Bata India Ltd. is changing its expansion strategy. The footwear maker will launch 50-60 stores per year, compared to 100 stores earlier, and instead focus on increasing revenue per store.
Speaking to BloombergQuint, Rajeev Gopalakrishnan, the managing director & president of South Asia business for Bata India, said that the company will open fewer, but larger stores. Gopalakrishnan added that the company will focus on franchises to tap into rural and semi-urban markets.
Here are edited excerpts from the interview:
What products will the company sell in Tier-II & Tier-III cities?
Product category will depend on the city. Hush Puppies, i.e., our premium product's share will be around 15 percent to 20 percent of the total.
Why did the company change its policy to open only 50-60 stores a year?
Previously the plan was to open around 100 stores a year as the company was trying to increase its market presence, which the company did achieve. Currently, we are opening fewer stores, but larger stores which become destination stores. Wherever we see a requirement to open a storewe manage to do that. Company is now focusing to drive more revenue per store.
Why is Bata preferring to open franchise stores? How will that effect your margins?
Now as we are going into smaller towns, we have chosen the franchising model. The margin would roughly remain the same, thoughproduct portfolio might differ a bit.
Which product categories will generate more revenue for the company?
Volume growth will come from a range of products. We are looking at three categories. One is women segment, as more working women join the workforce. Second is the younger audience, which is actually going to drive footfall. And the third is the kids category.
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