FOOTWEAR

Agenda 
Global scenario  Indian market scenario  Segmentation and consumer behaviour  Major brands  Market trends

Global Scenario

Global Scenario 
The global footwear market grew by 3.8% in 2005 to reach a value of $159.6 billion.  Expected value by the end of 2010 is $194.3 billion.  The most profitable regional footwear market is America.  The global footwear market grew by 5.4% in 2005 to reach a volume of 10 billion pairs.

Competitive Landscape 
Leading companies include Nike, Adidas-Salomon, Reebok and Asics  Extensive revenues within the Asia Pacific region  High research and development  Overcome cost increases by decreasing prices of products from suppliers  Maintain margins through developing volume sales  Consolidation along the supply chain adding to the effect of maturity

Indian Market Scenario

Indian Footwear Market
Liberalization of Indian economy led to increase in the buying capacity of the country¶s middle class. Market Value The Indian footwear market grew by 8.2% in 2004 to reach a value of $2.4 billion. Market Value Forecast In 2009, the market is forecast to have a value of $3.2 billion, an increase of 31.5% since 2004. Market Volume The market grew by 8% in 2004 to reach a volume of 1.8 billion pairs. Market Volume Forecast In 2009, the market is forecast to have a volume of 2.3 billion pairs, an increase of 29% since 2004.

Market Characteristics
Over INR 10,000 crore in value terms Brand-driven market Organized retail dominates sales Market size approximately 10 crore pairs p.a.  India is the second largest footwear manufacturer in the world  Nearly 58% of the industry concentrated in cottage industry sectors    

Segmentation and Consumer Behaviour

Consumers Insights
Factors which can help in enhancing the sales 

Price  Durability  Variety  Looks  Multiple pairs  Brand name  Buying experience

Segmentation 
According to price
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Super premium segment Premium segment Middle segment Lower segment Sports shoes Party wear Professional Casual 

According to usage

Consumer Behaviour
If we segment the market according to the price  Super premium segment
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Brand conscious Money is secondary Demands more variety Examples ± Gucci, Red Tape, etc. Quality conscious Have an upper limit to the money Try to get lowest price possible for high quality brand Examples ± Bata, Reebok, Nike, etc. 

Premium segment

Consumer Behaviour
If we segment the market according to the price  Middle segment
‡ ‡ ‡ ‡ Do not care much about brands More concerned about looks and comfort Price one of the main factors. Examples: Bata, Liberty, etc. 

Lower segment
‡ Do not care about brands at all ‡ Size of this particular segment very high in India ‡ Much more concerned about the functionality and durability ‡ Try to get lowest price possible ‡ Examples: Khadim, Shree leathers, etc.

Consumer Behaviour
If we segment the market according to the usage 

Sports wear
‡ ‡ ‡ ‡ ‡ Brand conscious Money is secondary More choosy Loyal customers Examples: Addidas, Reebok, Nike, etc. 

Party wear
‡ Main concentration on the looks ‡ Comfort is considered but is a secondary thing ‡ Demand of high variety ‡ Examples: Gucci, etc.

Consumer Behaviour
If we segment the market according to the usage 

Professional wear
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Brand conscious Lesser variety Importance to durability and comfort Loyal customers Examples ± Bata, Liberty, etc. Comfort is of utmost importance Longevity is one of the important factors Value for money Lot of untapped market Examples: Bata, Liberty, etc. 

Casual wear

Major Brands

Bata India Ltd 
Incorporated in 1931  Subsidiary of the Bata Shoe Organisation  India¶s largest footwear company, selling 60 million pairs of shoes annually  Dogged by labour problems, overstaffing and subsequent losses  Though recognized as a household name in India, Bata suffered greatly after the liberalization.  Repositioned itself as a market-driven, fashion-conscious lifestyle brand with an emphasis on service and production.

