The Indian Footwear Retail Market

Bindu D. Menon

Shoe retail is in the process of taking a giant leap with the industry not only becoming more organised but also attracting a larger number of players into its fold. Touted as the next big impulse purchase after apparel, footwear retailing is sprouting ‘green shoots' in India. Manufacturers who had till recently been concentrating on the export markets are now looking inwards. Eyeing the sizeable mall-hopping consuming class, manufacturers are turning retailers, either going ahead on their own or forging alliances with international partners. Interestingly, the needs of the domestic market still continue to be catered to by the unorganised segment.

“The recession has been a great teacher. The US and the European Union, which were our primary markets, crashed following the economic downturn. Order books too remained grim until we decided to sell our European designs in the Indian market. This gave us the confidence that we could replicate our overseas success here where there is a huge chunk of buyers looking for the right products,” says a Delhi-based exporter.

Like all aspects of retailing that is accepted by consumers, players in the organised sector are pooling their resources and pumping in investments to cater to the next generation of clients. Of late, this has catalysed a slew of joint ventures and seen retail presence ramp up, and resulted in the scaling up of capacities and design enhancements.

Consider some of the joint ventures that have taken shape during the past 12 months. The UK-based Pavers has inked an agreement with Chennai-based exporter Foresight Group to introduce European fashion footwear brand Staccato in India. The Timberland Company, a major manufacturer of outdoor footwear and apparel, has entered into an exclusive partnership with Reliance Brands Ltd, a part of Reliance Industries, for distribution. The Kishore Biyani-led Future Group and the UK shoe retailer, Clarks, have agreed to form a joint venture to build a strong brand. Similarly, Winner Sports, a wholly-owned subsidiary of the Kishore Biyani-promoted Pantaloon Retail, has tied up with US-based lifestyle footwear and apparel maker Skechers to licence and distribute its products in India. “With its rapidly-growing fashion and retail sectors, we believe India will become a key market for us,” Timberland President and CEO Jeff Swartz says in an e-mailed statement.

So besides a large captive consumer base, what do footwear retailers see in the domestic market? According to a retail expert, India ranks second among the footwear-producing countries, next to China. The industry is labour-intensive and is concentrated in the small and cottage industry sectors. While leather shoes and uppers are concentrated in large-scale units, sandals and chappals are produced in the household and cottage sector. India produces more men's footwear while the world's major production is in ladies footwear. In the case of chappals and sandals, the use of non-leather material is prevalent in the domestic market.Therefore, the joint venture partners can use India not just as a selling point but also as an economical sourcing hub.

In fact, a number of areas in and around Chennai, Kanpur, Ranipet, Jalandhar, Agra and even Delhi cater to big global footwear makers who source from India. Owing to the non-compete clause and barriers to design reproduction imposed by these brands, local companies could not sell here for fear of losing a dollar remittance, the expert says. However, with several large retailers forging alliances, manufacturers can now look forward to catering to the domestic market too.

Eyeing aspirational customers

The Rs 1,500-crore domestic footwear market is targeting aspirational customers. While international brands largely dominate the higher end of the spectrum, the lower end of the market is dominated by homegrown players as well as unorganised players. While men's footwear is the biggest target category, children's and women's lifestyle footwear is not behind in the race. Last year, the iconic brand Crocs launched in India. The brand retails itself through a chain of footwear retailers such as Metro and through company-owned outlets.

Future Group's joint venture with Clarks is looking to build a strong brand for the market. Clarks, a British, family-owned footwear business, has expanded from the UK market and is today a global brand for men, women and children. The group turnover reached £1.1 billion in the year.

Clarks is well established around the world with 48 per cent of its turnover coming from international business. Originally developed as a wholesale business, the company is quickly expanding the number of Clark's stores around the world, mainly with franchise partners.

“India is a top strategic market for us. We have done a great deal of research on the complex Indian market and have invested substantially in it with the aim to develop it as a sourcing hub for our global business. This is an ideal partnership as it combines the Clarks brand and product development capability with Future Group's retail expertise, infrastructure and knowledge of India. I'm sure this bond will help serve the needs of both the Indian market and the brand's global requirements,” Andrew Martland, Head of International Business Development, Clarks, said after inking the joint venture with Winner Sports, the specialist footwear/ sports division of Future Group. Winner Sports already runs the multi-brand sports speciality chain, Planet Sports, and is the exclusive India licensee-cum-distributor for retailing and marketing international brands such as Converse, Speedo, Wilson and Skechers.

While the two companies are mum on investments, Rakesh Biyani, CEO – Retail, Future Group said, “We are focusing on research right now to evolve and suit changing Indian tastes. We are confident this collaboration will meet the growing needs of Indian customers as Clarks has years of experience in shoe manufacturing and retailing, while we have an in-depth understanding of Indian consumers.”

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