Its debut in footwear retail business through Tashi didn't work out as planned; in fact, Tata International (TIL) exited the business in August this year and shut down the remaining six stores of the chain within three years of the launch. The Noel Tata-led company is now changing tack and venturing into a branding and distribution model for footwear.
The move fits in well with the larger strategic change in TIL. With businesses in steel trading, agricultural trading, auto distribution and leather product manufacturing, the firm is moving out of retail to focus on manufacturing, distribution and trading.
Tata has drawn out ambitious plans for the estimated Rs 25,000 crore footwear industry in India. Beginning with Aerosoles, a women's footwear brand, the company has lined up three men's brands - Aristos, S.C.T and Arin - and a wide range of children's footwear collection. All of these will be launched between April and June this year.
"We want to go to the higher level in the value chain by targeting the domestic footwear market. It means from just a supplier, we will go to retail outlets with our own products," says N Mohan, assistant vice president and business head for footwear global business at TIL.
The company has Aerosoles licence in Europe and it owns it. TIL has distribution licence for the product in 16 countries across Europe and has its own and franchisee stores. The 25-year Aerosoles is one of the leading and niche brands in US and available in China, Hong Kong, Philippines, Thailand, Israel and others. Soon it will be launched in West Asia and Africa, for which also TIL has got rights. Across the globe, currently around 20 million pairs of Aerosoles are sold with a sales turnover of around $500-600 million.
"We have the knowhow, understand the brand and the Indian market is also ready to accept it," says Mohan, adding men's footwear accounts for 64 per cent of the market. "We feel we have got an excellent opportunity to penetrate the women's footwear market," he said.
To start with, the brand will be available in select cities and stores, including West Side, Regal, Mochi and Metro. The price range would be Rs 1,800-3,000.
"We are hoping to sell around half a million pairs of Aerosoles in India in the next three years," says Mohan.
In the past, the price acceptance factor was a big issue in the footwear trade, but today things have changed as more women are going out for work. Asked about the emerging competition from a few domestic brands like Woodlands and Red Tape and international brands like Hush Puppies, Dr.Scholl's, etc, Mohan says, "Our USP to take on these brands will be flexibility, comfort, light weight and quality".
In June 2014, the company is planning to launch 'Aristos', a premium elegant and dress casuals, which are manufactured at the Chennai facility. It caters to corporate customers for their formal social gatherings. Aristos will be followed by 'S.C.T' (Style Comfort Technology), built in technologies that highlights the comfort aspect of a footwear and then 'Arin', which are targeted at the casual outing space.
Mohan says the company will initially look at multi-branded outlets as that's the model that have been adopted in China and European markets. In Europe, for example, most brands sell through a retailer or shop-in-shop, while having their own standalone stores just to give an experience of the products. "After two years, we will look at setting up such standalone experience shops," says Mohan.
That's because the company first needs to understand the frequent change in the industry. "We are new, we might have dealt with brands around the world but things are different in every part. So we need to have that understanding," says Mohan.
Of the leather and leather products, footwear brings the largest chunk of turnover, which was Rs 100 crore five years back and is expected to reach Rs 700 crore by the end of March 2014. The company has been manufacturing premium leather shoes and was exporting to global brands and leading retailers including Marks & Spencer, Gabor, Aerosoles, Zara, Wolverine, Mango and many others globally. The company has seven units in Tamil Nadu and one in Madhya Pradesh, besides one in Portugal and China.
On the manufacturing side, Tata's target is to become the first 10 million pairs manufacturer in the next three years and to reach 20 million pairs by 2020. The company is in the process of expanding to 10 million capacity by 2016-17 from the current six million pairs.
At the end of March 2014, the leather and leather products business of TIL is expected to clock a turnover of around Rs 1,100 crore as compared to Rs 920 crore in 2012-13. The revenue includes Rs 700 crore (Rs 575 crore last year) from footwear, around Rs 400 crore (Rs 300 crore) from finished leather and Rs 50 crore (Rs 45 crore) from leather goods. In three years, footwear will be increased to Rs 1,300 crore, finished leather Rs 500 crore and garments Rs 100 crore.