COVER STORY

INDIA'S FOOTWEAR INDUSTRY: PUTTING ITS BEST FOOT FORWARD

- By Zainab S Kazi Footwear remains a very important industry in , contributing to not just employment generation within the country but exports as well. Today, India is the second largest producer for footwear in the world, just behind China.

B"~™""™I ollywood mega star Marilyn Monroe once I said - "Give a girl the right shoes and she I can conquer the world." And that may ^_ I well be true, since there are no two I thoughts about the fact that footwear B__^H__B remains a very important industry in India, contributing to not just employment generation within the country but exports as well. Today, India is the second largest producer for footwear in the world, just behind China. Given a boost, the country can most certainly surpass China and become the largest footwear producer in the world. Setting the context of the story, Farah Malik, Managing Director & Chief Executive Officer, Metro Shoes Ltd - one of the most respected footwear brands in India - shares the dynamics of the industry that seems to have suffered some setbacks in the year that went by. "The footwear segment continues to perform well in India. The market, however, has seen some significant disruptions in FY 16-17. The majority of the Indian footwear market is still unorganised, accounting for 70 percent of the market. With events such as demonetisation and GST, this segment has been under significant strain this year. The organised segment has experienced growing competition from the international brands expanding their footprint within India," she says. Hitting the nail right on the target, Anupam Bansal, Executive Director, Liberty Shoes Ltd., talks about the dynamics of the footwear industry in India. "Footwear market ^^^^J is pegged at an interesting stage currently. On one hand it is experiencing growth with the consumer shift towards the

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branded footwear and on the other end considers Footwear as a luxury product, The market, as an industry we are struggling under and therefore it has been slapped however, has the impact of GST. It is hoped that the the very high 18 percent slab of GST. seen some government will address the issues Through the platform of CFLA - Council significant raised by the industry and things will for Footwear Leather & Accessories we disruptions in smoothen out. Government of India have been representing our case to the has already commenced the "Make in Finance Ministry for equating footwear FY 16-17. The India" campaign which has been proving at par with apparel in terms of Tax majority of the beneficial in boosting manufacturing in imposition." Indian footwear India. But there are tons of discrepancies Sahil Gupta, Director, Helios points market is still and bottlenecks when it comes to out that the increase in the demand for unorganised, boosting manufacturing. Government footwear can be attributed to the fact accounting for should facilitate the private sector with that customers do not consider footwear 70 percent of adequate infrastructure facilities, space as a utility anymore. He says: "It is a the market. ^ for malls and retail formats (MBOs fashion statement, and this is the reason & EBOs), implementation of GST tax buying shoes for special occasion has - Farah Malik, has remove the inequality in the tax become a norm. All of this has resulted Managing Director & payments amongst states and cities and in increase in per capita consumption Chief Executive Officer, improvement in the logistic system. increasing from 1.6 to 2.4 in the past 5 Metro Shoes Ltd This does promises a secure future years." on financial front. Being a part of this process of improvement of the country Demand Dynamics ^ Footwear is a proud moment for Liberty. Overall Woodland, an iconic brand carved a market is it seems to be on a positive path and the niche for itself with its chic range at a interest amongst the newer generation pegged at an time when the Indian footwear industry in the business and the upgrading of the interesting did not have the trend of international retail chains will see a further boom in stage currently. brands wooing Indian customers. the industry." Woodland's parent company, Aero On the one On the evolution of the industry in Group, has been a well-known name hand it is the last five years, he adds, "We are in the outdoor shoe industry since the experiencing experiencing the shift from unorganised early 50s. Founded in Quebec, Canada, it growth with market to the organised market which entered the Indian market in 1992. the consumer is led by the consumers themselves Highlighting the market share of men, shift towards which has been a very good trend. This women and kids footwear, Harkirat the branded has encouraged the industry to build on Singh, Managing Director, Woodland footwear and on newer technologies and introduce better says, "The men's market is growing products. There has been a massive at a CAGR of 10 percent. At present, the other end as improvement in the retail sector with the men's market contributes around 60 an industry we organised brand investing in company percent of sales in the footwear segment are struggling owned stores and hence ensuring a as compared to the women's share under the better delivery and promise to the of 30 percent. The women's segment, impact of consumers. Due to the ever-increasing however, is growing at a much faster internet penetration and adoption of CAGR of 20 percent. In case of kids, GST.„ internet and the overall ecosystem athletic shoes have captured the biggest - Anupam Bansal, for e-commerce falling in place, the share, and though the segment is Executive Director, last decade has been the best for this growing it is doing so at a comparatively Liberty Shoes Ltd. industry." smaller rate." Inder Dev S Musafir, Director, M&B On the demand dynamics, Malik adds, Footwear (P) Ltd. & Vice Chairman - "There's no question that sneakers have CFLA - Council for Footwear Leather taken over the fashion limelight for both & Accessories, points out, "2017 men and women. There are myriad undoubtedly can be considered as the factors fueling momentum today, milestone year for the footwear industry. including celebrity-powered collections The largely unorganised sector is for that are driving new customers, cool the first time witnessing the impact of collaborations between designers and discipline towards tax compliance under retailers, and a growing crop of social the GST format.The unfortunate thing is media influencers sparking excitement that the government for some reason still In addition, the athleisure and working

