Shoe Industry of Pakistan

Prepared by:

Muhammad Abubakar Ghauri 135

Tahoor Raza Sheikh 139

Tehmaas Tareen 147

Sana Ali 102

Rashid Mehmood 143

Zakish Ayub 119

Submitted to:

Ma’am Rizwana

First of all, our gratitude to All-Mighty ALLAH who gave us the energy, the motivation and the wisdom to accomplish this task.

We have pleasure in recording our indebtedness to many people who have helped us in this project.

We are grateful to Miss Rizwana who gave us an opportunity to explore, and polish our skills. At this stage, it was a great learning opportunity.

We also thank to all those who helped us in completing our survey.

Acknowledgement

This report is dedicated to Ma’am Rizwana as she has taught us with full devotion and provided us with the best of her teaching. We got to learn a lot from her both theoretically as well as its practical implication.

Dedication

PrefaceThe study aimed to investigate the consumer behavior towards shoe industry of Pakistan. The platform we chose is ladies footwear. The study is to investigate the consumer behavior and affection towards different brands. For this purpose, a survey was conducted among female customers of different brands especially focusing on brands producing only female footwear. The survey was conducted by letting customers fill the questionnaires that were developed in a way to get consumer insights about different brands. The data collected via questionnaires was analyzed with a software “IBM SPSS”.

ContentsLadies Fashion Shoe Industry of Pakistan...........................................................................................................7

PEST ANALYSIS...................................................................................................................................................8

Political Environment:.......................................................................................................................................8

Impact of Political Environment on Shoe Industry:........................................................................................8

Economic Environment......................................................................................................................................8

Impact of Economic Environment on Shoe Industry:.....................................................................................9

Social Environment:...........................................................................................................................................9

Technological Environment:............................................................................................................................10

INDUSTRY ANALYSIS:.....................................................................................................................................10

• Too many suppliers..................................................................................................................................10

• Lead time short.........................................................................................................................................11

• Easily available – homogenous product..................................................................................................11

• Segregated suppliers.................................................................................................................................11

• Supplier’s product essential to the quality or performance of the business.........................................11

• Product differentiation is not provided by the suppliers as they have to make to designs with complete specifications provided by the firm.................................................................................................11

• Low switching cost....................................................................................................................................12

Customers/Buyers:...........................................................................................................................................12

Threat of New Entrants:..................................................................................................................................12

Threat of Substitutes:.......................................................................................................................................13

Rivalry:.............................................................................................................................................................13

• Too many competitors................................................................................................................................13

• Low Exit Barriers.......................................................................................................................................13

Top five Brands and their marketing mix:.........................................................................................................13

Ehsan Chappal Store (ECS)................................................................................................................................14

History...................................................................................................................................................................14

Marketing Mix......................................................................................................................................................14

Stylo.......................................................................................................................................................................16

History...................................................................................................................................................................16

Marketing Mix......................................................................................................................................................16

Metro Shoes..........................................................................................................................................................18

History...................................................................................................................................................................18

Marketing Mix......................................................................................................................................................18

Milli Shoes.............................................................................................................................................................20

History ....................................................................................................................................................20

Marketing Mix......................................................................................................................................................20

Purpose of the study.............................................................................................................................................21

Scope of the study.................................................................................................................................................21

Methodology.........................................................................................................................................................22

Population.........................................................................................................................................................22

Sample selection................................................................................................................................................22

Instrument used................................................................................................................................................22

Statistical procedure used................................................................................................................................22

Results, findings and discussions:.......................................................................................................................23

SWOT analysis of leading two brands................................................................................................................27

SWOT analysis of STYLO shoes:....................................................................................................................27

SWOT analysis of ECS:...................................................................................................................................28

Recommendations:...............................................................................................................................................30

Recommendations for ECS:............................................................................................................................30

Ladies Fashion Shoe Industry of PakistanFashion these days has become very essential to females and they are highly demanding

whether its attire, shoes or accessories. Seeing this major change in the behavior of

females, every industry related to females and revolutionized. The ladies shoe industry

has also undergone changes and especially in the past few years the change has been

quite rapid. Ladies fashion shoe industry is a very growing industry. Existing firms in

ladies fashion shoe industry:

Brands:

1- Stylo2- Milli3- Metro4- Comley5- ECS

PEST ANALYSISPolitical Environment:

The political arena affects the industries of any country. If the political environment is stable then it is beneficial for any industry because stable political environment follows the regularity of the policies for any industry. Unfortunately in Pakistan, political environment was not sustainable which causes a bad effect on almost all the industries.

