Growth Strategy
- Store Expansion and Optimization
- The company is focusing on placing stores at the center of its growth strategy.
- A Zero-Based Merchandising (ZBM) approach is being implemented to enhance customer experience and store efficiency.
- The franchise store count has exceeded 600, growing significantly from fewer than 100 three years ago.
- Aggressive optimization by closing unprofitable stores while planning new openings in strategic locations.
- Portfolio Expansion & Premiumization
- Focus on high-growth brands like Floatz and Power, with Floatz now contributing 8-10% of turnover in some stores.
- New launches include Floatz Dual Density technology and collaborations with Disney and Marvel.
- Power brand is seeing strong growth in Athleisure, supported by innovative designs like Easy Slide and Stamina running shoes.
- Strengthening premium brands like Hush Puppies, Northstar, and Bubblegummers, leveraging brand ambassadors such as Vir Das and Jim Sarbh.
- Inventory and Supply Chain Efficiency
- Focus on reducing inventory while improving availability, leading to higher efficiency.
- A 33% reduction in planned store ranges and a 38% reduction in SKUs to simplify inventory management.
- Leveraging technology through the High-Performance Merchandising (HPM) tool for better demand forecasting.
- Value Proposition Enhancement
- Simplifying pricing structures to make customer choices easier, particularly in the women’s footwear segment.
- Reducing the number of price points per category while maintaining competitive pricing through benchmarking.
- E-commerce & Omni-channel Growth
- Expanding the presence on quick commerce platforms like Zepto and other e-commerce marketplaces.
- Leveraging digital integration to drive footfall and improve inventory management.
Future Outlook
- Expansion of Zero-Based Merchandising (ZBM)
- The company aims to expand ZBM to at least 250 stores by March 2025, with a long-term goal of covering top-performing stores.
- Growth in Franchise and Exclusive Brand Outlets (EBOs)
- Continued expansion of Power and Floatz standalone stores to capitalize on growing demand.
- Plans to open more Hush Puppies EBOs to strengthen premium positioning.
- Strengthening Product Innovations
- More focus on Floatz, leveraging premium yet affordable footwear to drive volume and margins.
- Enhancing the Athleisure portfolio under Power with wider choices and superior technology.
- Margin and Profitability Improvements
- Focus on increasing revenue per square foot through store optimizations.
- Cost reduction initiatives in supply chain and inventory management to enhance gross margins.
- Marketing & Brand Building
- Strengthening consumer engagement with high-profile brand ambassadors and targeted marketing campaigns.
- Expanding digital marketing efforts to drive higher customer acquisition and retention.
Challenges
- Execution Delays in Zero-Based Merchandising
- Despite ambitious targets, the rollout has been slower than expected due to complexities in physical store transformations and training.
- Competitive Market Landscape
- Rising competition from both domestic and international brands in the footwear sector.
- Pressure from unorganized and value-driven footwear players affecting lower price segments.
- Consumer Demand Fluctuations
- Economic factors and inflation impacting discretionary spending, particularly in entry-level price segments.
- Managing consumer shift toward digital-first shopping behavior while maintaining strong offline presence.
- Inventory and Supply Chain Management
- Balancing high availability with reduced inventory remains a challenge.
- External factors like supply chain disruptions impacting production efficiency and stock availability.
- Profitability Constraints
- Franchise expansion, while crucial for growth, results in lower gross margins, requiring a strong focus on cost optimization.
- Higher input costs and operational expenses affecting profit margins.
Key Advancements
- Retail Store Innovations
- Implementation of ZBM has resulted in significant improvements in customer experience, faster product retrieval (from 2 minutes to 45 seconds), and better store efficiency.
- The Net Promoter Score (NPS) of revamped stores is 300 basis points higher than the rest of the network.
- Digital Transformation
- Adoption of high-performance merchandising tools for improved demand planning and stock replenishment.
- Expansion of quick commerce and e-commerce partnerships.
- Product and Brand Innovations
- Introduction of Floatz Dual Density technology for superior comfort.
- Power brand expanding with new footwear technologies and growing consumer engagement.
- Premium positioning of Hush Puppies with celebrity endorsements.
- Operational Efficiency Improvements
- Achieved the lowest inventory levels in eight quarters while improving product availability.
- Streamlined supply chain processes to enhance stock turn and reduce complexity.
- Market Expansion and Distribution Growth
- Rapid growth in franchise network to penetrate smaller towns.
- Strengthening partnerships with multi-brand outlets and quick commerce players.
Conclusion
Bata India Limited is strategically focused on driving growth through store optimizations, premiumization, digital expansion, and supply chain efficiencies. While challenges like execution delays and competitive pressures persist, the company’s strong focus on innovation, cost management, and brand building positions it well for sustained growth in the coming years.