Foot Locker Inks Deal With Metro Brands, Nykaa To Enter Indian Market
The sneaker segment is experiencing rapid growth in India, the company said.
Foot Locker Inc., the New York-headquartered sneaker and sportswear retailer, is set to enter the Indian market in 2024, in partnership with local peer Metro Brands Ltd. and cosmetics-to-fashion retailer Nykaa.
Under the terms of the licencing agreements, Metro Brands will have the exclusive rights to own and operate Foot Locker stores within India and to sell authorised merchandise in Foot Locker stores, according to a company release on Wednesday.
Nykaa Fashion will serve as the exclusive e-commerce partner, operate Foot Locker's India website, and retail authorised merchandise on its branded shop on Nykaa’s existing e-commerce platforms.
The cult U.S. sneaker brand operates the eponymous Foot Locker chain of athletic footwear retail outlets in 28 countries, including in Asia, Europe, Australia and New Zealand.
Its portfolio of brands also includes Kids Foot Locker, Champs Sports, WSS, and atmos. Altogether, it operates 2,714 retail outlets, as of January this year. In the Middle East and Asia, the retailer has a franchised store presence, according to its website. The company also retails global brands such as Nike, Jordan, Adidas and Puma.
The flagship Foot Locker chain is also famous for its employees' uniforms, that resemble those of referees.
"The passion for sneakers in this market [India] is tremendous, and we believe that with the combined omnichannel strength of our partners, we are uniquely positioned to appeal to the rapidly growing Indian market," said Mary Dillon, president and chief executive officer at Foot Locker Inc.
According to its regulatory filing with the Securities and Exchange Commission, it is heavily dependent on Nike for merchandise supplies.
"Approximately 65% of all merchandise purchased in 2022 was purchased from one supplier—Nike," it said. Nike’s bigger push on direct sales has been hurting Foot Locker. Like many global retailers, Foot Locker's sales have also been hit as inflation-wary consumers prioritise spending on essentials over discretionary goods. But its potential growth in India might stay resilient amid tepid global growth.
Research firm Statista estimates the volume of the sneaker segment in India to reach 66 million pairs by 2028. The segment is expected to exhibit volume growth of 2% in 2024. The sneaker segment, according to Statista, is experiencing rapid growth in the country with consumers seeking unique designs that blend traditional Indian elements with modern trends.
Both Metro Brands and Nykaa Fashion seek to capitalise on India’s growing sneaker demand and fashion industry.
The partnership is a big step in that direction, according to Nissan Joseph, chief executive officer, Metro Brands. "It will also help us pave the way for revolutionising the sneaker market, enhancing the retail experience, and meeting the dynamic needs of our customers."
In a post-earnings call last month, Joseph had told investors that he expects the slowdown—that has afflicted its sales over the last year or so—to be a temporary one, rather than related to the overall economy.
“(What) We're seeing is probably a temporary headwind of timing more than it is an economic headwind that we're facing. Overall, we feel the consumers in our segment remain resilient to the business,” he said. He remained confident that the festivals and weddings in the third quarter would bring some respite.
The retailer recently launched its 800th store. It owns and operates an array of local labels—including Metro Shoes and Mochi, and international brands like Crocs, FitFlop and Fila.
Omnichannel retailer Nykaa Fashion—a direct subsidiary of parent FSN E-commerce Ventures Ltd.—is looking to create an edge in fashion akin to its beauty business, with its exclusive tie-ups with international brands.
"With our partnership with Foot Locker, we are excited to bring the world's best sneaker brands and styles to feed an exploding sneaker culture in India," said Adwaita Nayar, chief executive officer at Nykaa Fashion, in a statement. "All of this with the same ease of discovery, platform comfort and seamlessness that has become synonymous with Nykaa Fashion and is expected by our discerning base of customers.”
Nykaa Fashion, through its Global Store, offers over 600 brands such as Revolve, NA-KD, Cider, among others. Nykaa says its per capita consumption for fashion segment is $130 as compared with the industry average of $54.
Jefferies expects Nykaa to remain in a hyper growth phase in the medium-term, with online penetration in fashion ramping up. While the overall e-commerce penetration in India is at 19%, the share of fashion is lower, presenting significant opportunities for growth, the brokerage said.