Transcript Relaxo Footwear_Group 5_Final v2.0
Indian Footwear Industry
2 nd largest footwear producer in world The size of Indian footwear market is around 26300 crores and expected to reach Rs. 38700 crores with a CAGR of 15% by 2015 Indian footwear retail is mainly an unorganized market with around 60% market share At present, Men's contribute around 60% of footwear market against Women's share of 30% Men's market is growing at a CAGR of 10% & Women's market is growing at a much faster CAGR of 20 % More than 4000 manufacturing units in footwear(most of them are small scale-55%) The non-metro market accounts for nearly 55% of the overall footwear industry
SWOT Analysis Strengths
• High growth • Availability of labor • Large raw material base • Continuous focus on Product development and design upgradation
Weaknesses
• Less number of organized product manufacturers • • Uneconomical size of manufacturing units Poor supply chain
Opportunities
• Abundant scope/ Rising potential in the domestic market • Growing fashion consciousness • Use of IT and decision support software to reduce length of production cycles • Product diversification • Use of e-commerce in direct marketing
Threats
• Entry of multinationals • Ephemeral fashion trends • Increasing inflation is considered a threat which would increase overall input cost, as well as, conversion costs • Relaxing FDI limits in retail may bring in more international competition
Major Brands
Low cost comfortable slippers For men, women and kids Available in different shades and designs Relaxo is the largest producer of Hawaii slippers in India Price range ₹70- ₹115 “Mazbooti Bhi, Style Bhi” Relaxo’s most exclusive brand for women Also available for kids Price range ₹130- ₹360 “Fashionable and Lite”
Major Brands
Targeted towards youth Shoes, sandals and slippers Sporty looks and durable Price range ₹600- ₹2950 School Shoes Price range ₹200- ₹500
Recently Launched
Targeted towards kids
Shoes and sandals
Price range ₹400- ₹600
Leather footwear for men
Sophisticated look and comfort
Price range ₹800- ₹3000
Promotions
• Signed Salman Khan for “HAWAII”, Katrina Kaif for “FLITE” and then Akshay Kumar for “SPARX” • Relaxo has experienced a record-breaking growth rate of 4800% within the last 10 years • The cost on promotion went up to 5507.62 lakhs in 2012-13 from 2961.77 lakhs in 2011 2012
Advt & Publicity Cost (Rs. Lakhs.)
Advt & Publicity Cost 5507,62 2084,83 2482,38 2961,77 2010 2011 2012 2013
Online Presence
Has a Facebook page https://www.facebook.com/r elaxofootwears
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Approx 125,000 likes
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Showcases new products with price and offers, if launched
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Advertisement done to attract targeted customers
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Reviews help customers in their discretion
Online Store
Has own online shopping portal as http://www.shopatrelaxo.com/
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Online sales in footwear industry accounts for approx. 8 % of sales
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Properly segmented (For
him, For her, For Junior)
Good distribution network. Present even in smaller villages
Sales 10%
Multi-brand retail Self-owned shops
90%
Most of their business (~90%) comes through distributors with excellent terms Aggressive ground presence with 150 exclusive company owned retail stores and 50 more opened in FY13
Retail Chain
Company-owned stores, 'Relaxo Retail Shoppe', are more from image building exercises and helps the dealer/retailer network Company relies more on distributor-retailer network for sales Besides it sells footwear by means of e-commerce operations www.shopatrelaxo.com
Stores under operation Revenue Per Store FY 12
149 0.40 Cr
FY 11
127 -
FY 10
100 -
FY 09
79 -
FY 08
60 0.26 Cr
Differentiation
Relaxo footwear has the following differentiating advantage over the competition: Relaxo consistently lives by and upheld its quality and customer satisfaction Produced state of the art footwear at very low cost price Caters to the demand of the middle income groups without compromising on quality
Segmentation
The entire market can be segmented on the basis of Age, Gender and Price
Age Gender Price
Kids Youth Adults Male Low(<300) Female Medium(300-2000) High(>2000)
Targeting
Based on the Segmentation following Brands of Relaxo Footwear target the segments
Age Kids Brand
Hi-Fashion Kids, Flite Kids, Schoolmate
Gender Male Brand
Hawaii, Sparx Youth Sparx, Elena, Flite
Adults
Hawaii, Flite, Casualz, Sparx, Boston
Female
Flite, Mary Jane
Price Low (<300) Medium (300-2000) Brand
Schoolmate, Hawaii Sparx, Flite, Casualz, Boston High (>2000) Sparx
Positioning
Relaxo Footwear tries to cater to the demand of all the consumer bases and hence it has tried to position in all the segments through various brands It positions its brand Hawaii and Schoolmate as a value for money product Also its Sparx range go footwear is perceived as a high quality, durable and value for money product Flite and Elena are considered to be fashionable, light and comfortable by the Women customers
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Financials
India is the world's second largest footwear producing country Per capita footwear consumption is 2.5 pairs per year in 2012 Size of Indian footwear market is around 26300 crores and expected to reach 38700 crores with a CAGR of 15% by 2015
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Financials
At present, Men's contribute around 60% of footwear market against Women's share of 30%.
