Skech­ers aims to be 2nd largest sports­wear brand in In­dia

Shoes & Accessories - - Updates I 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.

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