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Footwear major Bata India is looking at increased profitability from existing stores, even as it looks to tap the franchise route for rural foray.
Stress on improving profitability from existing stores comes as a strategy shift for the company, which had till a few years back harped on adding new ones every year.
Sources maintain low consumption and increased competition is one of the reasons as to why Bata has focussed on increased profitability from same stores.
“Merely focussing on adding stores is not going to be the way forward. We have almost exhausted areas to which we can expand. A lot of our existing stores have also been remodelled,” Uday Khanna, Chairman, Bata India, said on the sidelines of the 83rd Annual General Meeting.
In FY-16, the company added around 21 ‘Bata’ stores, 14 ‘Hush Puppies’ stores and seven ‘Footin’ ones. The total store count stands at 1,265.
Bata will now explore the “asset light” franchisee model. The company is carrying out a pilot across Madhya Pradesh, Gujarat and Uttar Pradesh where 30 such stores have “been tested”.
Franchise model According to Rajeev Gopalakrishnan, MD and CEO, Bata India, experimentation with the franchise model “has seen good traction” and over the next two-three years some 200-odd franchise stores will come up.
“Franchise model can be explored for rural areas as well as in Tier-II, III and IV towns,” he said. Bata will also explore a separate range of offerings with lower price bands, in the sub-₹1,000 range, targeting rural areas.
“We have not yet decided whether to create a separate label (sub-brand) or not (for rural markets),” he added.
Bata is also planning an omni-channel presence with installation of “online kiosks” in some of major retail stores.
Online offerings According to Gopalakrishnan, the company has already launched a ‘Click and Collect’ option on its website.
“Customers can now shop for the entire range of products available online, choose any product and get it delivered to the local Bata store,” he said.
In order to prevent cannibalisation, the company has already introduced a separate portfolio of online offerings. Going forward, nearly 90 of every 100 shoe models displayed online or in stores will be exclusive to that channel.
“Currently, the exclusivity is at 50 per cent. Going forward, it will be raised to 90,” he said.
E-commerce is expected to move up from around 1.5 per cent of its total turnover to around 5 per cent over the next four years.
Gopalakrishnan further added the company had earmarked a capex of about ₹80 crore for the next few years towards modernisation of plants, retail and marketing.
Around ₹20 crore will be spent in the next two years towards modernisation of its largest unit, located at the Batanagar in West Bengal.
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