Relaxo in retail push to grow topline

People shop for shoes at a roadside store at a market in Mumbai September 14, 2012. India opened its supermarkets to foreign direct investment and allowed foreign airlines to invest in local carriers in a spate of reform initiatives on Friday, a day after New Delhi raised the price of heavily subsidised diesel. REUTERS/Danish Siddiqui

Relaxo Footwears, the largest footwear maker in India by volume, will add 50 outlets to its network this year as it looks for a retail push to inch closer to Bata, which is bigger in terms of revenues.

"At present, we have 300 outlets, most of them in the northern and eastern markets," said Rajeev Bhatia, Assistant Vice President, Marketing.

The exclusive outlets contributed Rs 170 crore to the company's topline of Rs 1,956 crore in the 2018 financial year. "We expect the share to increase to Rs 200 crore this year," Bhatia added.

Bata ended last year with a revenue of Rs 2,629 crore.

Relaxo had opened an equal number of outlets last year, with seven of them based on the franchisee model. Bhatia said the company hasn't decided on the franchisee share in this year's retail expansion.

The retail push is a tweak in its business model, which has traditionally banked on the multi-brand outlets. Relaxo has a presence in over 50,000 multi-brand outlets across the country.

Apart from the popular rubber slippers under the Relaxo brand, the Delhi-based company also sells under Sparx, Flite and Bahamas brands. The company specialises in non-leather products, unlike Bata.

The Bata model

Bata has cemented its leadership in the market thanks to its extensive network of 1,500 retail outlets. It has now drawn up plans to add at least 80 stores a year after identifying 435 tier-2 and tier-3 cities for its next stage of growth.

While Relaxo's network is much smaller, the company benefits from its low-cost distribution model, because of which it sells 60 lakh pairs a day.

Through the multi-brand outlets, the company focuses on the "belly of the market." Reports say 62 percent of the Rs 55,000 crore footwear market in India operates through the multi-brand outlets.

"We address the largest part of the market and not the premium end. Ours are products that give value proposition to customers," said Bhatia. The company competes mostly with unorganised players, of which there are 15,000 in the non-leather segment.

Sparx, which sells sports shoes and sandals, is the biggest brand in the company with sales of Rs 700 crore in FY2018. Relaxo slippers did a business of Rs 500 crore, Flite of Rs 600 crore and the Bahamas sold footwear worth Rs 200 crore.

"India is the third largest consumer of footwear in the world, after China and the US. But our per capita consumption at 1.6 pairs is very low. The global average is three pairs. Thus, we will continue to see growth," said Bhatia.

The company is also planning to focus on the exports market and has opened an office in Dubai. "We want to explore Africa and Middle East market," said Bhatia.