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•* The foot wear ^In Andhra Pradesh ^Together with industry has Today it is about and Tamil Nadu, we foreign origin brands, evolved into a a status symbol, a have demand for sizes Indian brands ran highly specialised fashion statement. up to 14 for men's through significant industry, where Now, proper research footwear. improvement machine production and understanding was predominantly becoming successful with a systematic on consumer's needs a chappal wearing to pose a stiff workflow has got the and desires requires city and the industry competition against mass industry to an to be given a lot of together is doing its their foreign international level. ^ weightage. bit to change this. ^ counterparts. ^

- Sagnik Banik, Ajanta - Prem Dewan, Retail Head, OSL - Sushanto Dey, - Harkirat Singh, Managing Footcare (India) Pvt. Ltd Luxury Collections Pvt. Ltd., Partner, Sreeleathers, Director, Woodland

women's category are Sagnik Banik from Ajanta growing rapidly." Footcare (India) Pvt. Ltd Malik elaborates on makes an interesting point dynamics being witnessed when he says that in the in the women's category footwear industry, brand saying, "With more women loyalty plays a huge role, and entering the workforce, this has led to a segmentation the formal wear category is of the industry zone wise showing good growth. With with the zone leader having additional disposable income more than 50 percent market women are spending more on share. "The footwear industry formal and casual wear. The has evolved into a highly category showing less than specialised industry, where average growth is in stilettos machine production with as comfort is still a paramount a systematic workflow has factor. Earlier, younger got the mass industry to an women would wear stilettos international level," he adds. as a fashion statement. Today, Saggar Mehra, Creative fashion is more focused Director, brand Sunil Mehra, around the casual segment attributes the rise in the such as sneakers." She adds demand for footwear due to on the kid's category stating, the changing and evolving "Kids as a category has lifestyle of Indians. He enormous potential, but says, "The rising demand currently is not a significant of footwear in India has a share of our sales." lot to do with the changing As for the regional demand lifestyles and an increase variation, according to Malik, in the number of working 'South India is the stronghold professionals. The men's of practical comfort whereas footwear market contributes the North will see a demand around 60 percent of sales the footwear market in fascinating too," he adds. for colors and high fashion. in the footwear segment. India. During this phase Prem Dewan, Retail Head, Platforms and wedges are The CAGR of men's footwear the revolution in footwear OSL Luxury Collections Pvt. a must in and the accounts for about 10 percent. designing made wearing Ltd., Corneliani, feels that the North-East wants casual and With increasing demand in branded sandals and other industry has gone through trendy styles. As western not just Tier I cities, but also varied designs are not just a substantial change in the culture creeps in however, in Tier II and III cities, the accepted but have taken past 5 years, from just being a there is also a nationwide Indian footwear market is a place of being called as need based product. He says, demand for certain types of rapidly evolving and expected fashion statement pieces. "Today it is about a status products, such as brogues for to grow at a higher rate in the Adoption of new technologies symbol, a fashion statement. men, sneakers or platform future." and higher quality fabric and Now, proper research and wedges for women, that does "2014-15 has been a techniques of constructing understanding on consumer's well in all markets." revolutionary phase for the shoes has been needs and desires requires to

