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S. No

Content

Page No.

1

Introduction

3

2

Relaxo

5

3

Bata

6

4

Growth of companies within the years Impact on sales and distribution during the COVID period Relaxo Vs Bata (Comparison)

7

5

6

9

10

7

Conclusion

13

8

References

14

2

Introduction Footwear Industry in India The footwear sector is a very important and significant segment of the leather industry in India; rather it is the driving factor of growth for the entire Indian leather industry. India is the 2nd largest global producer of footwear after China, accounting 13% of global footwear production of 16 billion pairs. India generates 2065 million pairs of different categories of footwear (leather footwear - 909 million pairs, leather shoe uppers - 100 million pairs and non-leather footwear - 1056 million pairs). India exports about 115 million pairs. Hence, nearly 95% of its production meets its own domestic demand.

Source: investindia.gov.in The major production centres in India are Chennai, Ambur in Tamil Nadu, Mumbai in Maharashtra, Kanpur in U.P., Jalandhar in Punjab, Agra, Delhi, Karnal, Ludhiana, Sonipat, Faridabad, Pune, Kolkata, Calicut and Ernakulam. 1.10 million employee’s strength are engaged in the footwear manufacturing industry. Footwear varieties exported from India are Dress Shoes, Casuals, Moccasins, Sport Shoes, Horrachies, Sandals, Ballerinas, Boots, Sandals and Chappals made of rubber, plastic, P.V.C. and other materials. 3

Footwear: Global scenario and India’s market share The global import of Footwear (both made of leather as well as non-leather) represented a significant increase from US$ 124.43billion in 2013 to US$ 134.943billion in 2017, growing at a CAGR of 2.1%. During 2017, the India’s share in the global import was 2%.

(In Million US$) 2013 Global import 124132.959 of footwear India’s export 2609.814 of footwear %Share of 2% India Source: indiatradefair.com

2014

2015

2016

2017

131819.943

127818.70

128324.900

134943.372

2900.733

2771.020

2747.900

2785.993

2.27%

2.16%

2.15%

2%

Source: Statista 2022 The footwear sector has sharply matured from the level of the manual footwear manufacturing method to the automated footwear manufacturing systems.

4

RELAXO The company was incorporated on 13th September, 1984 as a Private Limited Company. The company was then particularly converted into a Public Limited Company on 31at March, 1993. RELAXO FOOTWEARS LTD. is a marketing company of the Relaxo Group and at present, it is closely held. This Group includes five diverse assembling units with all out manufacturing plant space of more than 1,20,000 sq. ft., more than 1100 representatives in various teaches and has an organization of more than 200 wholesalers and 20,000 vendors. The gathering makes Rubber Hawai Chappals, Canvas Shoes, sports shoes, easygoing shoes, leather shoes and light weight chappals. The Company total produces approx. 50,000 pairs per day. Approximately 90% a the total production is consisting of Hawai & Lightweight Chappals. The group is one of the top manufactures in this segment.

Source: relaxofootwear.com The gap between demand and supply is of about 150 million pairs per annum. In the light of this, the company is setting up modern plant to manufacture 50,000 pairs of Hawai & lightweight Chappals per day on two shift bases under the present project. The Company will keep going with its marketing for products of the group concerns even after commencing its own manufacturing activities.

5

BATA Bata India is a part of the Bata Shoe Organization and is the largest retailer and leading manufacturer of footwear in India. Established as Bata Shoe Company Private Limited in 1931, the company, at first, was set up as a small operation in Konnagar (near Calcutta) in 1932. the foundation stone for the first building of Bata’s operation - now called the Bata was laid in January 1934. In the following years, the overall site in the area was doubled. This township is popularly known as Bata nagar. It was also the first manufacturing facility in the Indian shoe industry to receive the ISO: 9001 certifications. The Company went public in 1973 when it changed its name to Bata India Limited.

Source: Zee Business Today, Bata India has set up itself as India's biggest footwear retailer. Its retail organization of more than 1200 stores gives it a reach / coverage that no other footwear organization can coordinate. The stores are available in good areas and can be found in all the metro cities, smaller than usual metro cities and towns Bata's savvy looking new stores upheld by a range of better-quality items are objected toward offering a better shopping experience than its clients. The Company additionally works an enormous non retail dispersion network through its metropolitan discount division and takes into account a large number of clients through more than 30,000 vendors.

