Retailing and e-commerce

Research Paper on Bata India

2015JULB01098

Table of contents
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Particulars

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4 ps of marketing for bata store in Neeladri Road

Interview with Venkateshwara Rao and Ganesh.N

Industry Background
About the company
Bata India limited Today
Objectives of the study
SWOT and PEST analysis
Competitive Analysis:
Store demographics and Merchandise
Different channels of Bata Retailing
Financial performance
Financial Ratio analysis
Critically assess the retail strategy of Bata
India Limited

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Industry Background:
Indian footwear industry holds a crucial place in the Indian economy for its
potential for employment, especially for weaker sections, and for
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supporting economy through its foreign exchange earnings. India is the

second largest global producer of footwear after China. Footwear sales
continued to soar during 2015, posting a retail value growth of 17%, an
improvement compared to the growth of 16% registered during 2014. Key
footwear players such as market leader Bata India, Paragon Group and
Relaxo Footwear continued to expand their presence across the country
through store-based expansion. This helped increase the penetration of
branded footwear in India during 2015. Also, all these top three players of
the industry had products priced low, targeting the masses. These product
offerings helped attract more consumers into the organised market,
shifting from the unorganised market.

Competitive landscape:
Bata India continued to be the market leader within footwear during 2015.
The company commanded a retail value share of 5% during 2015 and
continued to maintain its lead over the next big player, Paragon Group.
Between 2014 and 2015 the company opened 159 new retail stores
across India. These stores were of larger size compared to existing stores
and were based on the global design the company follows in other
countries, making the stores look attractive and spacious. The company
has plans to add around 100 new retail stores for the forecast period to
increase its presence across the tier two and three cities of the country.
The company also invested in improving its store layouts and created
special emphasis on its key products in the stores through in-store
promotions.

Prospects:
The demand for footwear products in India is expected to continue over
the forecast period. Footwear in India is expected to register a retail value
CAGR of 8% at constant 2015 prices over the forecast period to reach
sales of Rs1.1 trillion by 2020. The rising health and wellness trend in the
country is expected to drive increased participation in activities such as
exercising, swimming and jogging over the forecast period. More people in
the urban regions are expected to join gyms and also take up sporting
activities such as football, basketball, volleyball and cricket. The improving
economy is expected to create new job opportunities over the forecast
period and more men and women should be joining the workforce. The
number of international schools which demand branded footwear in the
urban regions is also expected to increase over the forecast period. All
these factors are expected to drive the demand for footwear products
over the forecast period.

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About the company:

Bata India Ltd., incorporated in the year 1931, is a Mid Cap company
(having a market cap of Rs 6324.84 Cr.) operating in Leather sector.
Bata India Ltd. Key Products/Revenue Segments include Footwear which
contributed Rs 2301.36 Cr to Sales Value (93.88% of Total Sales),
Accessories, Garment & Others which contributed Rs 148.79 Cr to Sales
Value (6.07% of Total Sales), Other Operating Revenue which contributed
Rs 1.10 Cr to Sales Value (0.04% of Total Sales), for the year ending 31Mar-2016.
For the quarter ended 30-Jun-2016, the company has reported a
Standalone sale of Rs. 674.28 Cr., up 23.78% from last quarter Sales of Rs.
544.73 Cr. and down -1.46% from last year same quarter Sales of Rs.
684.30 Cr. Company has reported net profit after tax of Rs. 50.50 Cr. in
latest quarter.
The companys management includes

BOARD OF DIRECTORS:
Mr. Uday Khanna Chairman and Independent Director
Mr. Ravi Dhariwal Independent Director
Mr. Akshay Chudasama Independent Director
Ms. Anjali Bansal Independent Director
Mr. Christopher Kirk Non-Executive Director
Mr. Shaibal Sinha Non-Executive Director
Mr. Rajeev Gopalakrishnan Managing Director
Mr. Ram Kumar Gupta Director Finance

Values:
Constant innovation in design and product development
Superior customer service.
Excellence in operational and commercial execution.
Entrepreneurial spirit and passion to win.
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 Teamwork in international environment.