Impact of Political Environment on Shoe Industry:There is no special trade restriction for shoes industry. Anyone can start this

business with the registration in chamber of commerce.

Government of Pakistan exempted special taxes of 10% - 15% on leather shoes imported that was a promoting action for shoes industry. Raw materials used in shoe industry are mostly leather, artificial leather, synthetic, and textile canvas, PVC, Hawaii and EVA. The import duty on all these raw materials is 15 %.

There are some environmental issues regarding shoes industry that is ban on import of raw material toluene. The chemical toluene is addictive. Due to this reason, the sticking chemicals like Lee-tax, Diamond and MEK are mostly being imported and if it is manufactured in Pakistan, then toluene is smuggled.

Political instability has big affects on import and exports of shoes industry as well as retail business. All the imports orders can be cancelled due to political instability no one country willing to export their shoes and shoe raw material in Pakistan.

Economic Environment.Most considerable point for any industry is the economic condition of the country.

If a country is economically strong then there are chances of growth in each sector.

Pakistan is a developing country and progressing continuously. The economic condition is much better now as compare to the previous years. In the past foreign companies were afraid to invest in Pakistan but now the situation is totally change. Many countries are investing in different sectors and playing good role in our economy. The GDP of the Pakistan has increased and rising up with the time.

Impact of Economic Environment on Shoe Industry:Due to this reason, there is great change and development in Shoes industry. Shoes

industry is much more efficient now days as many firms are entering into this business. New companies like Soul Collection, Shu 8, Think Pink, Comely shoes, swan shoes, and Metro shoes are the example of this growth which will raise our GDP more.

Social Environment:Social trends and the demographics are the key elements that are taken in consideration to do business in any country. Each country has different culture and trend basing on their norms and values.

In Fashion Shoes industry trends are changing day by day rapidly and if you don’t keep up your pace with this rapid transition you will lack behind.

Now a day’s people are becoming more stylish, fashion oriented and status conscious so they prefer and demand for shoes which fulfill their personality needs. People today want good quality products in return of the money that they spend.

People like to socialize. As imported and internationally renowned brands are assumed to be prestige to use, people are more likely to go for some best known products.

In the ladies fashion shoe industry, there is an increased trend of females to buy shoes that matches their outfits. Some years back, very neutral colors like black, brown, white and fawn were used for ladies shoes and were considered as a match for outfits of all colors. But this trend is by gone now and ladies are more prone to buy matching shoes. Because of this demand from the ladies, almost all firms are manufacturing shoes of a variety of colors. Now, shoes are being manufactured in various shades of one color like different shades of blue, green, pink and other colors are easily found.

Another increased trend is of providing shoes according to various occasions like valentines, basant; weddings etc. for example on valentines, shoes in various shades of red are provided and displayed. In the same way, in wedding season golden, copper, silver and reds are provided because of their huge demand.

As weather in Pakistan remains warm in most of country’s region and it continues approximately 7 to 8 months, so in such weather you need more stylish chappals.

Technological Environment:Technology is the best weapon to win the war of competition in these days. Those who have outdated technology are out of the competition. In shoes industry majority of companies are manufacturing handmade shoes for competitive edge. In Pakistani shoes industry usage of technology is very low because people prefer to buy handmade shoes. The budget allocation for research and development in shoe industry of Pakistan is low. Due to low usage of technology in this industry technological change rate is also very low.

A big reason for not involving technology is that in ladies fashion shoes industry, the designs change rapidly and with this fast pace, machines cannot be changed.