6

Growth of companies within the years There has been a huge development among these two organizations in their sales and distribution network with the improvement in their functional benifits and also with the adaptation of the style and comfort which the people are looking for.

• Relaxo fortifying the distribution network, strong investment in marketing and branding, soft raw material prices and initiatives to push sales on the e-commerce portal are all to push the company’s prospects. Relaxo India’s second-largest footwear maker clocked a compounded annual growth of 14 per cent in five years to FY19. Analysts claim that the company’s drive towards product premiumisation may help it log a double-digit sales growth in value terms, if not in volume terms. Relaxo has nine manufacturing facilities with a capacity to produce 7.50 lakh pairs a day with average blended utilisation level over 70 per cent.

As

cts roll out of its ten manufacturing units spread across northern India, its 800-strong

Source: relaxofootwear dealer network, reaching out to about 50,000 multi-branded outlets, ensures that the customer always gets what he/she wants.

7

Relaxo’s production facilities maintain strict quality and testing standards. They also have several certifications, for quality, environmental management, occupational health and safety and production standards. The company has consistently strived to optimize its product portfolio by re-designing approximately 20% of its products every year to meet in-season launches.

• Bata As of now, it has around 1,415 retail stores of which around 150 are franchised. Sales from such stores account for around 85 per cent of its business and the rest consists of sales from ecommerce channels as well as multi-brand retail outlets. Beside remodelling its existing stores in the metro cities, Bata has been trying to open around 70-80 stores each year and hopes to retain the momentum for its growth strategy. In the last fiscal year, the company spent Rs 40 crore on store remodelling alone. Bata as a company is generally known and recognized as the “People’s brand for the global shoe industry”. A majority of the population extensively likes it and that makes it one of the most common and well-known shoe brands of modern times. It has impressive sales and profit figures that claims to serve to almost one million customers each day across the territories. • New design and healt sales dem • New app strategy

• Focus on increasin store expansio

New design to aid sales growth

Focus on women footwear and spends to drive growth

Revisiting store expansion storage

Increasing focus on ecommerce

• Intends to capitalize on he healthy rends ncrease in ural penetration

ual ancement in its online strategy

Bata will go slow on new store openings and planning expansion only in new towns through the franchise route. The company currently has over 1,400 stores across the country and reopened more than 1,200 of them after the relaxation of lockdown. Considering the above changes in market landscape, Bata’s strategy is to emerge as a brand of choice for the 25-35year segment and transcend the perception of just being a maker of school shoes. Footwear maker Bata will continue its growth journey in India with the multi-retail channel approach along with e-commerce platform to reach out to as many customers as it can, said a 8

top company official. The company, which has a retail network in 450 towns, is further expanding by adding new stores in smaller town.

Revenue growth (%) 20 15.5

15.4

15

14.5

10.6 10

7.4

8.8

7.3

6.7

5 0 Q4FY19

Q1FY20

Q2FY20

Q3FY20

Q4FY20

-5 -10

-8.7

-15

-15 Bata

Relaxo

Impact on sales & distribution during the COVID-19 period In the post-COVID world, the demand for utility-based footwear like sandals and flip-flops has increased, so comfort and fit have become critical elements compared to style and exclusivity. This is where branded footwear from the organised sector are being favoured over small businesses from the unbranded sector. As markets revive post-COVID, Indian companies need to look at reinventing themselves to overcome legacy challenges and boost their international standing, starting with the import dependence. Reducing this dependence will not only add to the turnover of domestic enterprises including MSMEs, but is also likely to translate to benefits through forward and backward linkages, better economies of scale along with cost competitiveness and importantly, enhancing the scope of employment in our country. The sector is additionally impacted by the plight of labour and the break in production activities during the lockdown. The state of raw hides lying in these factories has meant a further hit on business, as this is projected to impact production of leather shoes in the coming months.

9

Performance Comparison (Bata vs Relaxo) The competitors to Bata and the second largest player in the organized footwear industry, Relaxo Footwear has transformed itself from being a high-volume mass brand to a strong celebrity endorsed fashionable footwear. The stock price has also moved along with its strong success story competing market leader BATA, doubling over the past one and half years. Still behind Bata at a fair distance, Relaxo has lot of catching up to do in the second largest footwear market in the world. Bata is still competing on the front foot mainly due to its inherent strengths such as a distribution network of 1300 EBO stores, strong brand recall, higher pricing power, complete debt free status and lower vulnerability to raw material fluctuations. All this leads to premium pricing with the stock currently at its 52-week high, having multiplied investor wealth two and a half times over the past three years.