Trust and respect for our employees.
Adding value to the community
Delivering on our commitment to shareholders

Bata India limited Today:

Bata India is the largest retailer and leading manufacturer of footwear in
India and is a part of the Bata Shoe Organization.

Incorporated as Bata Shoe Company Private Limited in 1931, the company

was set up initially as a small operation in Konnagar (near Calcutta) in
1932. In January 1934, the foundation stone for the first building of Batas
operation - now called the Bata. In the years that followed, the overall site
was doubled in area. 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. Today, Bata India has established itself as Indias largest footwear
retailer. Its retail network of over 1200 stores gives it a reach / coverage
that no other footwear company can match. The stores are present in
good locations and can be found in all the metros, mini-metros and towns

Batas smart looking new stores supported by a range of better quality

products are aimed at offering a superior shopping experience to its
customers.

The Company also operates a large non-retail distribution network through

its urban wholesale division and caters to millions of customers through
over 30,000 dealers.

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The present Objectives of the study

Detailed Profile of the Company
Critically assess the different channels of retailing
Critically assess the retail strategy of Bata India Limited

Since, footwear in India is still dominated largely by unorganized sector,

untapped market, Bata being an organized one, frequently it is
customizing as per Indian customers and it is rebooting its business
strategies. With this above background, it motivated me to do a retail
study in Bata Indias individual stores, to understand their strategies that
is existing at the store level and this also reveals the importance of
choosing a strategic location in ease of doing the business.

Product Categories:

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Marketing mix:
SWOT Analysis of Bata with USP, Competition, STP (Segmentation,
Targeting, Positioning) - Marketing Analysis
Bata
Parent
Company

Bata Shoes

Category

Apparel- Footwear

Sector

Lifestyle and Retail

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Tagline/
Slogan

Indias favourite footwear brand; Shoes for all; I love my

shoes

USP

Innovation and Trust

STP
Segment

Complete Coverage of the market

Target
Group

People who prefer fashionable footwear

Positioning

Best Footwear Brand

SWOT Analysis
1. Worldwide Presence in over 70 countries and
production facilities in 27 countries
2. Benefit received from link to the international
organization for back-office systems, product innovations
and sourcing.
3.Found in all the metros, mini-metros and towns
4.Sells through over 1200 retail stores in India and 5000
stores worldwide

Strengths

5.Employs more than 6800 people in India and 40000

people worlds over and over 30,000 dealers
6. Excellent advertising and brand presence
1. High cost for brand protection

2. Intense competition in the footwear segment means

Weaknesses limited scope to overhaul market share
Opportuniti
es

1.People now look towards buying footwear as a blend of

fashion and comfort, so now has an increasing market
size
2. Bata has an opportunity to create a separate division
for tackling the rural markets in emerging nations

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3. Global expansion in the premium footwear section

1. Intense Competition from other leading footwear
brands
Threats

2. Commoditization if fashion footwear not differentiated

well

Competitive Analysis:
Down the lane of the store, Adidas, Puma, Metro, Khadims are the main
competitors. These stores are catering to high end customers.

Store Demographics:
STORE STRUCTURE Usually 5 concept of business is being followed by
Bata. City or Town location, Shopping Centre Concept, Bazaar Concept,
Family concept, Clearance outlet.
Out of these, the store is of family concept type It is basically a threestoried building. So, it contains shoes for all members of the family. It
displays all the items in the first place but these stores are mostly limited
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items according to the area and business model targeting the specified
stores customers.

