Summary

  • Bata India is the largest retailer and leading manufacturer of footwear in India
  • Bata India has a strong pan-India retail presence with 1526 stores across cities, including franchisee stores
  • Bata India will focus on expansion in small towns and online channels

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Company Overview

Bata India (NSE:BATAINDIA) is the largest retailer and leading manufacturer of footwear in India and is a part of the Bata Shoe Organization.1

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 Bata’s operation - now called the Bata. In the years that followed, the overall site was doubled in area. This township is popularly known as Batanagar. It was also the first manufacturing facility in the Indian shoe industry to receive the ISO: 9001 certification.

The Company went public in 1973 when it changed its name to Bata India Limited. Today, Bata India has established itself as India’s largest footwear retailer. Its retail network of over 1375 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

Bata’s 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.

Besides owned stores, Bata brand is also available through a large network of dealers. Bata, the name, stands synonymous with quality and has been the trustworthy footwear partner for the Indian consumers. As a brand, Bata is aspirational, vibrant, and sought-after. The company's mix of new products, innovative brand experiences, and impactful brand positioning are sustaining its image as a bold and young-at-heart brand. Commitment to quality, combined with an excellent mix of design, comfort, and affordability, makes Bata the No. 1 footwear brand in India. Taking global, regional and local fashion trends into account, the company endeavour to provide consumers with a fresh new collection, every season.

Bata is the world’s leading shoemaker by volume, designing stylish and comfortable footwear at surprisingly affordable prices. Today, Bata remains a family business, which serves over one million customers a day in its 5,300 stores, and producing locally in its 23 Bata-owned manufacturing facilities across five continents. Even though it is a global company headquartered in Switzerland, the brand caters to the unique local needs of customers in countries across Europe, Africa, Asia & Latin America.

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Brands

  • BATA2
  • COMFIT
  • SCHOLL
  • FOOTIN
  • DISNEY
  • BUBBLEGUMMERS
  • NORTH STAR
  • POWER
  • CAT
  • WEINBRENNER
  • BATA INDUSTRIALS
  • HUSH PUPPIES
  • MARIE CLAIRE
  • NATURALIZER
  • REDLABEL
  • HUSH PUPPIES

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Industry structure and developments

India is the second-largest producer of footwear and third-largest footwear consumer globally. Economists predicted India to become a favourable market for fashion retailers on the back of a large young adult consumer base and increasing disposable income. Luxury retailing is also gaining importance in India. This includes fragrances, gourmet retailing, accessories and jewellery among many others. This momentum of the footwear market in India, on the back of growing demand for trendy, fancy and comfortable footwear among the youth of the Country, however, has been disturbed by the massive shock of the coronavirus pandemic and the shutdown measures to contain it. 3

Global economy has plunged by a severe contraction and Global growth is projected at 6% in 2021, moderating to 4.4% in 2022. Except stores selling essential commodities, most other stores were shut down across the Country for nearly two months in the year under review and were operating under checkered conditions for the rest of the year. Even today, partial lockdowns or restrictive conditions continue to impact retail store operations. The pandemic also led to non-reopening of Schools which impacted sales of school shoes.

Even with the aggressive Covid-vaccination drives, the consumer sentiment would take some time to revive. Though there is a shift of focus to e-commerce, it currently accounts for more than 4% of the Country’s overall food and grocery, fashion, consumer electronics retail trade.

The industry is witnessing an upward revision and anticipates a vaccine-powered recovery in the second half of 2021-22, however, there may remain a subdued economic activity in non-essential retail business. High uncertainty surrounds this outlook, due to the pandemic, to the speed of vaccine-powered normalization and the evolution of financial conditions

Under the “New Normal” as India Inc. shifted to “Work From Home” and with socialising becoming a rare occasion, shoppers are purchasing casual and comfortable open footwear.

The silver lining, however, is the increasing awareness of health, thereby driving the demand for sports footwear. The retail footwear business is expected to improve gradually as economic activity is improving.

