Remember those rushed mornings when you still found the time to shine your shoes to go with that crisp school uniform? So do millions of other Indi-ans to whom Bata shoes have been an arguable truth of everyday life.
The Bata brand that symbolised the quintessential middle class is still an integral part of the average Indian home after over 80 years. Few would guess that Bata India, one of the oldest multinationals operating in India and the country’s largest footwear retailer, is Swiss-based, so thoroughly has it localised itself.
While enjoying a monopoly for nearly six decades, there was also a time when it became embroiled in labour issues that slowed growth, incurring losses but again bouncing back to post profits.
Cut to 2016. The Bata brand that reigned over both Indian feet and hearts is all set to undergo a transformation.
Change Is Afoot Bata is ready to graduate from its erstwhile 35-year-old-plus customer to today’s metrosexual youngster. With new collections and new strategies to take on competitors and changing market dynamics. What Bata plans to do is to make a strong push to focus on e-commerce platforms, to increase its appeal among younger generations.
Currently operating around 1,500 stores nationwide with an annual revenue of Rs. 2,784 crore, the company is eyeing $1-billion in revenues in the next five years, says Rajeev Gopalakrishnan, President South Asia. According to him, the new vision of Bata is to change from a mass into a premium brand, going first to 100 stores in the metros. It also wants to connect as an aspirational brand for the working women class as well as make the maximum business possible from the children’s shoes market. In a nutshell, the company is getting aggressive in its plans address changing customer needs.
Over the past eight decades, Bata has not gone into full-blown advertising, except for print ads. The selling points in its advertising campaign only focused on durability and comfort. It enjoyed the advantage of top-of-mind recall for the customer, practically known as the only shoemaker of the country. As a result, Bata rarely required large scale campaigns to make its presence felt. Sturdiness and affordability were its hallmarks. It’s low-cost, rubber slipper brand Hawai, launched in 1950, became a generic name. Other brands like Naughty Boy, Ballerina school shoes and Ambassador too were household names.
Now because of changed goals, the company getting into 360-degree advertising, it is also looking to finalise a communications agency. “We never felt the need to spend money like a Cola company all these years but now we need to change because today’s consumers are more digitally inclined and have enough choices. We need to connect emotionally and digitally to tell them what’s in store,” says Gopalakrishnan.
Bridging The GapGopalakrishnan accepts that despite being the indisputable leader, there are gaps and challenges. “Understanding the changing needs of the consumer is the biggest gap, and we are investing significantly in research and development and digital to bridge that gap,” says Gopalakrishnan.
Three years ago, Bata entered the e-commerce business and now 60 to 70 per cent sales are online. For a while, Bata had become known for dated designs. Hence the need to move on to premium well-designed footwear. “We have started manufacturing new collections to cater to the growing younger generation. We have set up the design and development centre in Gurgaon headed by a famous Colombian designer,” says Gopalakrishnan. He says the average age of a Bata consumer has come down to 27 years making up 30-40 per cent of its customer base. Foot In, the youth brand launched by Bata for teenagers 18-21 years is doing quite well and boasts of 80 stores now.
Even though men’s footwear makes up 50-60 per cent of Bata’s business, new collections are being introduced for women and children. “We are looking towards doubling our children’s business in the next three years,” says Gopalakrishnan.
A Global LocalBata India is the most profitable of the group’s companies and contributes the highest (nearly 30 per cent) to the global revenue of $2.5 billion. India is among the top three revenue-generators for the $2.5 billion (estimated revenues) Swiss parent. Spearheading this growth Gopalakrishnan says, “I want Bata India to be at $1 billion in revenue in the next five years.” This means the company has to nearly triple revenues from 2014s $349 million (South Asia as a whole exceeds $600 million). Of course Bata India would be helped by the country’s rapidly growing middle class, the increasing number of women in the workforce and an evolving rural market. It also helps that Bata is so in tune with local needs. “One of the key successes of Bata is to understand the needs of the consumers and adapt to local culture. What we sell in north-east is completely different from what we offer in the south,” says Gopalakrishnan.
Transforming Bata’s image from a value-for-money brand to an aspirational brand will take a long time. “Bata is an iconic brand, but positioning itself as an aspirational brand is a little far-fetched,” says Piyush Gupta, President, Kestone, a consultancy.
Gupta believes that Bata has already captured the mind space of the consumer looking for a durable rightly priced shoe, and trying to change that brand imagery will not be possible and by doing so, they will lose their core positioning. He suggests that for the overhaul, they should leverage their sub brands like Foot In for teenagers among other categories they plan to introduce instead of promoting the mother brand for its brand positioning.
Today, when international shoe brands like Clarks, Aldo, Steve Madden and Charles & Keith that are aspirational for the youth, are making inroads into the Indian market, Bata’s positioning as an aspirational brand will be a challenging task.
On A RollBata India is on a roll again. It now sells 50 million pairs a year and is a much-loved consumer stock with a $1 billion market cap. It has doubled revenues (in rupee term) in the past five years through store additions and renovations plus brand extensions to scarves, bags, sunglasses and belts. The company provides employment to over 15,000 people in its manufacturing and sales operations throughout India. Headquartered in Calcutta, the company manufactures over 33 million pairs per year in its five plants located in Batanagar, West Bengal, Faridabad, Haryana, Bangalore, Patna and Hosur, Tamil Nadu.
Even though Bata has had a first mover advantage in certain shoe categories like sportswear with its Power and Adventure variants, companies like Nike, Puma, Adidas and Woodland hold the upper hand in terms of market share in the category. “We will fight them only in Tier II, III and IV cities where these big guys have no presence and make it a choice for their consumers” says Gopalakrishnan. According to him Bata’s main competitors are the regional players- Liberty and Relaxo in the North, Sree Leathers and Khadims in the East followed by VKC Paragon in the south.
monica@businessworld.in