Merchandising of each store:

Merchandising method Stocks store

Different channels of Bata Retailing:

Bata India markets its products through Four distinct channels.
1. Company operated retail outlets
The Company operates its own retail network of over 1,100 retail stores
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spread across the country. These outlets are serviced through six
distribution centres spread out geographically and each responsible for a
particular region.
The process flow begins with the transportation of the finished products
from the Companys manufacturing units and contract manufacturers
plants to the distribution centres through the services of third party
carrying and forwarding agents. The distribution centres in turn transport
these products to the Company operated retail outlets based on specific
demand requirements. These retail outlets are manned by the Companys
employees and exclusively market the Companys footwear brands.
As part of its strategy to provide complete footwear solutions to
customers, the retail outlets also market accessories like shoes laces,
socks, shoe polish. In certain outlets, the Company also provides cosmetic
services like pedicures, etc.
Out of the 1,100 retail stores, the Company has designated 84 stores as
factory outlets which are used to sell merchandise at marked down prices.
These factory outlets are used primarily by the Company to sell surplus or
non-moving products and factory seconds stocks.
Institutional sales as well as supplies to the civil and defence agencies are
also taken care of through the Companys distribution network. The
Company has designated specific senior managers to oversee the
marketing to this segment of buyers. The requirements are directly
supplied from the Companys distribution centres.
2. Dealer Network
The Company also uses the dealer network of the footwear industry to
market its products. Through this channel, the Company supplies its
products to non-exclusive wholesale distributors who in turn distribute the
Companys products to independent dealers across the country. The
dealers covered under this channel are non-exclusive Bata dealers and
hence sell footwear and related products of other companies also.

3. Market Extension Programme

The Company is undertaking steps to generate volume business in semiurban markets and markets which are unrepresented and underrepresented footwear markets, pursuant to its Market Extension
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Programme, through authorised Bata dealerships. Under this programme,

the Company appoints authorised dealers, subject to certain selection
criteria who run outlets which exclusively market the Companys products
and adhere to rules and regulations of the Company.
4. E- Retailing
Bata India Ltd said it has created a separate products portfolio exclusively
for the e-commerce segment. Bata have created a portfolio of 500
products only for online sales. This will avoid clash with offline stores. The
company is aiming at five-fold increase in online sales to 12 lakh pairs by
December 2016 as compared to 2015. Online sales would be five per cent
of the companys total revenue in next few years. Bata sells on its own
portal and through major e-retailers like flipkart, amazon, shopclues, Tata
cliq etc.

Financial performance:

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Financial ratios:

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Critically
Limited:

assess

the

retail

strategy

of

Bata

India

Market trends:
Bata India recently announced that it is in the process of altering its policy
of opening 100 stores annually, deciding instead to concentrate on
boosting store profitability. It will also look to open new sales channels to
strengthen online sales.
The footwear manufacturer is also focusing on improving productivity at
its manufacturing facilities, while introducing marketing initiatives such as
creating wedding and festive collections.
shareholders that in view of the increased challenges from international
footwear giants and local players, including the unorganized sector, the
company has changed its strategy of opening 100-plus stores every year,
and is now concentrating on same-store growth.
Deeper and wider penetration of high-growth markets through
differentiated product lines, focusing on style, comfort and wow pricing,
as well as increasing the productivity of the manufacturing units are the
key tenets of the company now
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The companys key focus is to grow in double digits and scale up margins
going forward. I am sure that it is going to improve, because the collection
we are launching in the autumn is also going to feature extremely good
products, particularly focused on women. This is with better margin,
better product, better price and better styling. So, you will see this is also
going to add in the next two quarters in terms of our profitability.
Also, when we say premium, it is looking at our internal brands like Bata
the Brand itself. We are preimmunizing in the top stores, with a complete
leather-shoe collection with leather outsoles and improvements like that.
However, in terms of ladies, we are moving into more contemporary
styles, better price points and more fashionable shoes which are going to
be part of the ladys contemporary range.
In addition to its partnership with major e-commerce players, Bata India is
also trying to boost its own online sales by offering differentiated
products. It is aiming to increase the share of its digital business from 1.5
percent of total sales to 5 percent in three years.
New city format stores - key growth driver going forward; strategy to add
100 retail stores year-on-year bodes well for Bata India
As a part of its growth strategy to make the brand more accessible to its
customers, Bata Indias retail expansion plans are going on smoothly. The
company has been adding 100 stores year-on-year and will be sticking to
the same strategy for the next couple of years. In line with this strategy,
Bata India opened its new city format store at the Great India Place,
Noida, in November 2014, in succession to the launch of their largest store
in Bandra, Mumbai. The new format stores offer customers an
international shopping experience with new extensive product offering in
a newly introduced city format which displays the product range in a
much-advanced format. Going forward, we remain hopeful on the
prospects of these new format stores as Bata India is aggressively
pursuing its plan to open such stores at key locations. The companys
emphasis on aspirational designs and continuous addition of a wider
range of products to its existing portfolio also makes us optimistic for its
prospects.

