M&B Footwear plans major retail expansion

M&B Footwear (P) Ltd, the only footwear company in India having arrangements of licensing and distribution with some of the major national and international brands like Lee Cooper, Provogue, Firangi, Geox (leading brand of Italy), Bata, Reebok and iD (the in-house brand of the company), has aggressive plans for retail expansion in India.

The company plans to open 125 walk-in stores in the country by 2010. The number of stores is 20 now. The company will open its first outlet in Chandigarh tomorrow. It plans to open such Walk-in M&B stores in all major towns of Punjab by the end of the year.

The company also plans to increase the number of its factory outlets from the existing 30 to 100 by 2010. The concept is targeted towards the consumer who is at the threshold of being introduced to branded products, but does not want to pay the full price.

This format of retailing is based on a no-frills concept, wherein consumers derive maximum advantage through value discounts on premium footwear brands. The stores have a self-service module.

The director of the company, Inder Dev Singh Musfir, told Business Standard that it was imperative to diversify into retail business as the margins of the manufacturers were squeezing due to the prevailing tax regime. He added that footwear manufacturers were levied value-added tax at 12.5 per cent and excise duty at 10 per cent of the maximum retail price (MRP).

He added that organised players constituted only 20 per cent of the total market and the threats from the cheap substitutes from China were the driving forces behind the focus on retail business. He added that it was more cost effective to import from China and sell in retail market rather than expand the manufacturing business in the current scenario.

The company has manufacturing facilities at Baddi and Noida. He said 80 per cent of their manufacturing had been relocated from Noida to Baddi to avail the tax holiday offered in Himachal Pradesh.

M&B Footwear has a capacity of manufacturing 5000 pairs of footwear in a day at its facilities in Baddi and Noida. It plans to increase production to 8000 pairs a day. This would help the company meet growing demand of the company's existing brands, and also to improve on the supply levels to footwear giants such as Bata and Reebok.