The retail sector in India is emerging as one of the largest sectors in the economy. It contributes 10% to GDP and 8% to employment. The total market size of Indian retail industry stood at US$ 950 billion in 2018 and is forecast to reach US$ 1,200 billion by 2021 and US$ 1,750 billion by 2026.

India ranked 73rd in the United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index 2019. Online penetration of retail is expected to reach 10.7% by 2024 versus 4.7% in 2019. The government’s focus to improve digital infrastructure in Tier 2 and Tier 3 markets would be favourable to the sector.

Business Overview

Retail Business

India experienced one of the strictest Lockdown across the world and all its stores, factories & offices were closed from March end till May 2020. In line with its ethos and values, its teams on ground displayed tremendous agility, ingenuity, grit, and resilience which helped it chart out the road for recovery. The company went through a phased strategy of survive, revive, revitalize & thrive in financial year under review in order to face the challenges of the pandemic and come out of it.

The company also focused on controlling its costs related to retail store expenses and generated more than Rs. 110 crores of savings by negotiating rents across 1000+ stores & closing 75 unviable stores.

The company was quick to develop new business channels in line with changing consumer behavior. For Digital Adopters and Digital Novices, the company rolled out innovative solutions like Bata ChatShop, a WhatsApp shopping, Bata Store on Wheels, and Bata Home Delivery, which enabled easier & safe shopping experience for its customers even as the pandemic raged on. The sales though digitally enabled channels grew 3 times in the last one year, contributing 15% of its total sales which is considered one of the best in the industry. Today 60% of marketplaces orders are delivered via its stores, powered by omnichannel technologies.

The company opened a total of 64 franchise stores after the pandemic struck, taking the total to 82 new Red 2.0 stores in the year. The company also started its association with 3 Departmental Store Chains & started Bata Shop in Shops at 38 location in order to attract incremental customer base of them.

Digital Multi-Channel Business

E-commerce business maintained steady growth during the year under review. The company sold more than 2.4 Million pairs of footwear through online channels and achieved a turnover of Rs. 1522 Million. Launch of Endless Aisle, that connected retail store inventory to online website with technical integration, has multiplied the business potential by manifold. Bata India now ships more than 96% of orders received from Bata.in through its stores. Tools like WMS & Marketplace integration were put in place to scale up its marketplace operations. Advancing to Auto Replenishment lets the online stocks replenished for e-commerce the way retail stores are replenished with inventory on a regular basis.

In addition, Launch of Bata Home Delivery Services in over 1200 stores allows store staff to place orders on customer’s behalf if the article of their choice is not available in the store and retain customers, who otherwise would have walked out of its stores due to non-availability of size and color.

B2B business has been steady on Amazon and Flipkart. Focus has been on improving secondary sales on these platforms which in turn improves primary business. Rigorous marketing campaigns including Cost per Click (CPC) and Cost per Million Impressions (CPM) were launched while diligently participating in brand specific and category specific events for increased Brand visibility. Tech integrations like Return and Exchange Functionality improved customer experience on Bata.in, thus reducing customer complaints. Thus, the company has also focused on Technology upgradation to make internal processes robust and strengthen the serviceability

Hush Puppies

In Hush Puppies, the company continued its approach of communicating about technology, with introduction of new product technologies like Bounce Max, Bounce and Bounce Plus. Given the pandemic spanning through the year, the company focused on essentials in addition to consistent communication around bounce technology, with focus on reactivating brand social media assets. Campaigns were promoted through various touch points covering Retail, activations, digital and PR.

Hush Puppies has been the go-to brand for formal wear but with the new bounce technology collection, it introduced a large variety in causal styles and a vibrant range of colors. The collection is a perfect addition to wardrobe with a variety of styles that can be paired up for modern work attires to on-the-go ensembles to trendy weekend looks.

Comfort has been Hush Puppies’ DNA and with Bounce Plus, the brand is taking the comfort quotient a notch higher. For customers looking for footwear having performance features of today, Bounce Plus collection brings casual styles infused with technology to keep up with consumers’ hustling lifestyle.

