When Gunjan Shah took over as the new CEO of Bata India this June, the shoe was pinching India’s largest footwear retailer rather hard. With work-from-home becoming the norm during the pandemic, demand had dipped steeply in two segments — formal footwear and school footwear –– where Bata dominated. As veteran marketer and now a corporate strategy adviser, Sandip Ghose points out, for most Indians, “It was first to Bata and then to school.” Schools are now beginning to open up in several States, but Bata can no longer afford to bank too much on this segment. However, Shah, formerly Chief Commercial Officer at Britannia, seems to have a plan in place, to help Bata put its best foot forward. He says his first hundred days at Bata India, which incidentally is celebrating a milestone year – it turns 90 – has been a riveting journey. “While the pandemic has posed a number of challenges, we are devising strategies that will aid us in getting back on the growth trajectory,” he says.
According to Shah, Bata has realigned its focus to include more active and casual wear as it recognises that casualisation and sneakers are a trend here to stay. “Our primary focus right now is on enhancing our sneaker range, along with our casual portfolio.” But he is quick to add that formal shoes will continue to be an important part of Bata’s portfolio, but with an enhanced comfort factor. With consumers shopping for more casuals, Shah says Bata India has brought in younger brands like North Star, Hush Puppies, Red Label and Power to the front of its stores and created new zones such as Sneaker Studio and Neo Casuals.
Toeing the e-com line
The other big thing that Bata India has done is to invest strongly in e-commerce. Although e-commerce is still a “single digit percentage” of total sales, it has seen a 3x jump. “A pivotal step was how we revamped our website with AI and recommendation-science technology,” says Shah. “We have introduced over 5,000 new styles on our website, along with ensuring superior browsing experience,” he adds.
In omni-channel, nearly 80 per cent of company stores (1,200 out of 1,526) have been ramped up to double-up as delivery points. Chatshop-based orders and home delivery, stores on wheels, among others have helped the company overcome the Covid-induced slowdown.
And these are likely to stay. “Bata Chatshop, our WhatsApp-enabled shopping platform, and Store on Wheels will continue to be a part of ourstrategy,” says Shah.
The shoe major has also innovated with another channel which it calls ‘Endless Aisle’. “It allows customers to scan in-store through a QR code, select and order their favourite styles, and have it home-delivered later,” says Shah.
A larger footprint
Bata’s focus now is to increase its reach by expanding through franchise routes. “There is now a new market for branded products in Tier 3 to 5 cities.
People are looking for brands that offer more quality products, and also ensure safety and security while making the purchase. This is where Bata, that has been enjoying customers’ unwavering trust for decades now, stands to gain,” says Shah.
He describes how the company opened 82 stores last fiscal and this includes 64 new franchise stores. “We are planning to open over 50 more franchise stores in the second half of the year alone,” he says.
Franchise stores are now at 15 per cent or 230-odd of the 1,500 plus exclusive stores of the company.
Over the next two-to-three years, the count is expected to double to 30 per cent of the total stores.
Moving up the value chain
The average selling price of footwear for Bata is around ₹700, a 20 per cent increase over the last four years. Although Bata thinks there is scope to increase ASP more, and is upping the play through Power, Naturalizer and Hush Puppies, industry observers are a bit sceptical on this front.
“I don’t think Bata can be a serious player in high end sports shoes – as it can neither match the Nikes or Skechers in terms of marketing spend and more importantly, technology. To make a serious play with Power, even as a local competitor, it will need a different marketing and route-to-market strategy,” observes Sandip Ghose.
In case of adjacencies, particularly apparel, where the company is looking at a greater play, Bata has planned launches over the next “12-odd months”.
Initial plans for roll-out in April–June onwards were pushed back because of the second wave of Covid infections. Launches will cover brands like ‘Power’ and ‘Scholl’s’.
According to Ghose, Bata India is known as a “shoemaker” first. It had given up manufacturing and designing competencies.
“Now, perhaps, there is an opportunity for that, with China no longer being the sourcing destination of choice. It can make India a big manufacturing hub for boutique shoes,” he adds.
The per capita footwear consumption in India is pegged at 1.7 pairs annually, compared to six pairs in developed markets, say industry insiders.
Bata India was selling over 40 million pairs before the pandemic (32 million pairs were sold in FY21).
And while premium formal footwear continues to be hit, Bata had actually begun changing its portfolio much before the pandemic. While Bata pioneered many firsts in India and held the leadership position for long, there was a period when it got bogged down in labour issues, and also faced the headwinds of competition from various brands.
But Bata scripted a comeback by attempting a premiumisation drive, entering into marketing and sales tie-ups with global brands, and also putting a fashionable foot forward.
Pushing aside the old “affordable” proposition, it took a different line in its ad campaigns, such as ‘Surprisingly Bata’ which revamped its image as a more vibrant brand. As offices open up, however, Bata, which has embarked on its casualisation spree might face a dilemma. What if formal footwear bounces back?
Shah has already anticipated that. “With schools and offices opening up, we are expecting increased traction for formal wear,” he says.
But he points out that the new formal footwear market which opens up will be a changed one.