Bata

Relaxo

25

20

15

10

5

0 FY 15

FY 16

FY 17

FY 18

FY 19

-5

-10

-15

Relaxo has streamlined its product portfolio and shifted its focus from category led to a geography led distribution strategy to enter new territories and give Relaxo, a complete pan India presence. Relaxo which was once valued lower than Liberty shoes has stirred up its way to challenge Bata with its strong growth zeal and aggressive sales & promotion drive. Bata is still struggling to shed its school image which drives its sales and ensures that its June quarter consistently being its best performance round the year. Relaxo on the other hand has a wider product profile, from Hawaii chappals to formal men and women’s wear, trendy and fashionable casual footwear, school shoes and ‘Sparx’ which 10

has given it a foothold in sportswear segment competing with MNCs whereas BATA has not been able to create any magic in this segment over the past eight decades. Sparx has created a market in south India for Relaxo and is the rapidly growing brands for the company apart from ‘Flite’ and ‘Bahamas’.

Source: relaxofootwear.com Relaxo has streamlined its product portfolio and shifted its focus from category led to a geography led distribution strategy to enter new territories and give Relaxo, a complete pan India presence.

11

Bata vs Relaxo (Net Sales)

Bata vs Relaxo (Sales volume and realization) The company adopted both ‘Push and Pull strategy’ after FY12 for higher product visibility by endorsing its product line through various Bollywood celebrities. It was Salman Khan for mass product Hawaii chappals, Akshay Kumar for Sparx and Shruti Hassan for southern market. This varied and differentiated promotional strategy worked in highlighting Relaxo’s product mix, more varied than the local brands and more affordable than the MNCs. Bata- An undisputed leader of organized footwear industry Bata is the largest footwear retailer in the domestic market. It has over 2,500 SKUs across 14 brands and is available through its 1,558 retail outlets. The products are also sold on its own web portal as well as various other e-commerce plyers, which marks company’s reach to over 1,400 cities. The company’s differentiated products offerings at competitive price points, strong brand recall and increasing loyal customer base are key foundation of Bata’s future growth. Prudent management strategies to support an all-round performance. The company has evolved with time and changed its products and store décor to move a notch ahead of the curve. It also endorsed celebrities from film and sports fraternity, who helped to increase the products appeal to target customers. Bata’s initiatives helped the company in both sales volume growth as well as sales realization over the years. 12

Conclusion Taking in consideration all the stats and figures that are shown, it appears that Bata is a greater player of the footwear industry in India in comparison to Relaxo, but the growth of Relaxo has unquestionably increased to greater heights in the past few years in comparison to Bata and has implemented various measures in order to justify these sales. Relaxo had a rather modest beginning as a trading and marketing footwear company, and is currently producing 6 lakh pairs a day. From being a part of the unorganized sector catering to high volume mass market of ‘Hawaii chappals’, Relaxo moved up the value chain introducing ‘Sparx’, ‘Bahamas’ and ‘Flite’, high margin products servicing upper middle-class segments and expanding its horizons with Schoolmate, Mary Jane and Casualz brand. Relaxo grew at a CARG of 30% during 2006-2012 and touched Rs. 1000 cr revenue mark in 2013. The score doubled in the next five years with Revenues of Rs. 2300 cr against Bata’s annual sales of Rs. 2997 cr in FY19. Relaxo which was once valued lower than Liberty shoes has worked its way up to challenging Bata with its strong growth zeal and aggressive sales & promotion drive. Bata is still struggling to shed its school image which drives its sales and ensures that its June quarter consistently being its best performance round the year. Bata being a major competitor in terms of market share due to high reliance on outsourcing work to outsider. Relaxo is meeting the competition by capacity increase and focussing more on Hawaii chappals business and is getting focussed to urban market. It is a large supplier of Hawaii chappal in north India. Thus, the company has recently appointed Accenture on the business strategies and systems in order to enhance its marketability and reach to the consumers.

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References • • • • • •

economictineindiatimes.com relaxofootwear.com batafootwear.com in.fashionnetwork.com elephantdesign.com/relaxo indiabusinesstrade

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