Companies

Bata bets on franchise model for growth

Abhishek Law Kolkata | Updated on August 13, 2021

To focus on casual footwear line, apparel to boost volumes

Footwear major Bata India is banking on the franchise model as it targets growth with a more “casual wear” line of offerings. The company is also looking at a larger play in adjacencies, like apparels, not just across stores, but also in the e-commerce channels. Demand for formals and school shoes are yet to bounce back.

According to Gunjan Shah, CEO, Bata India, franchise stores have been a thrust area in the last few quarters. They account for 15 per cent (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. Multi-brand outlets is another growth area the company is targeting.

Similarly, the casual wear portfolio, that includes sneakers, open footwear, athleisure and so on, has seen a 1.5x times growth over the last two years. From being in the “mid-teens”, casual wear as a percentage of Bata’s total portfolio is in the “mid-twenties” now.

“Casualisation and sneakers are a trend that is here to stay as customer behaviour changes have been fuelled by work from home. Even if people head back to the office, they would prefer casualisation. Casual footwear’s share to our total portfolio is up substantially. And it will go up further. The contribution to sales has also kept pace,” Shah said adding, “(Franchise) stores will increase incrementally.”

The average selling price of footwear for Bata is around Rs 700, a 20 per cent increase over the last four years. “There is further scope for ASPs going up,” the CEO said, adding that the company’s ASPs are significantly higher than its nearest competitor.

Although e-commerce is still a “single digit percentage” of total sales, it has seen a 3x jump. E-commerce continues to be in the “investment” phase, with nearly 5,000 products being listed.

Similarly, the company has been investing significantly in omni-channels, with nearly 80 per cent of its stores being “ramped up for delivery”. Chatshops order and home delivery, moving stores to where consumers are through stores-on-wheels, among others, have helped the company overcome a Covid-induced slowdown in demand.

Adjacencies

According to Shah, the company is already exploring adjacencies, particularly apparels. Planned launches were delayed due to the second wave of the pandemic. However, these are now expected to pan-out “over the next 12 months”.

“We do have plans in apparels. Beyond Power, we are looking at offerings under some of the other brands like Scholl’s. As of now, adjacencies are still in single digits of our total business,” he said.

Bata India reported a 30 per cent reduction in standalone net loss to Rs 70 crore YoY for the June quarter, while there was a 98 per cent rise in revenue to Rs 267 crore.

Published on August 13, 2021

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