• Indian footwear retail is mainly an unorganized market with around 60% market share.
• The size of the organised sector which was around 7500 crores in 2010 increased to 10000 crores in 2011, growing at a CAGR of 30% every year since 2008.
• The market is expected to reach 17500 crores by 2015 growing at a CAGR of 19% p.a.
Financial Analysis
Company has sold 10.02 cr. pairs of footwear in 2012-13.
Sales turnover has reached Rs. 1004 cr.
Company has posted net profit of Rs. 44.8 cr.
Competitor Analysis
Relaxo competes with various local brands like BATA, Action, Liberty, Lakhani etc.
Bata being a major competitor in term of market share due to high reliance on outsourcing work to outsider and high asset turnover ratio.
Relaxo is meeting the competition by capacity increase (which is leading to high asset turnover ratio) and focusing more on non hawaii chappal business and is getting focused to urban market.
It is largest producer of hawaii chappal in north India.
The company has recently appointed Accenture to advice on the business strategies and systems in order to enhance its marketability and reach to the consumers BHARTIYA 6% CREW B.O.S
6% LIBERTY 8% MIRZA INTL 14% SREELEATHERS 1% RELAXO 23% BATA 42% BATA RELAXO SREELEATHERS MIRZA INTL LIBERTY BHARTIYA CREW B.O.S
Comparison with Competitors
Company
Bata India Relaxo Footwear Sreeleathers Mirza Intl Liberty Shoes Bhartiya Inter
Market Cap.
Sales
6,138.80 1,842.45
1,407.74 1,009.83
749.62
247.99
53.46
634.13
Net Profit
171.6
44.81
6.89
43.44
Total Assets
700.33
419.32
181.07
405.69
203.54
180.78
339.11
247.3
7.17
8.3
257.63
233.82
Amounts in Rs. crore
Marketing Objectives
Try to match or beat Bata to become No.1 player in Indian Market.
Try to influence people to have different set of footwear for each purpose rather than a single pair for all occasions Focus on selling Good Quality shoes at Affordable Prices Shift focus from just North India to expansion across all parts of India – strengthen distribution network Increase sales through Stronger distribution network Expansion in Foreign Markets like Africa Communication of Product Benefits compared to unbranded footwear Better variety and design of products
Hawaii King
Relaxo is the largest manufacturer of hawaii chappals in India It has a huge market in rural areas Price in the range of Rs 70- 100 Cheap and very robust
Introduction of Safari Range of Sandals
Relaxo should enter into low cost sandal market Sandals are also a hit in the rural areas Market dominated by local players Relaxo being a trusted brand has huge growth potential Easy to wear Complete Support Better grip over any surface Less strain on feet
Segmentation Targeting Positioning Urban • Design • High quality Semi Urban and Rural • Durable • Strong • Low price • High quality Niche • Latest trend • Design • High quality
Segmentation Targeting Positioning Relaxo has already targeted the urban segment with its SPARX brand of sandals 70% of the Indians live in rural areas The target customers are poor and middle class people living in rural areas There is very high brand loyalty in rural areas
Segmentation Targeting Positioning Points of difference: performance(durability) high strength, use in any weather and cheap Points of parity: easy to wear and use Brand mantra: “Majbuti bhi, Style bhi” The main means of differentiation is by a.
b.
