Indian Footwear Industry

---An Overview
Rita Chatterji (FDDI Rae Bareli)

Industry Overview
India is the second largest global producer of footwear after China, accounting for 13% of global footwear production of 16 billion pairs. India produces 2065 million

pairs of different categories of footwear (leather footwear - 909 million pairs,

leather shoe uppers - 100 million pairs and non-leather footwear - 1056 million pairs). India exports about 115 million pairs. Thus, nearly 95% of its production goes to meet its own domestic demand.

The major production centers in India are Chennai, Ranipet, Ambur in Tamil Nadu, Mumbai in Maharastra, Kanpur in U.P., Jalandhar in Punjab, Agra, Delhi, Karnal, Ludhiana, Sonepat, Faridabad, Pune, Kolkata, Calicut and Ernakulam. About 1.10 million are engaged in the footwear manufacturing industry.

Industry Overview (Contd.) Footwear exported from India are

Dress Shoes, Casuals, Moccasins, Sportshoes, Horrachies, Sandals, Ballerinas, Boots, Sandals and Chappals made of rubber, plastic, P.V.C. and other materials.

Brands sourced from India:

Acme,Ann Taylor, Bally, CharterClub, Clarks, Coach,Colehann, DanielHector,Deichmann, DKNY, DoubleH,Ecco, Elefanten, Etienneaigner, Florsheim, Gabor, GeoffreyBeene, Guess,Harrods, Hasley, HushPuppies, KennethCole, LizClaiborne, Marks&Spencer,Nautica, Next, Nike, ColeHaan, NunnBush, PierreCardin, Reebok, Rockport,Salamander, Stacy Adams,Tommy Hilfiger, Tony Lama, Versace, Yves St.Laurent, Zara, Johnston&Murphy, Docksteps, Timberland,Armani, Geox, Diesel, TedBaker, Lacoste, Kickers, CalvinKlein, Sioux,Brasher, Zegna, Massimu Dutti, Buggatti, Lloyd, ChristianDior, Salamander,Camper, Bata, Espirit, French Connection, Legero, Mercedez, H & M and many more famous brands

MNC brands are sold in India and Indian brands sold in India
MNC Brands Sold in India Aldo, Bally, Clarks, Ecco, Florshiem, Ferragammo, Hush Puppies, Lee cooper, Lloyd, Marks & Spencer, Nike, Nine West, New Balance, Reebok, Rockport, Stacy Adams, Tods, Geox , Louis Vuitton Indian Brands sold in India RedTape, Bata, Liberty, Khadims, Lakhani, Metro, Action

Indias Footwear Export Growth over the last Four Decades

Industry Overview (Contd.)

Indian footwear is growing at a compound annual growth rate (CAGR) of about 15 percent, the Indian footwear industry is likely to reach approximately Rs 38,700 crore by 2015 from the current level of around Rs 22,000 crore. The global footwear market which is growing at a CAGR of about 5 percent is currently estimated at approximately Rs 10.15 lakh crore and is likely to reach Rs 12.34 lakh crore by 2015. Footwear is expected to comprise about 60% of the total leather exports by 2011 from over 38% in 2006-07. The major production centers are Chennai, Ranipet, Ambur in Tamil Nadu, Agra and Delhi. By products, the Indian footwear market is dominated by casual footwear market that makes up for nearly two-third of the total footwear retail market. The Indian footwear market scores over other footwear markets as it gives benefits like low cost of production, abundant raw material, and has huge consumption market.

Industry Overview
The estimated annual production capacity of Leather Shoe Uppers is 112 million pairs Indias export of Footwear Components touched US$ 229.49 million in 1999-2000, holding a share of 15% in Indias total export of leather and leather products. Nearly 75% of the total export of footwear components is from the Southern Region, followed by the Northern Region, with a share of 13%. The major markets for Indian footwear components are the U.K., Germany, Italy, the USA, France, and Portugal. Nearly 83% of India s export of footwear components is to the above countries. India is often referred to as the sleeping giant in footwear terms. It has an installed capacity of 1,800 million pairs, second only to China.

Organized Sector vs. Unorganized Sector

The Indian footwear market is estimated to be worth Rs.22,000 Crore and constitutes just about one percent of Indian retail. The ladies footwear segment still remains the most untapped as nearly 80-90 percent purchases happen in the unorganized market

Indian Footwear Market

37.80% 62.20%

Organised Market

Unorganised Market
Source: Indian Retail Report

Actual Exports & Target of the Leather Industry In India

Product 2006-07 2007-08 Actual Export 726.85 2008-09 Actual Export 785.00 847.80 915.63 2009-10 2010-11 (In Million US$) Actual Export Leather 688.05

Footwear
Garments Leather Goods Saddlery & Harness Total

1212.25
308.98 690.66 81.85 2981.79

1967.88
358.53 733.34 105.66 3892.26

2597.60
372.87 798.69 127.85 4682.01

3428.83
387.78 870.06 154.70 5689.17

4526.05
403.30 948.04 187.19 6980.21

Market Share in the Footwear Industry

Volume Share of Products Segments in Footwear Volume Share in Footwear

Source: http://indiaretailing.com/news.asp?id=1611&topic=3

Major Players in Shoe Market

Adidas v/s Nike

Parameters Brand Owners Technologies founder Adolf "Adi" Dassler Goddess of Victory Reebok, Taylor Made golf company and Rockport Adiprene, Torsion, Ground Control System (GCS), Climacool "Impossible is nothing Adidas products are generally cheaper than Nike products Umbro, Hurley, Converse and Cole Haan Zoom Air, NIKEiD, Waffle Sole, Max Air, Independent Podular Suspension (IPS) "Just do it. Nike seems to have the upper hand in