But technology plays a great role in sole cutting and pressing. Machines are used in Pakistan as well as abroad for sole cutting and pressing. Earlier sole cutting and pressing was manually done but now machines are available on which mass sole cutting and pressing is done. As far as the uppers of shoes are concerned, they are embellished and sequenced by labor.

• Slip-ons uppers are cut on machines.

• Mass productions of shoes are having their uppers cut on machines.

INDUSTRY ANALYSIS:Bargaining power of suppliers – Low:

• Too many suppliers.The suppliers have mushroomed specifically in the city of Lahore and Karachi. Other than these cities suppliers can be found in Sangla hill, Shiekhupura and Kasur. The suppliers are quite large in number as compared to the buyers who order them. This large ratio of suppliers leaves the choice on buyers. The buyers have the complete power to work with as many suppliers as they want and to reject the suppliers when their orders are made.

• Lead time short.Generally the lead times of providing the orders to the firms are very short. If any supplier takes more time than others he will not be pursued and contacted by the firms. So the rivalry among suppliers is intensified on the basis of lead times.

• Easily available – homogenous product.The products demanded by all the firms in this industry are almost the same with little variations in designs. So overall, the products are homogenous in nature.

• Segregated suppliers.The suppliers do not have any union. They are segregated and spread. Because of no union of suppliers, their power has decreased. Price war has resulted because of segregation of suppliers.

• Supplier’s product essential to the quality or performance of the business.As almost all the firms in this industry are outsourcing so the products quality heavily depends on suppliers. The buyers expect to get good quality shoes from their suppliers. The product quality is totally dependent on suppliers’ part. For the quality to be consistent, the firms arrange for quality audits to the suppliers manufacturing place.

• Product differentiation is not provided by the suppliers as they have to make to designs with complete specifications provided by the firm.As far as the big names of this industry are concerned like Stylo, ECS, Modila, Milli, Soul Collections etc. they have their own shoe designers. Once the shoe is designed, it is sent with complete specification of raw materials to be used to the suppliers. So customization is quite high as far as the designs are concerned. In the ladies fashion shoe industry the product differentiation is mainly defined in terms of designs they offer to their customers. So the product differentiation is defined by the firms and not the suppliers.

• Low switching cost.As the ratio of suppliers is quite high as compared to the firms that they are catering, so this makes the switching cost of buyers very low.

Customers/Buyers:• Products are homogenous. Shoes in ladies fashion industry are not much different in terms of design and quality as almost all the firms have same vendors and if a firm signs an agreement with vendors in order to protect their designs from being copied, the vendors will offer the same design with a slight difference to some other firm. So, products are homogenous in ladies fashion shoe industry.

• Buyers are very strong as they have too many options available without any switching cost involved. If they face any issues regarding price, quality etc. they would easily switch to other brands as they can find the same designs with a slight difference (or at times same design) at any other shop at their acceptable price or quality parameters.

• Fashion trends are changing at a faster pace, buyers in this industry are not brand loyal rather they seek for better designs and apparent quality parameters defined by them.

• Comparable prices & quality: As mentioned earlier products are homogenous with little or no difference, buyers have advantage of switching a brand if they are not satisfied with the price or quality being offered by a particular brand.

• Switching cost is low, as mentioned earlier, that products are almost same so consumers do not face any major costs in switching a brand from one to another.

Threat of New Entrants:• Entry barriers are low as existing firms are all outsourcing which makes the total investment relatively low for new entrants.

• Switching cost is low which is beneficial for new entrants if they provide the designs and fulfill the quality parameters defined by the customers.

• No technicality involved. Supply chain is very easy to manage in this industry as not much technology is involved in manufacturing of the shoes and as a matter of fact outsourcing lowers the risk of failure in production.

Threat of Substitutes:• Machine made shoes are substitute products as handmade shoes are being produced currently in the market.

• Life of fashion shoes is very short i.e. fashion trends change at a fast pace which makes it difficult for the substitutes to follow rapid changes, so threat of substitute is pretty low.

