Woodland Banks On Retail Expansion, Plans To Spend Rs 50-60 Crore In FY24

Footwear maker Woodland, owned by Aero Club, plans to open 25–30 outlets in the ongoing fiscal year, as shopping in stores is back and thriving.

The homegrown company, which sells its footwear mostly in the premium athleisure range for outdoors, had shut down 55–60 stores and raced to meet the pandemic-driven online demand. However, the company is now reviewing its physical expansion strategy as offline demand has made a trendy comeback, helping Woodland surpass the pre-Covid sales figure.

"Our sales were hugely impacted—from a revenue of Rs 1,200 crore in FY20, we were down to Rs 700 crore in FY21 and Rs 900 crore in FY22," according to Managing Director Harkirat Singh. "However, we have crossed the pre-pandemic topline figure in the March-ended quarter."

Singh attributed the sales recovery to a surge in travel, several marriages taking place, and the fact that offices resumed. "Holidays seem to be at the top of consumers’ spending lists, thanks to pent-up demand, and this trend is also fueling demand for our shoes," he said, adding that the company is looking to invest in store additions to meet the growing demand.

"We are looking to spend Rs 50–60 crore towards capacity expansion and store additions, roughly the 30-odd that we plan this fiscal," said Singh.

Investments towards own retail network are critical to running a very efficient retail model and driving scale in the premium footwear market, according to Motilal Oswal. "Over one-third of the market is composed of high average selling prices for footwear products, primarily catered by branded players, where investment in exclusive brand outlets is the key," it said, adding it creates a sticky customer base and superlative store economics.

Currently, Woodland has 475 exclusive outlets and 4,000 multi-brand outlets.

Buoyed by the surge in demand, Woodland is also looking to boost its product line-up in a big way for the first time since the pandemic.

"We were not very optimistic earlier, and our sales expectations were not really high because how soon demand would bounce back was always a big question," said Singh. "This is the first season in many months when the company is bullish on expansion and plans big for the season," he added.

Still, Singh remains cautious on inventory management and "doesn't plan to go overboard", fearing that instances of rising Covid cases could impact consumer spending. He, however, isn't overtly worried about inflationary pressures on demand, as Woodland, being a premium brand, has remained insulated, defying the general slowdown that is mostly hurting mass brands.

The Rs 96,000 crore footwear market in India is among the most organised, with a 30% share, according to Nuvama Institutional Equities. Initially positioned as a value purchase, shoes are now becoming a lifestyle purchase. Analysts say that demand for sports and athleisure categories is driving market growth and gradually consolidating market share.

"Athleisure has been the fastest-growing segment in footwear in India, driven by a combination of an increasing casualisation trend and a focus on fitness," said analysts at Nuvama. "Even as athleisure was a megatrend before Covid-19, the pandemic further blurred the dividing lines between work and free time, thereby making way for rising acceptance of comfortable wear in previously more formal contexts," the brokerage said.

The retail market is loosely defined around formal/dress, casual, sports and athleisure, and outdoor segments. Woodland's Singh believes that the sports segment is growing fast, but the outdoor segment is also picking up.

Woodland will continue to concentrate on metros and mini-metros when opening the new stores. "Because we don’t currently have a market in tier-3 or tier-4, we do not intend to expand to those cities. We go to the places where our dealers and distributors are already established," Singh said.

Currently, the company has the capacity to produce five million pairs of shoes a year. Additionally, it outsources its goods to other factories.

"We are not running at full capacity at the moment. Our factories are gradually going back to normal," Singh said.

The company is also doubling down on its relatively new apparel business.

"People buy more garments than they buy shoes, so there is a lot of opportunity here," said Singh. "It's an important category, and we'd like to be seen as a lifestyle brand with apparel contributing half of our sales."

Currently, footwear contributes 55% of sales, while 25% comes from apparel and the remainder from accessories.

Woodland has 18 factories located in Punjab, Noida, Uttarakhand, and other parts of the northern region. Ten of these are dedicated to footwear manufacturing, while the remaining are focused on manufacturing apparel and accessories, including backpacks, pens, wallets, socks, and more.

"We are expecting to grow our topline by 10% this fiscal," Singh said.

Despite its offline strategy, Singh said footwear as a category is suited to online shopping given the standardisation of sizes. It also makes it an attractive channel for both brands, given the reasonably higher gross margins and much lower returns. "Online helped us grow the business during the pandemic, and it continues to be an important channel for us," said Singh.

E-commerce channels used to contribute around 10% of the apparel-to-shoe brand's overall sales before the Covid-19 pandemic. Today, they contribute around 30% of total sales, said Singh. A major chunk of our online sales come from marketplaces like Amazon, Flipkart, and Myntra.

"Going forward, we expect the share of online to increase to 40%," he said.