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44 2017 undoubtedly can be considered as the milestone year for the footwear industry.The largely unorganised sector is for the first time witnessing the impact of discipline towards tax compliance under liberalisation, as the the GST format. economy opened up to the international market, -InderDevS Musafir, Director, imported goods gradually MSB Footwear (P) Ltd. & Vice gained traction among Indian Chairman - CFLA - Council for Footwear Leather & Accessories buyers. In recent years a huge number of international be given a lot of weightage. brands have gained a good This is the key for any brand and reliable position in the to sustain in the market." market. Together with foreign He adds, "Today it is about origin brands, Indian brands a status symbol, a fashion ran through significant statement. Now, proper improvement becoming research and understanding successful to pose a stiff on consumer's needs and competition against their desires requires to be given foreign counterparts." quirky shoes from Duke + a lot of weightage. This is the One may be surprised to Dexter (The United Kingdom) key for any brand to sustain in know that the competition or luxurious shoes from the market." from international brands Magnanni (Spain) and Schutz According to Sushanto isn't only from the ones that (Brazil). It brings strong Dey, Partner, Sreeleathers, are solely into footwear, but fashion information on its people in eastern India have according to Malik, even products as well as offering a smaller feet size with the brands like Zara and H&M are great prices." maximum being size 10 for seen as strong competitors. Elaborating on what led men. He shares, "In Andhra Sushanto feels that the him to launch Berleigh Pradesh and Tamil Nadu, penetration of international in the country, he states, we have demand for sizes brands is low and is seen "Heel & Buckle Pvt. Ltd. ran up to 14 for men's footwear. only in the metros. He shares, successfully for three years, Chennai was predominantly a "They will need about 10 and was looking at expanding and another one in Delhi at chappal wearing city and the years to understand India." and introducing newer brands the Ambience Mall in Vasant industry together is doing its Premium luxury in the Indian market. That is Kunj. bit to change this." international footwear brands when we at The Dar Group ASICS India launched are also foraying into India. decided to join hands with lapanese brand Onitsuka The Foray of International The Dar Group has launched them in 2016. And that is how Tiger in the country recently. Brands Berleigh, a luxury multi-brand Heel & Buckle Luxury Pvt. Ltd. This brand is a sport-inspired Anything that is international footwear and accessories was found as a subsidiary to fashion brand that has excites Indians. While there retailer in the country which The DAR Group." designs ranging from updated may be exceptions to this rule, will be bringing together Berleigh is being positioned classics to refreshing new but none of them apply to the finest products from as a bridge-to-luxury space styles and collaborations with fashion. International brands celebrated brands around the that houses different brands like-minded artists. have a fantastic pull factor world. from different parts of the Raj at Khurana, Managing for consumers, then be it for Shashank Arya, Executive world. Arya adds, "Our prices Director, ASICS India Pvt. footwear or apparels. Director, The Dar Group, says, and craftsmanship is better Ltd. says, "We have partnered Reiterating this, Singh "Berleigh houses different than the high-street brands with Burgundy Hospitality in says, "The inclination of types of brands from elegant and our prices are lower than India for the distribution and Indian consumers towards and suave Andrés Sendra luxury brands." operations to launch Onitsuka international brands has (Spain) masterpieces to Berleigh currently has its Tiger first-ever-mono-brand become pertinent. After modern and charming, yet flagship store in Fort, store in India in the Palladium