Rivalry:

• Too many competitors.• In the Footwear Industry, the Level of Rivalry is high. There are Several Competitors such as METRO, ECS, STYLO, BORJAN, MILLI, COMELY and STARLET. The competition between these companies is so intense because they are dealing with SHORT-LIFE CYCLE Products.

• As mentioned earlier, target market is almost same for all competitors that results in almost same strategies so, competitors in this industry do not face hard time reading each other’s (competitors) intentions accurately.

• Low Exit Barriersi. No specialized assets are involved as this is a labor intensive industry.

ii. There are no Government policies for any firm that wants to leave the industry.

Top five Brands and their marketing mix:1- Stylo2- Milli3- Comley4- Metro5- ECS

Ehsan Chappal Store (ECS)

HistoryFirst outlet opened in 1954 in Anarkali and soon became a raging success for its excellent quality and designing. Since then we have been expanding operations in the fields of manufacturing, importing, exporting and retailing. The expansion has been continuous with the market growth. Now third generation of the founder Mr. Fazal Rab Saddiquiis in the business yet the core values of business remain the same.

Owns multiple brands of ladies and girls’ footwear, bags and accessories including ECS, elements, effects and e-circles. All these brands are exclusively available at ECS stores located at most convenient locations in most major cities of Pakistan. ECS is undoubtedly the most famous ladies footwear brand in the country with a history of over 50 years. Unsurpassed quality and contemporary designing are the hallmarks of all Ehsan chappal Store brands. A large family-owned chain of ladies footwear and accessories retail outlets. ‘For latest in ladies footwear’ is their slogan.

Marketing MixProduct

ECS products include all sort of ladies footwear. Sandals, slippers, heels, thongs, flip-flops, moccasins, dress shoes, bridals and now also kid’s shoes and ladies purses. Most of the shoes are made in their local factory by their own skilled craftsmen. The rest are either sourced from Karachi or imported from Thailand. In addition to shoes they now proudly display an extensive range of ladies handbags and shoulder bags.

Place

The first outlet was opened in the then newly-constructed Bano Bazaar in Lahore’s famous market Anarkali in 1953. The idea was to give the customers good value for money. In 1997 a new branch was opened in Liberty Market, Gulberg to cater the needs of the growing city of Lahore. Liberty Market is now the largest and most posh market in the city and Ehsan Chappal Store was an instant success there. Afterwards ECS entered the markets of Y-Block Defence, Peco Road Township and the Mall Road Lahore. An extraordinary branch was opened in2001 in Defense. It is a four story stand-alone building, unrivalled by any other shoe store in the entire country. In 2001 ECS opened its biggest outlet in Rawalpindi, and shortly after that, it entered the markets of Islamabad. Its success did not slow down there. It opened its outlets in Faisalabad and Gujranwala in 2003. Right now, the management of ECS is planning to expand the business in many

other cities and into the international market as well. The business was incorporated in the year 2000.Below are the branches of ECS and the reason for selecting these places depend upon target market instant access:

Anarkali, Lahore Liberty Market, Lahore

Defence Lahore Township, Lahore Saddar, Rawalpindi F 10 Markaz, Islamabad F7 Markaz, Islamabad Peoples Colony, Faisalabad Sussan Road, Faisalabad Satellite Town, Gujranwala

Price

No doubt ECS keep on announcing different discount and cuts in prices to attract more customers. But it sets price level using cost as bases. Price = cost + margin. Different types of price cuts that are offered to members of ECS are discussed in promotion activities.

Promotion

ECS has always spent vigorously in such campaigns. They have designed their own transport trucks with very attractive banners of their brand to serve as an advertising agent. In girl’s colleges, they advertise a lot by pasting permanent stickers of their logos and colors on the benches and roofs. They advertise in fashion magazines as well, like FAQ, etc. ECS also keeps its way to better and improved features in all aspects. They have experimented and maintained a lot of logos and got different results every time.