New sales channels to drive up revenue growth to 60 bn

in the coming 3-4 years:
Having increased its appeal among the younger generations, Bata India
plans to increase its focus on e-commerce and digital platforms. The
company, which currently operates over 1,400 stores nationwide, is
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expecting a three-fold growth in its total revenue at 60 bn in the next

three-four years. The annual turn never for the 12-month period ended
December 2014 (including online sales) stood at 22 bn.
Moving ahead, Bata India is planning to launch an e-commerce mobile
application in 2015, wherein the company will initially offer select brands
like Bata, Hush Puppies and Marie Claire. Other brands like Dr. Scholl's,
Bubblegummers, Power, Weinbrenner, Ambassador, Comfit, Mocassino,
Wind India, etc. will be rolled out over two years. Through the mobile
application, the company plans to start a click and pick model. The model
will provide the customers a block and pick-up facility, which will help
them block a product through the website or app and then go to the store
and buy it. This app also provides the option to exchange the product.
Also the pricing will remain the same both on its online platform and in
stores to avoid cannibalization. The company is focusing to build a
customer base of ~10 mn while trying to integrate digital with its retail
stores. We expect the company to witness a strong improvement in sales
given its consistent efforts towards strengthening its e-commerce
business. Further, efforts towards establishing lasting relations with the
customers and partners, through better customer case services, is likely
to yield fruitful results.

Focus on specialised brands:

a successful attempt to alter the customer mindset With specialized
brands like Hush Puppies and FOOTIN, in its product basket, Bata entered
the niche footwear market, in the late nineties, catering to specific target
customers. Till then, Bata India is making continuous investments in
various marketing plans to re-position the brands in the minds of
consumer as international premium lifestyle casual footwear brand in
India.
HUSH PUPPIES: In line with its overall retail expansion program, Bata India
has been continuously expanding its premium brand, Hush Puppies. The
company continues to open exclusive stores and shop-in-shop stores in
premium departmental stores. At the end of CY13, Hush Puppies had 34
exclusive stores and 37 shop-in-shops.
FOOTIN: Bata Indias retail concept, FOOTIN offers a range of footwear
focusing on affordable fashion and trendy styles. Such stores offers
fashionable, young looking and affordable footwear presented through a
high-density display concept. It is one of the new business models with a
different approach to improve volume growth of the company. During
CY13, Bata India opened 8 new FOOTIN stores across India, with a new
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range of footwear for both men and women. These stores are unique in
terms of display and ambience and different from other footwear retail
stores in India. Being one of the oldest footwear brands in India, Bata India
has suffered with an unfavourable impression of a perception drag as the
brand has been unable to connect with the youth. Following the success of
these stores in India, the consumers perception for Bata as a mass
market brand has changed, which has enhanced the brand image of Bata
India among the young generation. On the back of this positive perception
for Bata, we remain hopeful for a pick-up in Batas sales in the coming
quarters.

