Which Company Will Win the Footwear War in India?

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An average American owns 8 pairs of footwear.

The Japanese and Europeans own about 6 each.

Even our neighbouring Asians own about 3 each, which is the global average.

But an average Indian, as per CRISIL's research, owns just 2.

Does that mean Indians are going to start buying footwear at a feverish pace in the years ahead? Will the rise in per capita income get reflected in footwear numbers?

I would certainly not recommend betting your money on that. For, as the numbers show, India's per capita footwear consumption has not changed in years.

So then, what are the chances of Indian footwear makers experiencing exponential growth over the next few years?

How can they ride India's consumption story? And will the stocks in footwear industry continue to find takers?

Well, even if it is not the per capita consumption that is multiplying over the years, it is certainly the quality and brand of shoes that Indians are discerning about. This cannot be reflected in the volume numbers.

Industry leaders Bata and Relaxo Footwears had their own share of challenges despite being well entrenched in the Indian market.

While Bata outsources around 50% of its capacity, for Relaxo the production is almost entirely in-house. The companies faced production challenges during the pandemic.

Over the years, shopping preferences of Indian consumers have changed from price sensitive to fashion conscious.

Bata's positioning has always been of a sturdy, but low fashion quotient brand. The company's slow but steady growth over the decades has been on the back of consistency as against product innovation.

But since 2010, to keep up with competition and sustain profitability, the company adapted 'premiumisation' as its strategy for the next decade.

Bata has consciously changed the perception of its offerings with trendier and more fashionable merchandise. It even exited the value category of footwear (MRP less than Rs 200) in the plastic and rubber categories.

The premium collection for Bata (including some in-licenced brands) is Hush Puppies, Naturalizer, European Collection, Power International Range, and North Star. Bata has also added collections of casual, daily wear, sports, and outdoor categories for teenagers.

A continuous focus on the premium segment, has resulted in Bata's per pair realisation growing at a compounded rate of 4-5% over the past five years.

This has complemented the volume growth which has been in double digits in the post pandemic years.

More importantly, higher gross margins have propelled overall return ratios into a higher orbit from 14% in financial year 2018 to 23% in financial year 2024.

However, its relatively newly listed competitor, Metro Brands, which has been in the footwear retailing business for six decades, decided to focus purely on branding and licensing.

Over 70% of Metro Brands revenue comes from its private brands and the plan is to strengthen that portfolio.

While the flagship Metro brand is positioned as a family footwear store, Mochi is meant for the millennial consumer.

The company also has exclusive licenses for global brands such as Crocs and more recently FitFlop for which it has set up exclusive brand stores.

Some of its recent in-store launches such as Metro Nature Pro, Metro Merino Wool and Mochi Australian Wool are sustainable brands. While Metro Nature Pro is made from recycled PET bottles, the latter is made out of wool and doesn't contain leather.

Having fully outsourced capacities, the company is able to regionally customise its product offerings. Ones sold in the Northeast have smaller sized. Products for southern states have fewer heels. States like Punjab have products that have a lot of colour.

Yet another reason why the company has been able to localise is due to its strategy of having company-owned stores as opposed to the franchise model.

Now the differentiating factor between the two established footwear giants are profitability and economies of scale.

Owing to Metro's scale of operations and strong supplier network, the company is able to negotiate better margins with vendors and enter into arrangements with third-party brands on favourable terms.

More importantly, under most of arrangements for third-party brands, Metro is required to pay for products only once these products are sold.

Metro also operates stores based on variable cost structures in terms of lease rentals and employee expenses. This helps to contain volatility of store-level margins.

Given the underlying trend of e-commerce adoption in footwear space, Metro Brands has ramped up capabilities with separate platforms for its three umbrella brands. Besides, it is also ramping up its digital presence.

So, Metro Brands is one of the few footwear brands in India with an asset light model. This allows Metro Brands better operating margins and a leaner balance sheet as compared to Bata India.

Bata India, on the other hand, has used more traditional methods for expansion. Its extensive store network does cater to the demands of shoppers seeking trendy and fashionable footwear.

So, the company operates a wide-reaching retail network across India, comprising 1,862 COCO (company-owned and company-operated) and franchise stores.

Of course, Bata does have its own website and partnerships with major online marketplaces. Additionally, Bata boasts a robust e-commerce network capable of delivering to customers across the country.

It was also the first footwear brand to launch digital invoicing, e-pay wallets and in launching store inventory app 'Find a Pair' that helps the store in tracing the availability of the pair.

Bata has also added new experiences to its stores with 3D Holographic Units, Digital LED Screens, Jukebox innovation and QR codes for online experiences.

During the financial year 2024, Bata significantly expanded its presence by opening over 500 franchise stores, 650 Sneaker Studios, and 125 Hush Puppies stores.

The company also forged new partnerships in various marketplaces, including exclusive brand outlets (EBOs), multi-brand outlets (MBOs), and digital footprint expansion.

So, primarily Bata has aggressively reinvested in enhancing its store network to improve accessibility and customer experience. In doing so, the company continues to trail Metro Brands in both operating margins and level of debt on its books.

Now, the sharp difference in the valuations of the two stocks may trigger a valuation rerating over time.

Bata has seen a sharp correction since October 2021. Therefore, there is a possibility that the stock of gets back its P/E multiple (52x) closer to its 3-year average (68x).

Current valuation of Metro Brands (P/E of 83x) is already higher than the three-year average multiple of 87x.

However, until Bata India catches up on its digital footprint and lowers the debt on its books, investors may remain sceptical about rerating the stock closer to its top performing peer.

Check out the What are the 3 main types of stock? Factsheets for more detailed analysis of India's top footwear stocks.

Warm regards,


Tanushree Banerjee
Editor, StockSelect
What are the 3 main types of stock? Research Private Limited (formerly What are the 3 main types of stock? Agora Research Private Limited) (Research Analyst)