Mass Semi Premium Premium

% of SKUs Price Range % of

SKUs Price Range % of SKUs Price Range

North Star Ballerina Shoes

Power Sandals

Sneakers

Sandak Ballerina Slip - ons

Scholl Sandals Slip - ons

Sun Shine Slip - ons Sundrop Sandals

Source : Company Website and Reevolv Research Note: These are indicative numbers. The actual numbers may vary


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8.1.4. Financials Profit & Loss Account for the year ended 31st December (Rs. Mn)

CY2011 CY2012 CY2013

Revenues from Operation

Other Income

Total Revenues

Cost of Materials Consumed

Rent, Rates and Taxes

Employee Expenses

Selling and Distribution Expenses

Other Expenses

Total Expenditure

EBITDA

Depreciation

EBIT

Interest

Profit before Prior Period / Exceptional Items and Tax

PBT

PAT

Balance Sheet as at 31st December (Rs. Mn) CY2011 CY2012 CY2013 Share Capital

Reserves & Surplus

Shareholders’ Funds

Loan Funds

Deferred Tax Liability

Total Liabilities

Gross Block

Net Block

Capital work in progress

Investments

Inventories

Sundry Debtors

Other Current Assets

Total Current Assets & Advances excl. Cash & Bank

Current Liabilities

Provisions

Total Current Liabilities & Provisions

Net Working Capital excl. Cash & Bank

Cash & Bank

Net Working Capital incl. Cash & Bank

Total Assets

Source: Company Filings, Totals may not tally due to rounding off errors


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Key Ratios

CY2011 CY2012 CY2013

Expenditure Ratios

Cost of material consumed as a % of Total Revenues Rent, Rates and Taxes as a % of Total Revenues Administrative & Other Expenses as a % of Total Revenues Employee Expenses as a % of Total Revenues Selling and Distribution Expenses as a % of Total Revenues

Profitability Ratios

EBITDA % EBIT% PBT % PAT %

Return Ratios

ROCE % ROE %

Financial Ratios

Total Debt / Net Worth Secured Debt / Net Worth Total Debt / EBITDA Turnover Ratios

Working Capital Turnover Ratio Net Fixed Assets Turnover Ratio Inventory Days Debtors Days Source: Company Filings and Reevolv Research


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9. Annexure

1.1. Ratios

Key Ratios

Cost of Material Consumed % Cost of Material Consumed

Total Revenues X 100

Employee Expenses % Employee Expenses


Selling & Distribution Expenses % Selling & Distribution Expenses


Administrative Expenses % Administrative Expenses


EBITDA % EBITDA


EBIT % EBIT


PBT % PBT


PAT % PAT


ROCE % EBIT

Capital Employed X 100

ROE % PAT

Net Worth X 100

Capital Employed Total of Asset / Liabilities

(Liabilities = Shareholders funds + Loan Funds + Deferred Tax + Minority Interest)

Working Capital Turnover Ratio Total Revenues

Net Current Assets excl Cash Bank

Net Fixed Assets Turnover Ratio Total Revenues

(Net Fixed Assets excl Capital Work in Progress)

Inventory Days Inventory

(Cost of Material Consumed) X 365

Debtors Days Debtors



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1.2. Abbreviations

Description

Bn Billon

CAGR Compound Annual Growth Rate

CCD Compulsory Convertible Debentures

CCPS Compulsory Convertible Preference Shares

CY Calendar Year

EBIT Earnings before interest and tax

EBITDA Earnings before interest, tax, depreciation and amortisation

EBO Exclusive Brand Outlet

EV Enterprise value

FY Financial year

L Luxury

LFR Large Format Retail

M Mass segment

MBO Multi Brand Outlet

MMR Mumbai Metropolitan Region

Mn Million

NA Not available

NCR National Capital Region

NM Not meaningful

NR Not relevant

NS Not specific

OEC Other e-commerce portal

P Premium

P/E Price to earnings

PAT Profit after tax

PBT Profit before tax

ROCE Return on capital employed

ROE Return on equity

SP Semi premium

TC Traditional channel


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About Reevolv

Reevolv is a boutique consulting and investment banking company offering a "One Stop Shop" in the areas of

business strategy, financial advisory and operations consulting to corporates and private equity funds.

We service our clients in their constant re-evolution process through our in-depth industry research, domain

understanding, our timely and superior execution capabilities and strong network to provide customized

solutions to our clients.

With a host of implementation focused services spanning across functions, we ensure that our clients reach

the desired goals and objectives in most efficient manner. We achieve sustainability of our initiatives by an all

round involvement of the client resources. This approach of an integrated improvement helps build a strong

foundation for the forward leap of our clients. Reevolv understands and acts upon the Strategic, Financial and

Operational needs of the clients on a regular basis to ensure adaptability and flexibility to suit the market and

industry dynamics.

Founded in 2008, Reevolv is a team of CAs, MBAs and Engineers with functional and industry expertise and

diverse background of investment banking and management consulting.

Disclaimer This report is published for information only. Reevolv Advisory Services Private Limited or any of its affiliates, group companies, directors, employees, agents or representatives shall not be liable for any loss or damages whether direct or indirect that may arise from or in connection with the use of the information in this document. This document is the sole property of Reevolv Advisory Services Private Limited and prior permission is required for full or part reproduction.This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose.

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Data & Analytics

Indian Women Footwear Industry Report