Stylo

HistoryMr. Azhar Hussain Siddiqui, who started out as a shoe salesman in Lahore’s famous Anarkali Bazaar. His hard work and honesty gained him popularity and earned him many job opportunities at other stores but being a visionary he started his own business in 1974 under the name of Bano Chapal with a humble PKR 174 only. His sincere commitment to his work started paying off and the vision gradually turned into a success story. Now, Stylo has become the leading footwear and accessory brand of women’s fashion in Pakistan with presence in 45 cities and is continuously expanding to keep up with the growing demand.

Marketing Mix Product

Stylo is Pakistani girls and women most favorite choice. Its main job is to grab factionist’s attention through its magical styles. It includes:

Ladies shoeso Formal shoes

o Party shoes

o Casual shoes

o Bridal shoes

Kids footwear Ladies accessories

o Hand bags

o Jewelry

Casual fabric name ‘FABRIZIO’

Place

Stylo was started in 1975 with a small place in Anarkali Lahore. Until 2003, it was having only 4 shops, then with an aggressive expansion plan from 2004 onwards up till now there are total 87 outlets presents in 52 different countries. There outlets are present in following cities:

Lahore Islamabad Rawalpindi Karachi Multan Faislabad Peshawar Sialkot and many more.

Price

It has different ranges of prices. Moreover there are some defected articles which are sold on low prices.

Promotion

They advertise in fashion magazines, through electronic media and advertisements in television.

Metro Shoes

HistoryFounded in 1986, Metro Shoes is an indigenous Pakistani brand. It is ISO certified and has a clear vision of catering to the footwear needs of the community. Metro Shoes over the years, has established its reputation as one of the finest brands in fashion footwear and accessories all across the country and beyond borders, showcasing a large variety of casual, seasonal, formal, fancy and bridal collections in ladies shoes, clutches, handbags and men’s shoes, keeping in perspective the varied communal likes, interests and aspirations. Metro imports, as well locally produces, a pleasingly diverse line of distinctive designs that comprehensively cater to market sentiments. Metro Shoes has become one of the first shoe brands that women could turn to for feminine style they coveted and comfort they thought was impossible to attain. With rich leathers and unique details, Metro Shoes has captured the essence of modern femininity… whether that means taking a leisurely walk or running a board meeting. Metro Shoes pamper your feet with the cushioned, contoured foot bed and experience all-day comfort! The best service, the best price, and the best design, all over the world.

Marketing MixProduct

It includes following products:

Ladies shoeso Fancy

o Khussa

o Casual

Gents shoeso Formal

o Casual

o Khussa

o Chappal

Kids footwear Accessorize

o Ladies bags

o Jewelry

Place

It has outlets mainly in major cities. It includes Lahore, Faisalabad, Rawalpindi and many more.

Promotion

It gives promotions usually on social and electronic media with attractive advertisements and discounts.

Milli Shoes

HistoryIt was founded in 1978. It has more than 30 years of experience in Shoe Manufacturing with 8 outlets in Lahore, one each in Sargodha, Sahiwal, Gujrat, Haroonabad, Sheikhupura, Okara, Bahawalpur, Rahim Yar Khan with two franchise outlets in Muridke and Shamki Bhattian. Their products are being exported to number of countries in Europe and Middle East.

Marketing MixProduct

It includes following products:

Ladies Shoes Men Shoes Kids Shoes Hand Bags

Place

Their outlets are in following citites:

Lahore Multan Okara Sargodha Sheikhupura Sialkot

Promotion

Purpose of the studyThe purpose of the study is to gather the knowledge of marketing mix of different famous shoe brands of Pakistan and to gather relevant information about them.

Scope of the studyThis study will highlight the information about the shoe industry of Pakistan and ranking of various brands and their marketing mix.

MethodologyFor the current study, the following research design was used.

PopulationWe selected people of Lahore, Pakistan to conduct our survey.

Sample selectionWe selected people of age 18 & above for filling the questionnaire total 80 questionnaires were filled out. The respondents involved in this survey were either employed or students at different at universities.

Instrument usedInstrument used for survey was questionnaire. We developed a questionnaire consisting of about 29 questions.

Statistical procedure usedSoftware SPSS was used to analyze the results of our survey and to take out averages. Five choices were given against each question.

