Indian Footwear Industry 2nd largest footwear producer in world The size of Indian footwear market is around 26300 crores and expected to reach Rs. 38700 crores with a CAGR of 15% by 2015 Indian footwear retail is mainly an unorganized market with around 60% market share At present, Men's contribute around 60% of footwear market against Women's share of 30% Men's market is growing at a CAGR of 10% & Women's market is growing at a much faster CAGR of 20 % More than 4000 manufacturing units in footwear(most of them are small scale-55%) The non-metro market accounts for nearly 55% of the overall footwear industry

SWOT Analysis Strengths Weaknesses Opportunities Threats High growth Availability of labor Large raw material base Continuous focus on Product development and design upgradation Weaknesses Less number of organized product manufacturers Uneconomical size of manufacturing units Poor supply chain Opportunities Abundant scope/ Rising potential in the domestic market Growing fashion consciousness Use of IT and decision support software to reduce length of production cycles Product diversification Use of e-commerce in direct marketing Threats Entry of multinationals Ephemeral fashion trends Increasing inflation is considered a threat which would increase overall input cost, as well as, conversion costs Relaxing FDI limits in retail may bring in more international competition

Major Brands Low cost comfortable slippers For men, women and kids Available in different shades and designs Relaxo is the largest producer of Hawaii slippers in India Price range ₹70- ₹115 “Mazbooti Bhi, Style Bhi” Relaxo’s most exclusive brand for women Also available for kids Price range ₹130- ₹360 “Fashionable and Lite”

Major Brands Targeted towards youth Shoes, sandals and slippers Sporty looks and durable Price range ₹600- ₹2950 School Shoes Price range ₹200- ₹500

Recently Launched Targeted towards kids Leather footwear for men Shoes and sandals Price range ₹400- ₹600 Leather footwear for men Sophisticated look and comfort Price range ₹800- ₹3000

Promotions Signed Salman Khan for “HAWAII”, Katrina Kaif for “FLITE” and then Akshay Kumar for “SPARX” Relaxo has experienced a record-breaking growth rate of 4800% within the last 10 years The cost on promotion went up to 5507.62 lakhs in 2012-13 from 2961.77 lakhs in 2011-2012

Online Presence Facebook Online Store Has own online shopping portal as http://www.shopatrelaxo.com/ Online sales in footwear industry accounts for approx. 8 % of sales Properly segmented (For him, For her, For Junior) Has a Facebook page https://www.facebook.com/relaxofootwears Approx 125,000 likes Showcases new products with price and offers, if launched Advertisement done to attract targeted customers Reviews help customers in their discretion Facebook Online Store

Good distribution network. Present even in smaller villages Most of their business (~90%) comes through distributors with excellent terms Aggressive ground presence with 150 exclusive company owned retail stores and 50 more opened in FY13

Stores under operation Retail Chain Company-owned stores, 'Relaxo Retail Shoppe', are more from image building exercises and helps the dealer/retailer network Company relies more on distributor-retailer network for sales Besides it sells footwear by means of e-commerce operations- www.shopatrelaxo.com   FY 12 FY 11 FY 10 FY 09 FY 08 Stores under operation 149 127 100 79 60 Revenue Per Store 0.40 Cr - 0.26 Cr

Differentiation Segmentation Age Gender Price The entire market can be segmented on the basis of Age, Gender and Price Relaxo footwear has the following differentiating advantage over the competition: Relaxo consistently lives by and upheld its quality and customer satisfaction Produced state of the art footwear at very low cost price Caters to the demand of the middle income groups without compromising on quality Age Gender Price Kids Male Low(<300) Youth Female Medium(300-2000) Adults High(>2000)

Targeting Based on the Segmentation following Brands of Relaxo Footwear target the segments Age Brand Gender Price Kids Hi-Fashion Kids, Flite Kids, Schoolmate Male Hawaii, Sparx Low (<300) Schoolmate, Hawaii Youth Sparx, Elena, Flite Female Flite, Mary Jane Medium (300-2000) Sparx, Flite, Casualz, Boston Adults Hawaii, Flite, Casualz, Sparx, Boston High (>2000) Sparx

Positioning Relaxo Footwear tries to cater to the demand of all the consumer bases and hence it has tried to position in all the segments through various brands It positions its brand Hawaii and Schoolmate as a value for money product Also its Sparx range go footwear is perceived as a high quality, durable and value for money product Flite and Elena are considered to be fashionable, light and comfortable by the Women customers

Financials India is the world's second largest footwear producing country Per capita footwear consumption is 2.5 pairs per year in 2012 Size of Indian footwear market is around 26300 crores and expected to reach 38700 crores with a CAGR of 15% by 2015

Financials At present, Men's contribute around 60% of footwear market against Women's share of 30%. Indian footwear retail is mainly an unorganized market with around 60% market share. The size of the organised sector which was around 7500 crores in 2010 increased to 10000 crores in 2011, growing at a CAGR of 30% every year since 2008. The market is expected to reach 17500 crores by 2015 growing at a CAGR of 19% p.a.