Bata India Ltd 
Introduced Flagship, City, Family and Bazaar stores that cater to different segments of the market  Over 1,100 retail stores  The retail outlets also sell accessories, like shoes laces, socks, and shoe polish.  Capitalise on its vast retail network  Trying to generate volume business in unrepresented and under-represented footwear markets  Consistently trying to leverage on its established brands, while creating a niche for its new brands.

Liberty Shoes Ltd. 
Existed since the 1950s and until 1983, Liberty was entirely export-oriented  Liberty is the second largest shoe company in the country  Re-positioned as a mid-price brand in 2004  Contemporary brand in Indian footwear via new advertising  350 exclusive showrooms  Children¶s shoes bring in the largest volumes for Liberty

Woodland 
Launched in 1992  Carved a niche as a ³Rugged high-quality premium casual shoe´  Presented itself as an outdoor/trekking shoe  Called as SUV of Indian shoes for its ruggedness and allterrain use  Ads showing people wearing Woodland shoes for various outdoor activities  Became status symbol during the 1990s due to excellence in quality and styling  Pioneered suede and nubuck leather shoes in India

Reebok India 
Entered India in 1995  Sports and fitness brand targeted young adult mainly  45% of its turnover comes from footwear  Accounts for 47% of the premium sports shoe market in India  Initially targeted at the male consumer  Large market for female consumer who lives an active lifestyle  Reebok modified the format of all its stores to introduce a women's collection  Reebok-certified instructors  In 2004, opened women¶s-only stores  Reebok "Gang up for rewards" promotion

Reebok India 
Cricketers as its brand ambassadors  Cricketers as fitness icons since India does not have a fitness culture  Relies heavily on sports promotions as a marketing strategy  Developed a fitness culture  ³Wear the Vector. Outperform´  The integrated marketing campaign

Market Trends

Unbranded vs Branded 
India still a huge market for unbranded footwear  Difficult for brands to enter entry level segment  Difficult to raise prices  Branded still an urban phenomena  Looks score above brand names in middle and lower segment  High-quality shoes - big market for export

Retail Growth 

Foreign brands launched new designs in 2003  Foreign brands focus on lifestyle aspect  Domestic players began advertising  Improvement in operations and retail strategies  This excitement led to urban middle ± class moving to branded retail formats

Casual, Younger Styles 
Increased media exposure and global travel  Footwear a lifestyle accessory, a means of differentiation  Men also care more about apparel and accessory  Style also a factor rather than just comfort

Women¶s and Kids¶ Segment 
Opportunity for retail chains in these categories  Ladies constitute 40% of market though 80-90% of these sales are through unorganized sector  Indian women changing from product conscious to brand conscious  Kids¶ segment also expected to grow due to young population  Indulgent parents also a factor  Leased space and franchizing popular modes

Sportswear 
Presence of big players  Playful promotion campaigns, world class merchandising, stylish décor in stores  Promote clothing alongwith sportswear  Banking on middle class and improving lifestyle attitudes  Indian players also becoming more contemporary

Value Retailing 
Factory discount stores ± huge in number  Category killers arriving on the scene  Shopping malls will drive growth in this segment

Competition from Non-Specialist Retailers 
Face challenge from apparel retailers diversifying into footwear  Hyper marts and retailers - another challenger  Will have to focus on constant improvement, need to differentiate

Innovative Locations and Distribution Strategies 
Future possibilities could be health spas, health clubs, airports  Exclusive and multi-brand stores both present  Multi-brand ± possible entry point for foreign players  Cross-promotions benefit all

Market Value Forecast 
In 2010, the global footwear market is forecast to have a value of $194.3 billion, an increase of 21.8% since 2005.  The compound annual growth rate of the market in the period 2005-2010 is predicted to be 4%.

Market Volume Forecast 
In 2010, the global footwear market is forecast to have a volume of 13.2 billion pairs, an increase of 31.5% since 2005.  The compound annual growth rate of the market volume in the period 2005-2010 is predicted to be 5.6%.

Questions?