Bata expects 30% stores to be run on franchise model in about 4 years

Leading shoemaker Bata India Ltd is working on portfolio changes towards casuals and sneakers as part of its business growth plans and channel expansion through franchise, its CEO Gunjan Shah said.

Consumer behaviours are changing after the pandemic and the market is moving towards casualisation, online purchase and value buy, he said.

There is a drop in discretionary spending and customers are more price-conscious and deal-seeking, he said in a presentation while addressing a virtual media round.

Bata, as part of its expansion strategy, aims for 30 per cent of its stores to be operated by the franchise in the next 3-4 years, and also looks for contribution from e-commerce to be in double-digit in coming years.

When asked about the contribution of casuals in Bata's sales, Shah replied: "It would be in the mid-teens, let's say from a portfolio contribution perspective till about one and a half, two years back, and that's now moved to about the mid-20s."

There is almost 1.5 times shift in terms of contribution by casuals, he added.

The company is taking initiatives in the segment by launching new products... "open footwear, launching a whole bunch of sneakers under brands as Hushpuppies, expanding the range of North Star".

"So I think, this will only go further up. And hopefully, I will be able to report to you even better shifts on this going down," Shah added.

According to him, consumers are now experimenting and are innovative.

"We have just launched Hushpuppies originals, which is like harking back to almost designs of the 1970s and 1980s and is giving us very good response," he said adding "so there is a lot of creativity that you can bring in, which also allows you to give you the differential pricing and therefore margins."

Bata presently has around 15 per cent of the store on a franchise model, and expect it to increase "incrementally" in the coming years.

"230 is the current count last quarter (franchise) out of 1,500 stores. I am sure that this mix will increase incrementally... So I am sure that this 15 will definitely double in the next three-four years, to over 30 per cent of our network," he added.

The company is adopting a two-pronged approach, making sure that it is more and more accessible and easier for consumers to purchase, whether its franchise or multi-brand outlets or digital.

However, he also added the youths between the 20 and 30 year age group are going to drive the disposable as well as the consumption going forward, largely centred in the urban markets.

"Metros are contributing to about 30 per cent of our turnover... I think between the metros and tier I & II cities there would be 60 per cent kind of a play of Bata," he added.

The balance of 40 per cent would come from the markets below, he said adding an expansion of e-commerce has happened in downwards markets also.