Companies

Bata hopeful of demand revival around festival season

Abhishek Law Kolkata | Updated on August 13, 2020

We will need at least one more quarter to have an idea about the trends and what will be sustainable, says India Chairman Ashwani Windlass

Footwear major Bata India is hopeful of demand revival around the festival season this year, if the surge in the pandemic subsides. At present, 85 per cent of its stores are open, but footfalls remain on the lower side.

According to Ashwani Windlass, Chairman, Bata India, there seems to be demand for casual wear (which includes open and washable footwear) over formals. In an interview with BusinessLine, he talks about buying trends, demand recovery, top-line and margin impacts, and new store openings. Excerpts:

How do you see consumer buying patterns emerge post the ‘un-locking’?

The market place is still uncertain. There are intermittent lockdowns happening and the pandemic is surging in different places. Cities like Kolkata have their own lockdown patterns; weekend lockdowns are there, too, elsewhere. The fact is: consumers are still not going out as they used to before. That puts a question mark in terms of where the demand is.

However, there are some trends we have noticed. (Footwear) Categories like sports, chappals, sandals and casuals are more popular and are moving faster, as opposed to formal footwear. In the near term, this will continue. This behaviour is also quite justifiable with the current scenario where there are not many social gatherings and people are not going to offices. We are responding to the trends through offerings in our stores and also digital campaigns.

In short, markets are opening up, but there are not many footfalls in stores. Even in factories, there are staff limitations.

So, does this look like the outlook for the whole year, or is this a seasonal trend considering the monsoons?

We have come a long way from where we were at the start of the year. There is also some positivity in key metros like Delhi, Mumbai and Chennai where flattening of the curve is happening or is about to happen.

We are hopeful that after the current ‘End of Season’ sale, we will get into the festival season and there will be some demand returning at that point, and sizably (so). Maybe, there will be recovery Diwali time onwards.

Between tier-I and non-tier-I towns, how is the demand playing out?

The reality is: Tier-I towns in India, including metros, are more congested, and they witnessed a different level of surge first. At that time (when metros saw a surge), tier-II towns were doing better.

Now, the spread is into tier-II or (even) tier-III towns. For example, the tier-II towns in Karnataka and Kerala were doing well before the surge happened there.

States are going into lockdowns and things will change. So, there will be an impact as we go along. Certainly, the impact in these (smaller) cities will not be as much as what it is in the metros that drive the bulk of the demand.

What will be the impact on turnover and margins?

The first quarter was mainly a lockdown. Now, opening up has happened and some trends are visible. But we will need at least one more quarter to have an idea about the trends and what will be sustainable.

The margins strategy comes from our product mix. At this point, we are supplying whatever the customer wants. If our product mix has to be tweaked further, we will take a call. The categories (in demand now) are not exactly at the top-end of our portfolio.

The market is very different and discretionary spends are not happening much. We are certainly not in the formal segment at the moment, but we are hopeful that it will pick up.

What are the plans around new store openings for the fiscal?

In a typical year, we add 50 retail outlets which are company-owned and at least 50 which are franchisee-owned. However, this year, since we are looking to conserve cash, we will concentrate more on franchisees and not own stores. Next year (fiscal), we will try and make up for the deficit on the own-store front.

Published on August 13, 2020

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