Naturalizer

American shoe brand Naturalizer has been a pioneer in designing shoes specifically suited to the contours of women’s feet since 1927. After successfully launching its exclusive stores in multiple international cities like New York, Chicago, Toronto & Dubai, Naturalizer has launched its flagship store in India at DLF Promenade Mall, New Delhi and a second store at DLF Avenue, Saket. The company's further expansion of EBO’s took a pause given the pandemic situation. Designed in New York and adorned by working women, ‘the shoe with the beautiful fit’ has been retailing exclusively in India at 50 Bata stores across 4 cities for almost a decade.

The Naturalizer collection serves well to the modern-day women for all day comfort as the patented N5 comfort technology with unmatched ease. The collection flaunts countless styles ranging from pumps, mules, chunky soles and heels. The brand’s design philosophy resonates with modern aesthetics combined with textures from their own archives and finds ways to incorporate them in the new collections.

Non-Retail Business

The company’s non-retail business division comprises of Multi-Brand Outlets, Key Accounts, industrial and institutional business divisions and exports. The company improved its Customer Service by streamlining supply chain, enhanced Quality of products across categories and trained the team to handle market challenges. The company's focus on few Categories gave it very good traction with Consumer inspite of COVID-19. The business revenue bounced back post Covid and started growing in last 2 quarters of the financial year under review. Bata availability in MBO is now in 800+ towns and about 400 enterprises provide Bata shoes to their Employee/Customers through its B2B Division.

Bata Club

The Company’s loyalty programme “Bata Club” has increased over the years and currently it has over 25 Million members. The programme engages with its members continuously and rewards them with special benefits to drive repeat purchase, conversion and footfalls. The Company has also started doing various innovative technology-driven promotions to leverage big festivals and events and further increase engagement from its member base.

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Financial Highlights

The operations and consequential financial performance of the Company remained impacted throughout the year under review due to the Covid-19 pandemic. During the financial year ended March 31, 2021, the company achieved a turnover of Rs. 17072.99 Million as compared to the turnover of Rs. 30,534.51 Million recorded during the previous financial year ended March 31, 2020. Revenue from operations of the company was lower by 44% mainly on account of lower sales due to disruptions owing to the pandemic resulting in continued slowdown of the economy including decline in consumption of non-essential goods. The company reports a loss of 902.80 Million for the financial year ended March 31, 2021 as against the Net Profit of Rs. 3,269.15 Million for the financial year ended March 31, 2020. The Loss after Tax for the financial year ended March 31, 2021 reflects a degrowth of 128% over the corresponding Profit for the financial year ended March 31, 2020.

On a consolidated basis, the company reports a turnover of Rs. 17084.80 Million during the financial year ended March 31, 2021 and a consolidated Net Loss of Rs. 893.11 Million for the said financial year.

With the Covid-19 pandemic impacting people across the globe, socially and economically, the company also witnessed severe disruption in its operations, which impacted the annual performance of the company. The financial year under review began amidst nation-wide lockdowns imposed by the Central Government to contain the spread of Covid-19 and the lockdowns were followed by systematic/gradual removal of restrictions on the free movement of people by the Central and/ or the State Governments. The Country also witnessed a second wave of the pandemic beginning in the last quarter of the financial year under review.

Given the above backdrop, the company continued to be India’s leading footwear brand during the year under review by maintaining its focus on getting back on its recovery path, with improvement of sales through its retail outlets and e-commerce platforms and hyperlocal digital channels like Bata ChatShop and Bata Store-on-Wheels. The company also launched new marketing campaigns like “Kick Out 2020”, “Ready Again” collection, “Sneaker Fest” and by continuing to implement “Sweeping Angela off her Feet” strategy. With the health and hygiene of its customers and employees as the focus areas since the onset of the pandemic, the Company is striving to gain share and is also working on various cost optimisation measures.

The company is focusing on increasing its reach to Tier 3-5 cities by expanding through franchise route and is planning to open 50+ stores every year.

