Skechers aims to be 2nd largest sportswear brand in India
Skechers is aiming to become the second largest sportswear brand in India in the next three to five years. Skechers, which sells mostly casual and sports footwear in India, is going to ramp up its presence on the accessories and apparel front.
“Our socks are already doing very well in India. We will launch bags in a month. We are testing apparel; we will launch athlesiure wear in the spring-summer of 2019,” Rahul Vira, CEO, Skechers South Asia, was quoted.
India’s sportswear market, dominated by brands such as Puma and Adidas, is projected to see 12% compounded annual growth with sales expected to touch $8 billion. A recent report by Euromonitor said the Indian sportswear market grew 22% from 2015 to 2016, surpassing the global growth in the segment which stood at 7%.
Skechers will also focus on women’s and kids’ segments. Women’s shoes contribute around 46% of the total sales in India now.
Skechers was launched in India around six years ago. Since then, the company has opened 170 franchise stores across the country, and plans to take that figure to 250 stores by December, 2018.
The other area of focus, kids’ shoes, was launched in India around three years ago, and the company says the growth in this segment has been staggering. “The contribution of kids’ shoes to total sales is in single digits now, but in six months to a year, it will hit double digits because the growth we are seeing is exponential,” said Vira, adding that the brand’s overall growth in India has been around 6070% year-on-year.
An average pair of kids’ shoes at Skechers is priced at $50-60 (around ` 3,400-`4,200), which is slightly on the expensive side. However, Bernstein is of the view that the Indian consumer is willing to shell out big bucks for quality products. “I find in India that the consumer is very sophisticated. If you put a quality product in front of people they appreciate that; and I respect that,” he said.
The company is now focusing on offering innovative designs in order to tap into a more premium segment with higher price points. Latest designs include the “Luminators”, which uses fibre optics to light up the top of the shoe. Skechers recently launched a special collection in collaboration with the Japanese manga and anime series One Piece.
With India becoming a crucial market for the brand on a global level, the company also said it is looking to set up manufacturing capabilities. “We are evaluating setting up a manufacturing unit in India. It is not on the cards in the short term, we are waiting for the right time to execute it,” Vira said.
As the massive $16 billion deal between Flipkart and Walmart nears closure, rival Amazon is ensuring that it keeps up the fast pace of investments in its India business.
Amazon Seller Services, the marketplace unit of the US online retail giant in India, received an infusion of ` 27 billion earlier this month.
The company also invested a further ` 1 billion in Amazon Retail India, the food retail unit of the company which will drive its grocery category. This investment in Amazon’s marketplace unit comes just three months after it infused ` 26 billion into the unit, and takes the total investment the company has made in its marketplace business close to $3.7 billion. Jeff Bezos, CEO of Amazon, has committed to invest $5.5 billion into the India business and that figure is approaching quickly.
Amazon says over half of the capital it has invested in India so far has gone towards building infrastructure, including investments in technology, warehousing, logistics, etc. While the company does not admit it, a lot of investment has also gone into discounting products on its platform to attract more buyers.
In the past one year, Amazon has also made significant investments in its loyalty programme Prime, which not only call for more money to be spent for logistics to enable faster deliveries, but also for the creation of original content that goes up on Prime Video. The US firm had said that it would invest as much as $300 million to create India-specific shows over the next few years.
Apart from its core e-commerce marketplace, Amazon is also investing heavily in its cloud computing, payments and even its IT services divisions in India. Counting the money that has come into these businesses, Amazon’s investment in India ticks over $4 billion according to industry analysts.
Moreover, Amazon’s investments in India are expected to steadily increase over the next few years. In the first two quarters of the current financial year, Amazon has already invested ` 53 billion into its marketplace unit, compared to ` 81.5 billion it invested in the whole of the previous financial year. Traditionally, the company brings in a larger quantum of investment during the festive period of Diwali to drive its mega sale.
While the investment in India has been steadily going up, the loss the company makes in India might not show up as prominently on Amazon’s balance sheet. For the three months that ended June, Amazon reported a loss of $494 million from its international business, the third consecutive quarter-on-quarter drop, even as the company continues to ramp up its investments in India.
This drop in losses the company was making internationally was attributed to improved operating margins in Japan and Europe, effectively offsetting some of the loss the company was making in India.