Long-term outlook looks positive for Bata India:

Bata India is taking various initiatives to enhance its revenue-base as well
as profitability which had been under pressure from the past few quarters.
The company has soft-launched its loyalty program and plans to
implement a comprehensive loyalty program by FY16. Through the launch
of this loyalty program, Bata India expects to increase the customer
stickiness to the brand and to generate better footfalls. Moreover, the
company is in the process of implementing SAP, which will help in better
inventory management and demand forecasting. Furthermore, the
company has launched a range of accessories like glares, womens
leggings, and premium shoe care products, so as to gain customers
attention, which should drive growth in the accessories segment. With
Bata Indias efforts to boost its financial performance, we expect the
company will see a gradual improvement in performance. The recently
launched loyalty programme as well as implementation of new supply
chain IT systems promises better outlook for long-term.

Valuation and view:

Bata Indias consistent efforts towards attracting new customers and
retaining the existing ones, we remain positive on the growth prospects of
the company in the long-term. With a massive restructuring exercise, Bata
India has evolved from being a low growth, low-profit generating company
to one that can boast on all key parameters, namely, growth, profitability
and cash generation. The companys investments in new sales channels,
franchisee model in tier III and tier IV cities and launch of e-commerce
model are steps in the right direction.

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Place:

Store located at strategic

location.
Where the corporate working
people lives in gated
communities like AJMERA
AVENUE,
ITTIN MAHAVEER, CONCORD, ECO SPACE, UNIWORLD etc.
All other residential area people who is having good disposable amount of
money.
Distribution network is good. Once the stock is over, the 12000 pair of
footwears are sent to the stores through the stockiest. This is the
maximum limit that store can have.
Time working hours morning 10 am tonight 10 pm.
Parking facility is available.
Other facilities are credit card, gift card etc .
CRM activities: MOBILE MESSAGES, REDEEM POINTS, BATA card is
being given to customers. If stock is not available, stock is ordered
and delivered at customer house.

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Price:
Pricing strategy used by BATA
is odd pricing. The price
adjustments or fixation
depends upon the demand.
However, the store does not
have any power to do so,
based upon the Prices set at
top level in Bata org. the
store will follow. Below table
describes the range of prices

Table: Range of pricing at store:

Particulars

Shoes

Foot ware

Women

550-3600

200-4000

Other
accessories
150-6000

Men

400-4000

200-4000

150-2000

Child

250-1500

200-2000

150-500

Discounts are also prevailing at recurring number like 33% and 50 %. It

was also observed that, only the non-sold items are kept for sale or at
discount. If we consider other categories, like complementary items,
prices are high.

Promotions:
Promotion is done through magazines, online sales/deals in different E-Commerce
companies.
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Banners, pamphlets, promo codes. Using soft sell messages aims at developing brand liking
preferences in terms of features, pricing, benefits or brand itself. It is to create the positive
brand image in minds of people.
End of the year sale-February and march
Independence sale -August
Discount sale-July
Diwali sale -October

Questionnaire to Store Manager Electronics city, Bangalore

Venkateshwara Rao and Ganesh.N

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 Who are the main target customer? - Working

employees
Location Proximity? -High
Competition? -Low
Store demographics:
Store occupancy area-40*56* 2 floors
Ground Floor Men footwear &
Accessories
1st floor Kids, Women footwear &
Accessories
Number of employees: 10
Parking space: Available
Sales growth :30%
Loyalty: Medium/good
Number of foot fall in to store:60-200
Maximum -300
Average foot fall Conversion rate :1520%
Peak hours: 7pm to 9pm
Number of different products
available:40

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Reference:

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Bata.in/reports
http://www.moneycontrol.com/india/stockpricequote/leather-products/bataindia/BI01
http://www.marketing91.com/marketing-mix-bata/
http://www.thehindu.com/business/Industry/bata-recasts-store-expansionstrategy/article8943727.ece
http://www.business-standard.com/article/companies/e-commerce-squeezes-bata-india-smargin-116042801682_1.html
http://www.fundsindia.com/blog/wp-content/uploads/2015/05/Research-Report-Bata-IndiaLtd.pdf

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