The company also bolstered its omni-channel home delivery offerings in 1200+ stores thereby increasing its Pan-India footprint.

The company also continues to focus on increasing its sales through Bata.in and other online marketplaces. It has a robust e-commerce network that delivers to over 1100 cities and towns across India. In addition, the company also sells its products through partners like Amazon, Myntra, Flipkart, Paytm, Tata Cliq and Ajio, amongst others.

The Distribution Business and B2B Business of the company also showed promising growth with repeat orders and new customers. Bata Products are now available in about 25000 MBOs.

Recent developments

Bata India to focus on expansion in small towns, online channels 4

Footwear major Bata India will focus on expansion in small towns and online channels as part of its efforts to save cash through enhanced productivity, cost-reduction and tight inventory management to overcome the challenges of the pandemic, according to its annual report for 2020-21.

The company has adopted 'Survive, Revive, Revitalise and Thrive' strategy and is constantly monitoring the store level performance, driving sales through online channels and cost optimisation across all functions.

"With India recovering from COVID wave 2, its priorities will revolve around safety and security of all its stakeholders...," Bata India Managing Director Rajeev Gopalakrishnan wrote in his address to shareholders.

To overcome the challenges posed by the pandemic, he said Bata India is focussing on "conserving cash by bolstering productivity across value chain and tight inventory control, driving margins via cost-reduction projects and achieving higher turnover by small-town and online channels expansion".

In 2020-21, he said the closure of malls and high street stores triggered by lockdown led to the company's sales taking a severe hit.

"As a result, it became paramount for it to employ cash-saving measures," Gopalakrishnan said adding through astute planning and cohesive collaboration, the company saved "more than Rs 100 crore on account of rent negotiations, vendor cost negotiations and consolidating office spaces".

He further said,"we also implemented 'Project Thrive' to reduce dependency on imports and shifted to local sourcing. Owing to 'Project Refuel', a product COGS (cost of goods sold) -saving initiative, the company were able to save over Rs 7 crore during (FY) 2021."

Stating that with COVID-19 infections surging in bigger metros and prolonged lockdowns, customers started looking for trusted brands, he said,"Therefore, the company continued to expand its retail network through franchise channel. The company opened a total of 64 franchise stores in smaller towns and cities, taking the total to 220 franchise stores."

The company also scaled up its presence via distribution channel, with Bata products now available in over 800 towns across 25,000 multi-brand outlets, Gopalakrishnan said adding,"The company also opened 18 new company-owned stores."

Bata India Chairman Ashwani Windlass said "the second wave shook the country even harder. Expectedly, revenues for the year remained subdued due to marked decline in demand for formal wear but the company's confidence on the path forward remains high."

On the outlook, the company said the current economic state, challenging retail environment and new waves of pandemic pose threats to businesses across all sectors.

"The countrywide lockdowns and the 'New Normal' has led to fundamental shift in customer behaviour and retail businesses in particular".

The company "is focused on 'Survive, Revive, Revitalise and Thrive' strategy and is constantly monitoring the store level performance, driving sales through online channels and cost optimisation across all functions", it added.

Bata India said it is strategically positioned to harness the present challenges, given the strength of its brand, innovation capabilities, retail foothold and growing online presence in footwear and accessories category.

References

  1. ^ https://www.bata.in/bataindia/a-20_s-179_c-42/about-us.html
  2. ^ https://www.bata.in/bataindia/topBrand.html
  3. ^ https://www.bata.in/on/demandware.static/-/Sites-bata-in-Library/default/ve8f8abf809e925a667ae41dd15f3b1cbdd122d06/Staticpagesimages/Annual%20Reports/Annual_Report_Bata_India_2021.pdf
  4. ^ https://www.moneycontrol.com/news/business/bata-india-to-focus-on-expansion-in-small-towns-online-channels-7194061.html
Tags: IN:BATAINDIA
Created by Wilton on 2020/07/07 16:29
     

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