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Last October, footwear chain Pavers England had its moment in the sun. It was the first company to receive clearance for 100 per cent FDI in single-brand retail. Its UK parent received sanction to invest $20 million in its Indian affiliate.
Almost a year on, Utsav Seth, the tall and strapping CEO and MD of Pavers England, says the company has invested $10 million so far in buying out its franchisee, which had rolled out its exclusive stores initially, and also in opening more stores. “We plan to invest another $10 million within the next 12-18 months. We also aim to invest an additional $20 million gradually to grow our network to 500 points of sale across India,” he says.
FDI BOOST
Seth explains that the FDI has given the company the ability to invest and grow rapidly and allows it to control the entire retail spectrum of the business. This is not sustainable in the franchise model.
“The franchise route is difficult to control when you're expanding. The ability of franchisee partners to finance and scale up is limited,” he adds.
In the past year, Pavers, which sells formal and semi-formal footwear, doubled outlets to 30. It also retails through over 100 outlets of Reliance Footprint and 25 Shoppers Stop department stores. Pavers has also set up an R&D, design and development centre in China, investing $2 million and plans to expand and invest a further $3-5 million over the next 2-3 years. The company employs 30 people at this centre. Seth says the Chinese centre is quick to throw up design prototypes, in two to three days, he says, as against more than a week for Indian footwear makers. Despite the poor sentiment in the market, Seth is bristling with plans. “The season never ends for good shoes,” he says, waving away talk of a slowdown. In three to five years, he wants to take the Pavers brand to the MIST (Mexico, Indonesia, South Korea and Turkey) countries.
Plans are afoot to launch a new ladies range of footwear, a shade less premium than Pavers, and to be retailed only through Reliance Footprint. “We are working on the concept,” adds Seth. Women’s footwear now contributes 60 per cent of its sales, a reverse of what prevailed couple of years ago for the brand, when men’s footwear dominated.
Manish Kawlra of Shoeline, a footwear exporter to Europe, says, “Pavers’ achievement was to fill the gap that existed for well-priced and fashionable branded ladies footwear, as this segment was dominated by the unorganised sector and private label brands.”
Sourcing requirement
The 30 per cent local sourcing requirement from small enterprises does not faze him, since Pavers already sources 40 per cent from India, and the rest from Vietnam, Italy and China. Seth intends to increase sourcing from India to 50 per cent. “We are looking for good partners, and it’s difficult but we are committed to grow local sourcing and increasing investments in our R&D and manufacturing base in Tamil Nadu,” he adds.
Pavers registered a turnover of Rs 70 crore in FY13 and is targeting a 60 per cent growth this year, says Seth.
The organised retail market for footwear is around Rs 7,500 crore and growing at 15 per cent a year. The market for premium footwear is growing even faster at 30 per cent a year.
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