1- Strongly disagree2- Disagree 3- Neutral 4- Agree 5- Strongly agree

Results, findings and discussions:According to the results of the conducted survey, it was clear that the leading shoe brand for women in Pakistan is Stylo and the second one is ECS.

In the survey around 65 candidates were of age group 18- 25 about 8 of age group 26-35, 5 from age group 36-45 and 2 from 46& above.

The household income of our population sample was like 40 belongs to 41000& above group, 15 to 31000-40000 group, 10 belongs to 21000-30000 group and 15 belonged to 10000-20000 group.

5 of our candidates have education upto intermediate, 28 had graduation, 35 have done or

doing masters and 12 were above masters.

According to our survey the most preferred shoe brand of Pakistan among females is

stylo and the second one is ECS. 30 were customers of stylo, 25 were customers of ECS,

15 were customers of metro, 6 were customers of milli and 4 were customers of comely.

SWOT analysis of leading two brands

SWOT analysis of STYLO shoes:

Strengths

1) Strong Brand name.

2) Versatility and innovation.

3) Strong management.

4) More than 1000 employees.

5) Online trade.

6) Pakistan’s largest fashion retailor.

7) Largest network of 87 outlets in 52 cities around the country.

Weaknesses

1) No international presence.

2) Less effective pricing strategy.

3) Designs are easily copied by local manufacturers

Opportunities

1) Expansion in whole Pakistan.

2) Expansion in international markets.

3) Company can also target males.

4) To capture the accessory market collectively.

Threats

1) Bad economy.

2) Political instability.

3) Intense competition.

4) Constantly changing fashion.

SWOT analysis of ECS:

Strength

1) ECS Brand-Image in the eyes of customers, it is top of all brands present in the market.When questioned that what brand comes to your mind when it comes to buy shoes; majorityof them replied, ECS.

2) Excellent Range in Product Lines – a well-structured product line and range.

Quality

1) Promotional Offers - XS ECS – this is playing a vital role in their business these days. Asthere is no membership fee and everyone is invited to join this circle, more and moremembers are joining this, affecting sales of the company in quite a positive manner.

2) Large number of Collaborators – there is a considerable big number of collaborators who aremotivating the sales of ECS by one way or another.

3) Effective Advertising Campaigns – campaigns in girl’s colleges have always brought fruitfulresults for the company.

4) Competitive Pricing5) Motivated Workforce, staff is highly motivated. They are regularly appraised and

arerewarded often on their performance. They work on commission base system.

Weaknesses

1) No clearly defined marketing strategy – though they are working successfully in the market but still there is any clearly defined or preplanned marketing strategy for ECS.

2) Lesser number of Outlets – as compared to its main competitor Stylo, they are operatingthrough lesser number of outlets.

3) Lack of managerial staff

Opportunities

1) New developing Local societies & Cities

2) Internationally-held Fashion Shows – ECS has participated in few internationally-heldfashion shows and have gained honor in them. The company got many orders from theseshows.

3) Launch of the Chronicles, this shoe-catalog would be a totally different idea in the country’smarket in this business. Therefore after thoughtful planning, launch of it could bring fruits for the company.

4) Economic Environment – steady and encouraging rate of inflation in the country, populationgrowth trend in urban areas and increase in per capita income; brings more and morecustomers in the ECS’s segment, this of course is good for the company.

Threats

1) Emergence of Cheap China Products, this could be a threat to ECS, since China is well-known for its similar but low priced products worldwide. Therefore if it enters the market,customers of ECS could switch towards it.

2) Stylo’s innovative marketing and promotional activities.

Recommendations:

Following re the recommendations for the improvement and betterment of ECS

(ranked second in our survey).

Recommendations for ECS:• Focus on Product Development, Market Development and Strategies

• Footwear industry is highly fashionable industry; hence ECS must improve the efficiency of product development in order to bring new design and style.

• Should provide consistent quality service to its customers

• Internet is a broad medium so they should also improve e-business

Refrences

www.stylo.com

www.ECS.com

www.slideshare.com/ECS

www.scribd.com/shoeindustry