Bata India to bet on franchise model for expansion in near future

In the next 2-3 years, about 80-90 per cent of footwear major Bata India’s new store additions will be through the franchise route.

“There is a huge headroom and opportunity. We see almost 80-90 per cent of our new store additions in the next 2-3 years coming from franchise,” said Gunjan Shah, managing director and chief executive officer Bata India, Friday evening, during a fireside chat at the Kolkata Retail Summit (KRS) 2021 organised by The Retailers Association of India (RAI).

The Bata brand, he said, cuts across the length and breadth of the country. “If that is the equity, there is potential for expansion and therefore franchise thereof is also significant,” said Shah.

“We are looking for entrepreneurs, we are looking for people who believe in the Bata promise as well as the brand. And we are getting a fantastic response. We are looking at a significant expansion and while we continue to have our own stores and expand them, we will have a significant partnership with local entrepreneurs and retailers to expand franchise,” added Shah.

Bata, while announcing its results for Q2FY22, said that it continued with its retail expansion drive in tier 3-5 cities through franchise route, taking the overall tally to 270+ as on date.

During the discussion, Shah pointed out that rural was urbanizing very fast. “More importantly, their aspirations are dramatically going up. They are getting exposed to digital mediums, disposable incomes are going up, and therefore, their aspiration for brands and products like Bata are going up. In addition, the equity of Bata is already there,” he said.

Rural and smaller towns gained traction during the pandemic for most companies and across categories. But Shah pointed out that the festive season was working well for Bata and consumer confidence was returning in metro cities as well.

“In the last few months, especially since the festive season started, we are seeing the metros and malls coming back,” he added.

With vaccination, the confidence of the consumers was coming back and Shah said, “Hopefully, we will keep firing both the engines.”

Bata, in Q2FY22 had clocked in a profit after tax (PAT) of Rs 37.1 crore compared to a loss of Rs 44.3 crore in the year-ago period. Revenue from operations for the quarter had stood at Rs 614 crore that the company said showcased “healthy and consistent” recovery since opening of lockdown. It was at Rs 368 crore a year back.

Explaining how the company navigated through the pandemic, Shah said, “There were avenues of sales that had stopped. But simultaneously there were several avenues that opened up,” he said.

While the company worked on increasing the digital interface with the customers, it also prepared for their return in stores.

“Simultaneously, we were getting ready for a time when the wave will be out of the way and consumers will want to walk back into the store. So, we worked upon getting stores in the right location and getting refurbishment done where required,” said Shah.

The basic theme that Bata followed through the pandemic, Shah said, was dealing with empathy as far as employees were concerned while maintaining agility and preparedness.