STEVE MADDEN, COLE HAAN, Aldo, Nine West, Charles & Keith ... These are the labels twentysomething fashionistas swear by. And Bata? Aren’t those the shoes their parents wore? Isn’t that the go-to brand for rubber flip-flops?
This is what Rajeev Gopalakrishnan, Bata India’s managing director and group managing director for emerging markets, is fighting. Sitting in his modern, glass-walled office at Bata Chowk in Gurgaon, he points out how tough it is to change the face of an 84-year-old brand. Bata is synonymous with middle-class, durable, utilitarian (read boring) footwear, and getting people to see it as a contemporary lifestyle brand is going to take some doing.
For Gopalakrishnan, high fashion means high margins, which is reason enough to want to grow this space. Market research shows that the next wave of growth is likely to come from women’s shoes, an area that Bata has somewhat neglected. Of course, there are women’s brands like Marie Claire in the portfolio, but there’s no snazzy, contemporary, big-bang product.
Although women’s lifestyle footwear accounts for 41% of overall footwear sales, the growth, at 21%, is the highest across categories. At Bata, the women’s segment is also growing fast and contributes about 30% of revenue. This falls much below the 55% revenue generated by men’s shoes (kids’ shoes account for the rest), but Gopalakrishnan feels that the Indian market is fast moving the global way where women’s products add more to the top line than men’s.
Globally, women are the biggest buyers of clothes, accessories, and footwear. In India, things were different earlier as fewer women were working. “That has changed in the past few years, and even if they are not working, Indian women are now more brand aware,” says Gopalakrishnan.
The footwear market is pegged at Rs 25,000 crore, growing between 13% and 15% every year. That gives the company enough headroom for growth notwithstanding lower-end rivals such as Khadim’s, Sreeleathers, Relaxo, and Paragon, and a bunch of global biggies, including Clarks, DKNY, Accessorize, Claire’s, and Carlton London. Given that 85% of the women’s footwear market is unorganised here, there’s also a great opportunity to add thousands of customers. But to do this, Bata needs to excite young and aspirational buyers who don’t see it as a style statement. One way of snagging them is through the Bata stores; on average, 100 stores are opened each year, from large 3,000 sq. ft. flagship stores to the Footin stores catering to the 15-25 age bracket.
There's not much point opening fancy stores if the products on the shelves are suited to, say, 60-year-olds. Enter the new Bata bet: ballerinas. “They are a new trend but the product could be at the centre of the women’s range in a couple of years, driving a major chunk of sales,” says Gopalakrishnan. Ballerinas, which are mainly flat or low-heeled comfortable pumps (the name comes from the ballet slippers on which these are modelled), are growing at 200% year on year at Bata. Of course, this growth is on a very low base.
Rajat Wahi, a consultant at KPMG India, says that even luxury brands such as Armani and Tod’s have come out with them. “The women’s segment is growing fast, and ballerinas are likely to continue growing in the next couple of years.” Bata has introduced ballerinas across all its brands and categories—Marie Claire (semi-premium), Hush Puppies (premium), Naturalizer (premium), and so on. The aim: Make them available for all kinds of buyers. The design mandate is to keep them comfortable, colourful, and trendy. That they go well with both formals and casuals lies at the heart of the ballerina’s popularity. “In India, we want to be No. 1 in this category—it will be one of our big initiatives next year,” affirms Gopalakrishnan.
In sync with a fast-moving fashion market, Bata updates its collection every three months while a design team sits in China and sends input on global trends. A dedicated team of 40 also works on jazzing up product designs. To grow its influence further, the company sells 400,000-plus handbags under its premium Hush Puppies brand, one of the bestselling accessories from its stable. Gopalakrishnan is particularly proud of the new and trendy women’s product lines. “If we were catering to the 35-plus segment earlier, today I think even a 20-year-old will be happy to see what is there in our store,” he says.
Bata’s long legacy here cannot be ignored. Bata Shoe Organization, a multinational now headquartered in Lausanne, Switzerland, set up shop in Kolkata in 1931. Its Indian subsidiary listed in 1973 as Bata India (earlier known as Bata Shoe Company). Bata Chowk is the third location in the country named after the company besides Bataganj in Bihar and West Bengal’s Batanagar, which had served as the firm’s nerve centre for decades. Bata India shifted its base to the national capital region back in 2004.
By the turn of the century, the country’s biggest footwear manufacturer and marketer got mired in labour issues. It also lost track of customer preferences, and losses peaked to Rs 63 crore in 2004.
The tide turned when Marcelo Villagran, a Chilean national and a turnaround expert who had worked for Bata globally, took charge of the Indian subsidiary in 2005. He streamlined costs (more than 1,500 employees were offered voluntary retirement and 500-plus small, unviable stores were shut down), refined sourcing and manufacturing strategies, and introduced large-format stores to get the company back on track.
Bata also runs its online store and sells its products through third-party e-commerce sites, including Amazon, Flipkart, and Jabong. Gopalakrishnan is keen to grow the digital business more aggressively by offering exclusive merchandise online, which are not available in any brick-and-mortar Bata store.
Gopalakrishnan seems confident that his strategies will work out and promises more excitement in the next two years. What worries him most is the current lull in discretionary spending. “I went around all the malls and had a chat with other retailers and the customers were just not there. In fact, all retailers are down about 10%, as against the same period last year. I believe sales will pick up from December [after a delayed recovery in consumption],” he says.
Will the company do roaring trade then, courtesy the ballerinas? San-deep Raina, an analyst at Edelweiss, is not too sure. Sales may grow but he says, “Bata India must try and find the flaunt value that it lacks at the moment.” Isn’t Gopalakrishnan’s pas de duex with customers all about that?
