Bata-Balancing the See-Sawing Fortunes

1It was an early evening in the month of February 2012, and Mr. Santos , Managing Director (MD) of Bata India Ltd. (BIL), was reflecting on BIL's performance over the last seven years. He once again looked at the financial results of the past years (Exhibit 1). BIL was in losses up to 2004 and then had gradually begun to inch towards profits. Although, the last seven years had been good for BIL as it had made profits, Mr. Santos was sceptical about the future. BIL had gone through its spells of losses and profits before and there was no guarantee that after this BIL would never slip back. Prior to his joining the company, Bata had been a brand heavily reliant on a limited set of products. But Mr. Santos and his team had spent most of their energy over the last few years “redirecting” things—everything from overhauling the company's distribution strategy to revamping its product line. The results had been dramatic; Bata was now considered one of the contemporary but affordable shoe brands in the country .

The past five years sales at BIL reflected the renewed popularity of the brand Bata. Mr. Santos brought continuous improvement in their collection by introducing trendier, more youthful designs and value pricing, which ensured that the customers found great satisfaction and gave their patronage to Bata.

Mr. Santos and his team knew that the next few years were going to be crucial. Mr. Santos's goals were to maintain the currency and cachet of the brand across its broad customer base, through rapid retail expansion, a fantastic shoe line, increased store productivity, improved inventory management and great customer service, keeping in line the BIL brand positioning, a brand for family. Mr. Santos was now deliberating the way forward to keep the Bata brand on a more stable growth trajectory. Mr. Santos had summoned a meeting in this regard and had planned to discuss the changing trends in Indian footwear industry, the competition and the consumer behaviour to dig out insights which could help them in keeping Bata in a healthy state for a long time.

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Indian Footwear IndustryThe Indian footwear market is in an expansion mode. Both the domestic consumption and the exports increased in the last ten years. According to industry experts, there is huge untapped potential within India, which will further expand the market. The reason for this acceleration was largely due to growth in population, rising living standards and growth in brand and fashion consciousness. The shoes market, like most other product markets has diverse segmentations. First, by material of construction: (a) leather, (b) rubber, (c) PVC, and (d) canvas. Second, by consumer variation: (a) men's, (b) women's, (c) boys', (d) girls', and (e) baby shoes. Third, by usage pattern: (a) formal shoes, (b) casual and informal shoes, (c) slippers for in-house use, (d) military shoes, and (e) sports shoes. Fourth, by types of shoes: (a) military or police boots, (b) formal dress, closed and pump shoes, (c) sandals, (d) hawai chappals and (e) slippers. Fifth, by price range: (a) Luxury going beyond INR 3000 per pair; (b) high-end over INR 1500 per pair (c) medium priced shoes between INR 250 to INR 1500 per pair, and (d) low-priced shoes below INR 250 per pair. (e)Plastic chappals or leather strapped rubber sole chappals could be priced as low as INR 20 a pair. Currently, the footwear industry is nearly at INR140 bn market, with the organised sector accounting for nearly INR 35 bn .

Until recently, a major part of the demand in India was met by the unorganised, informal, small sector and branded shoes which accounted for only about one-fifth of the entire market . Between the urban and the rural, the rural sector constituted 75% of the footwear market. The organised segment in footwear market was expanding and major apparel brands included footwear in their product portfolio so as to present a complete wardrobe solution to customers. Low priced footwear and casual footwear dominated the market both in organized and unorganised sector year 2010 (Exhibit 2).

Category wise the Indian footwear market was dominated by men's category which accounted for nearly 48 percent followed by women's lifestyle footwear (41%) of the total footwear retail market. A significantly high share was also taken by children's segment, partially owing to the increased emphasis on sporty looks as promoted by some of the major global brands.The casual and mass/economy segment was where most sales of women's footwear took place, though

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by Arpita Srivastava

FIIB Business Review. Volume 1, Issue 2, January - March 2012