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The number of ^ Footwear is the walk ins in the malls fastest growing will definitely vary category for HRX. from that on the nigh From 16 percent streets since the contribution last malls are designed for year to 25 percent a more of a complete contribution to family experience. ^ revenues this year, it - Anshu Kumar, Director, is going to become Rika Lifestyle Pvt Ltd the leading category for the brand. Mall, Lower Parel, Mumbai. Going forward, we will focus -AfsarZaidi, Co-Founder & MALL STORES: THE GOOD & THE BAD CEO ofHRX on establishing mono-brand • Malls are better organised and offer better infrastructure; stores in the country under a air-conditioning, ample parking, food courts, etc., all of "Shopping malls are a partnership with franchisees. which is a welcome break from the chaos of high street relatively recent phenomenon These stores will be one of Indian shopping in India. The delightfully our key channels to drive up chaotic, colourful and sales. Eventually, we will be • Malls are a haven when it comes to offering choice. A bustling Indian bazaars wide range of brands, including multi-brand outlets ramping up distribution of have dominated the retail can be found under one roof, which allows the bargain products through regional landscape for the longest conscious Indian shopper to compare prices. distributors and e-commerce time. As brands evolve and portals." • With their multiplexes, amusement areas, food courts, consumer behaviour slowly and promotional events, malls are big on entertainment shifts from need-based Footwear Retailing - Mall and have increasingly become a go-to destination for all shopping to that of retail vs. High Street age groups. therapy, Indian retail too With the advent of malls, • Of late, Indian cities are seeing a case of 'too many malls, is witnessing a quiet tug of shopping dynamics have nowhere to shop' due to malls being built without in- war between the high streets taken a 360 degree turn in depth understanding and research. and malls. While at some India. No one would have places, brands are shifting • Mall space is getting more and more expensive, with thought that people would from the cluttered high street some even demanding a percentage share of the sales buy shoes from a mall and environment to malls, certain revenue. that footwear retailers would prominent retailers are occupy a good space in malls purposefully avoiding malls to across the country. From HIGH STREETS: THE GOOD & THE BAD stand out from the crowd." Crocs to Clarks and Indian • With more space available and greater opportunities Anshu Kumar, Director, brands like Inc. 5 to Metro for customisation, high streets are a perfect choice for Rika Lifestyle Pvt Ltd shares Shoes, all have a healthy flagship stores. an interesting point with presence in malls throughout regards to the advantages India. • Established brands prefer the visibility and cachet of high a brand has when they are streets, but a presence in upscale malls is also a business Elaborating on the mall present on a high street. necessity. phenomena, Malik says, "The number of walk in's • Standalone stores give shoppers a more personalised in the malls will definitely experience that is missing from the homogenous nature vary from that on the high of malls. streets since the malls are designed for a more of a • Premium high streets tend to be more expensive than malls and do not guarantee sales persquare feet. Khan complete family experience. Market in Delhi and Linking Road in Mumbai are amongst On the other hand, the stores some of the most expensive retail locations in the world. at the high street are able • There's a rising trend of luxury brands moving from 5-star hotels to high streets. Old heritage properties that can do with some retrofitting are becoming precious real estate assets, for example, Hermes and Christian Louboutin have set up standalone stores at the historic Horniman Circle in Mumbai. Courtesy: Farah Malik, Metro Shoes Ltd.

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to play a lot more with the of stores in each location is 1,500-2,000 sq.ft. The presentation as in most of the depending on the intensity of brand has yet not taken the cases they have more retail demand. Tier I cities obviously franchise routel space comparatively which • Men: Evergreen styles have a greater volume of Revealing the reason for allows them to utilize a lot of include brogues, derbys, stores with an average of 25; this, Singh shares, "It is very area to work on display and mocassins and loafers. A Tier II cities have between easy to grow through the marketing and in this case the pair of leather chappals 6-12 stores; and Tier III cities franchise route, but quality Brand pull plays an important is a must-have in every can have between 1-4 stores is important in retail. By role." man's shoe closet depending on the market." having our own stores, we can project the brand much better • Women and evergreen A relatively new entrant, and keep the staff as per our Key Brand Dynamics fashion? That's an almost brand HRX which has Metro Shoes currently has 397 impossible question. Bollywood actor Hrithik requirements. So, we have company managed outlets However most women Roshan as its face for the taken a general call not to occupying 5.2 lakh sq. ft. of will have a regular use brand has been actively expand through franchisees." retail space. The average size of sandal, ballerina and capturing the men's In terms of retail expansion, each store is approx. 1000 sq. pump in theirshoe sportswear market in India. the brand has grown more ft. This goes to show that this closet. According the Afsar Zaidi, than 30 per cent on their industry has a fantastic growth Co-Founder & CEO of HRX, exclusive outlets at present to • In kids, sandals for boys opportunity for brands that 600 with aggressive focus on and girls are a mainstay. "Footwear is the fastest take their business seriously. growing category for HRX. Tier II and III cities. Courtesy: This particular brand has From 16 percent contribution With a presence in six states Farah Malik, Metro Shoes stood the test of time and last year to 25 percent covering the Eastern part of has set an example for other contribution to revenues this India, Ajanta Footwear today brands to follow. Little surprise • A cool printed hawai with year, it is going to become has presence across 100 then that Crocs has partnered shorts or tights. the leading category for the stores, out of which 70 percent with them for exclusive Courtesy: brand. We started with 20 are company owned. Banik retailing of their brand at Sagnik Banik, Ajanta styles at the time of launch says, "We are a mass brand Footcare (India) Pvt Ltd Metro and Mochi stores apart and today we have almost 250 with stronger dealer network from their own stores. styles across running, training and our presence is only Talking about Crocs, the • Brogues and Oxfords in and casual shoes category." in high streets with a mass brand is looking at expanding men and sneakers for Zaidi says sportswear as market in focus. We also have kids are a must have and to over 250 stores from the a category is dominated by our own portal, ajantashoes. will always remain in current 58 stores by the end the men's market. He adds, com that started this year vogue as they not only of 2020. In one of the recent "Sports/active footwear and the response we have speak of style but also are received is overwhelming." news article on the brand, supremely comfortable contributes to about 7 percent it was reported that it has and classy. For women, of the overall industry. Meanwhile, Rikka lifestyle's cornered over 10 percent a nice pair of bailies in The growing demand for brand Flipside has 205 stores share of the total market size neutral colors can never comfortable and athleisure out of which 200 are MBOs in the organised non-leather, go out of fashion. Be it shoes are bolstering the and 5 are EBOs which are non-sports casual footwear with a LBDora basic footwear industry." spread across , segment. In the year 2015, trouser one can always And then there is Bangalore, Delhi, Gurgaon, they sold 900,000 pairs of look elegant and classy Woodland, which has over Talandhar, Chennai, shoes, which went up to 1.5 without compromising 600 COCO stores across 50 Lucknow, Ahmedabad, million in the year 2016. on comfort. cities in India and covers a Raipur, Mumbai, Pune, Elaborating on the presence Courtesy: total retail space of around Gangtok, Kolkata, Patna, of Metro Shoes across India, Saggar Mehra, Creative nine-lakh sq.ft. The average Bhopal, Vizag, Malik states, "We are Director. Sunil Mehra size of a Woodland store Vishakhapatnam etc. currently present in 101 cities across India with a varying number