Channel differentiation: Effective and Efficient distribution channel Image differentiation
Marketing Mix
Product
Colours black & brown Design will cover most of the feet Available in standard sizes Warranty period of 3-6 months
Price
Rural market is very price sensitive market The price should be maintained under Rs.250
Due to large scale of production and good distribution system these prices can be easily targeted
Promotion
Posters of Brand ambassador Salman Khan with the sandals to be put at easily visible areas TV and Radio commercials Special promotional events during festivals Active promotion during school events harvesting season
Place
Using its strong supply chain network of hawaii chappals for supplying sandals Training and motivating channel members Avoiding channel conflict Make them available at all major footwear stores in this areas
Schoolmate
Schoolmate is the children’s shoes brand ranging from Rs 200 – Rs 500 It includes school uniform shoes for boys and girls White tennis shoes for children are also a part of this brand The focus of Schoolmate is to provide comfortable shoes for the tender feet of children
Suggestions
Target the semi-urban markets
Product
Sturdier shoes with more durable soles to suit the semi-urban environment
Promotion
Hoardings, TV and radio commercials “Har Student Ka Dost”
Place
Retail outlets in the vicinity of all schools will sell Schoolmate shoes
Price
Keeping the price at Rs 100 – Rs 200 to penetrate the semi-urban market Bulk Discount to Schools
Boston
Relaxo brand that includes formal leather shoes, loafers, sandals and party wears Lesser promoted brand of Relaxo High value product targeted to the middle and higher income groups Has wide variety of products, a type for each occasion
Boston – Marketing Plan
Increase awareness among the target audience by using promotional activities Price – Rs. 700-2500 Positioning - “A shoe for every occasion” Promotion - Advertisement showing Salman Khan starting day in office in formals, evening meeting with friends in Loafers and end day in Party Shoes at a party. Place – Tier 1 and Tier 2 cities
Mary-Jane DSTP
Segmentation and Targeting
Age group (21 to 45 years) Location (Tier 1 and Tier 2 cities) Income levels (middle and upper class) Occupation (working women and housewives) Professional women – shoes for workplace and leisure Housewives - fashionable but more casual shoes Target women who buy unbranded footwear from street shops
Differentiation
Look and Feel of a designer brand at lower price Branded Footwear with emphasis on quality and durability
Positioning
Every woman’s choice A shoe for every occasion
Marketing Mix
Product
Unmatched, extensive selection of different shoes Accessibility Professional customer service Competitive pricing
Place
Retail stores Factory outlet stores Online/E-Commerce
Price
Price range Rs. 700 – 2500
Promotion
Radio, TV, Print Advertisements Social Networking Websites Women Fashion Magazines Create Radio Jingles for spreading awareness of the product Association with a celebrity – Katrina Kaif
Suggestions
Retail commissions are very low, so many shops do not want sell Relaxo footwear.
Should focus more on Sparx and Flite brands which are more preferred products by the distributors .
Focus more on fastest selling SKUs Spend higher on commissions and offer better credit terms to retailers Over-concentration in North India markets - RFL sells almost 65% of its products in the north Indian market thereby creating a very high dependence on the states of north India wile leaving a large market untapped.
Company should expand distributor–retailer network to South, East and West India
Over 50% of the retail shops have managed to break even while the remaining continues to make losses.
Should pursue a good mix strategy of few self-owned and franchisee models, to minimize risk and share risk with partners Focus on increasing presence in multi-brand retail outlets that has presence in malls and high street stores Should expand its self owned stores throughout India.
Stores should focus more on spreading brand awareness in addition to improving sales In order to shift focus to parts other than North India, increase the sales force to cover all regions of India. 3rd party field force can be used for faster implementation of sales expansion strategy Improve exports in countries in Europe, Africa and other Asian countries
Drive Online Sales
Online shoe shopping currently accounts for about 8% of the footwear sales in India and is expected to reach about 20% by 2015. Relaxo’s online sales are limited to shopatrelaxo.com.
Majority of the online shoe shoppers buy from Myntra.com, Jabong.com, Yebhi.com, etc. that sell shoes from various brands.
Relaxo Footwear should thus also be available on these websites which would improve visibility and drive sales.
Relax Shoppe are only present in 9 states and thus online presence will boost sales from areas currently out of reach.