Motto Pricing

 Incorporated as Bata Shoe Company Private Limited in 1931, the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932 Bata India is the largest company for the Bata Shoe Organization in terms of sales pairs and the second largest in terms of revenues Bata India Limited is the largest footwear retailer in India. Bata India has more than 1250 stores across the Country Corporate office: Gurgaon CEO: Mr. Thomas G Bata

:Improving Market Share

25 20 15 10 5 6.7 0 0 2006 2007 2008 2009E 2010E
Overall Market Share

17.6

15.4

15.2

15

15
In Organised Retail

6.5

6.8

7.2

7.6

Bata today Serves 1 million customers per day Employs more than 40,000 people Operates 5000 retail stores Manages a retail presence in over 50 countries Runs 40 production facilities across 26 countries

Marketing Strategy of
Bata is reinventing itself and has introduced the concept of flagship stores to provide complete and unique shopping experience at par with their stores abroad. International trends, relaxed ambience, great products, and courteous staff at the new-look Flagship store are all a part of Batas new marketing strategy. Reposition brand 'Bata' - High brand recall for consumer lead to higher footfalls and better conversions Target new market (ladies and kids) - Filling the missing 45% pie of footwear market Improving shoe line - Launching international brands, focus on style will attract new young customer class

Major retail outlet of

India's first exclusive Hush Puppies outlet at Hyderabad 10,000 sq ft Mega Store at Vadodara

Bata India limited Behrampur

Overview
Market segment low to medium priced footwear for the common person across the globe Bata runs semi-autonomous companies targeted at the low to medium end of the scale. Bata clusters countries geographically into groups; the expatriate would build regional specialization & training activities would be more relevant on a regional basis for similar counties Bata follows a multi domestic strategy. It stands for low integration across country units & high local responsiveness Local Strategy

Marketing Approach

International strategy

Product Offerings
Bubblegummers is the leading children's footwear brand for the 0 to 9 olds that assure the healthy growth of a child's foot. Power embodies diversity with ranges in running, training, court,basketball, football and Outdoor that combines function with creativity Marie Claire shoes are for women with an active lifestyle who seek contemporary modern styles. The Weinbrenner line is made up of leather shoes and boots, low, mid and high cut Its characteristics such as double stitching, massage insole, latex foam insole, soft textile are used to emphasize the brand image both for comfort and style.

Product Offerings
DR.SCHOLL The ribbed surface of the insole gently massages your feet while walking. This boosts the circulation And keeps you active all the day. The soft sole absorbs all the shocks while walking. NORTH STAR It's a casual yet fashionable street-style shoes that caters to the young at heart.

Hush Puppies emerged world's first casual shoe It is soft, breathable and very comfortable shoe. Known for technology.

COMPANIES TARGETING THE CONSUMERS BASED ON INCOME PER ANNUM

RICH CLASS PUMA, NIKE ADIDAS ACTION, LIBERTY, NIKE, ADIDAS BATA, ACTION, LIBERTY, NIKE, ADIDAS, RELAXO BATA, ACTION, RELAXO

UPPER MIDDLE CLASS

LOWER MIDDLE CLASS

LOWER INCOME GROUP

Challenges in the Indian Footwear sector

Low quality of shoes threat of shift in production to other areas or countries where wages levels are low if the quality is maintained at same level Most companies work on subcontract basis design, component selection and methods of production are given by the buyers and do not provide their own fashion collections, however companies are able to make prototypes based on ideas provided by the buyer Strong requirement to increase quality as well as quantity Availability of right raw material (finished leather) at right time

Under developed designs for footwear components sector

Meeting manpower requirement under the state of affairs of rapid industrialization

Opportunities in the Indian Footwear Industry

Abundant scope to supply finished leather to multinationals setting up shop in India Growing fashion consciousness globally Use of information technology and decision support software to help eliminate the length of the production cycle for different products Product diversification - There is lot of scope for diversification into other products, namely, leather garments, goods etc Growing international and domestic markets Aim to present the customer with new designs, infrastructure, country & company profiles Exhibit strengths in manufacturing, for example, strengths in classic shoe manufacturing, hand crafting etc

SWOT Analysis Of The Footwear Market In India

Strengths
High Growth Ready availability of highly skilled and cheap manpower Large raw material base Policy initiatives taken by the Government Capability to assimilate new technologies and handle large projects Continuous emphasis on product development and design upgradation

Weaknesses
Lack of warehousing support from the government International price fluctuation Huge labour force resulting in high labour charges Lack of strong presence in the global fashion market Unawareness of international standards by many players

Opportunities
Rising potential in the domestic market Growing fashion consciousness globally Use of information technology and decision support software to help eliminate the length of the production cycle for different products Use of e-commerce in direct marketing

Threats
Major part of the industry is unorganised Limited scope for mobilising funds through private placements and public issues (many businesses are family-owned) Difficulty in obtaining bank loans resulting in high cost of private borrowing Stricter international standards High competition from East European countries and other Asian countries Lack of communication facilities and skills

I would be happy if the batch can work on .

There are more aspects to be worked on Job opportunities in Footwear Future prospects for Companies, Professionals, Designers and Suppliers