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Challenges & Pain Points gold plated. The texture, Highlighting the pain points finesse is very important while faced by the vendors, Malik purchasing footwear, needless does not mince words while to mention good design and saying, "On the supply side, shape of footwear." vendors are facing challenges adapting to the GST regime The Road Ahead which adversely affects their With the fashion market in working capital cycle. Brands India growing exponentially, will need to be resilient to footwear and accessories are navigate through this phase of at par with the consumption uncertainty." of apparels. According to Singh, "The Singh points out, "In the footwear industry provides last five years, Indian footwear a realistic opportunity to export has witnessed a implement and sustain the growth of 20 percent owing "Make-In-India" program to growing demands in the in true spirit. To realize this European nations and also potential, there is an urgent the trend of major importing need to encourage investment countries to shift their in the footwear industry to focus from China to other tide over the dis-economies of producing countries." scale and loss of competitive He further states how edge in the Indian footwear the footwear industry has industry." grown from a need-based Mehra highlights that industry to becoming fashion awareness is one of pain and style oriented. "India points across the industry. annually produces 2.1 billion He explains, "People have pairs of which 90 percent unprecedented choices when are consumed internally. In it comes to footwear. It is highly addition, India is the third important to be informed on largest footwear consuming what's gold and what's merely country in the world, but with very little separating the three, India is very soon expected to be the second largest consumer as well," he says. It is interesting to hear Malik share the how footwear has been a trendsetter for other industries to follow. She availability of manpower and mom-and-pop format are a says, "The footwear market resources. However, in the few hundred times more than has a high potential for long run, we see competition modern retail. Online retail of growth considering many especially International as footwear is gaining popularity. international brands in the an efficiency booster. Be However, the inordinate premium and semi-luxury itback-end infrastructure, discounting on the part of the segment. In fact, the first investment in training and portals is detrimental to the foreign brand that has a front-end staff, and better long-term equity of a brand. 100 per cent approval in production processes." Foreign brands of footwear FDI is a footwear brand. We Musafir concludes will do well if they have strong understand that there will encapsulating the dynamics local partnerships with a be more players wanting to of the industry stating: "The manufacturing companies, as have a piece of the growth mom-and-pop style of the quick changing and region trajectory of Indian retail. footwear retailing in India wise customer preferences With increasing competition, will always survive alongside of footwear fashion can only we do foresee some short- modern retail, as the number be serviced if the product is term crunch be it the of retail points under the Made in India." E

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