Financial Analysis Company has sold 10.02 cr. pairs of footwear in 2012-13. Sales turnover has reached Rs. 1004 cr. Company has posted net profit of Rs. 44.8 cr.

Competitor Analysis Relaxo competes with various local brands like BATA, Action, Liberty, Lakhani etc. Bata being a major competitor in term of market share due to high reliance on outsourcing work to outsider and high asset turnover ratio. Relaxo is meeting the competition by capacity increase (which is leading to high asset turnover ratio) and focusing more on non hawaii chappal business and is getting focused to urban market. It is largest producer of hawaii chappal in north India. The company has recently appointed Accenture to advice on the business strategies and systems in order to enhance its marketability and reach to the consumers

Comparison with Competitors Amounts in Rs. crore

Marketing Objectives Try to match or beat Bata to become No.1 player in Indian Market. Try to influence people to have different set of footwear for each purpose rather than a single pair for all occasions Focus on selling Good Quality shoes at Affordable Prices Shift focus from just North India to expansion across all parts of India – strengthen distribution network Increase sales through Stronger distribution network Expansion in Foreign Markets like Africa Communication of Product Benefits compared to unbranded footwear Better variety and design of products

Hawaii King Relaxo is the largest manufacturer of hawaii chappals in India It has a huge market in rural areas Price in the range of Rs 70- 100 Cheap and very robust

Introduction of Safari Range of Sandals Relaxo should enter into low cost sandal market Sandals are also a hit in the rural areas Market dominated by local players Relaxo being a trusted brand has huge growth potential Complete Support Better grip over any surface Less strain on feet Easy to wear

Segmentation Targeting Positioning Urban Design High quality Semi-Urban and Rural Durable Strong Low price Niche Latest trend

70% of the Indians live in rural areas Segmentation Targeting Positioning Relaxo has already targeted the urban segment with its SPARX brand of sandals 70% of the Indians live in rural areas The target customers are poor and middle class people living in rural areas There is very high brand loyalty in rural areas

Points of parity: easy to wear and use Segmentation Targeting Positioning Points of difference: performance(durability) high strength, use in any weather and cheap Points of parity: easy to wear and use Brand mantra: “Majbuti bhi, Style bhi” The main means of differentiation is by Channel differentiation: Effective and Efficient distribution channel Image differentiation

Marketing Mix Product Colours black & brown Design will cover most of the feet Available in standard sizes Warranty period of 3-6 months Promotion Posters of Brand ambassador Salman Khan with the sandals to be put at easily visible areas TV and Radio commercials Special promotional events during festivals Active promotion during school events harvesting season Price Rural market is very price sensitive market The price should be maintained under Rs.250 Due to large scale of production and good distribution system these prices can be easily targeted Place Using its strong supply chain network of hawaii chappals for supplying sandals Training and motivating channel members Avoiding channel conflict Make them available at all major footwear stores in this areas

Schoolmate Schoolmate is the children’s shoes brand ranging from Rs 200 – Rs 500 It includes school uniform shoes for boys and girls White tennis shoes for children are also a part of this brand The focus of Schoolmate is to provide comfortable shoes for the tender feet of children

Target the semi-urban markets Suggestions Target the semi-urban markets Product Sturdier shoes with more durable soles to suit the semi-urban environment Promotion Hoardings, TV and radio commercials “Har Student Ka Dost” Place Retail outlets in the vicinity of all schools will sell Schoolmate shoes Price Keeping the price at Rs 100 – Rs 200 to penetrate the semi-urban market Bulk Discount to Schools

Boston Relaxo brand that includes formal leather shoes, loafers, sandals and party wears Lesser promoted brand of Relaxo High value product targeted to the middle and higher income groups Has wide variety of products, a type for each occasion

Boston – Marketing Plan Increase awareness among the target audience by using promotional activities Price – Rs. 700-2500 Positioning - “A shoe for every occasion” Promotion - Advertisement showing Salman Khan starting day in office in formals, evening meeting with friends in Loafers and end day in Party Shoes at a party. Place – Tier 1 and Tier 2 cities

Mary-Jane DSTP Segmentation and Targeting Age group (21 to 45 years) Location (Tier 1 and Tier 2 cities) Income levels (middle and upper class) Occupation (working women and housewives) Professional women – shoes for workplace and leisure Housewives - fashionable but more casual shoes Target women who buy unbranded footwear from street shops Differentiation Look and Feel of a designer brand at lower price Branded Footwear with emphasis on quality and durability Positioning Every woman’s choice A shoe for every occasion

Marketing Mix Product Unmatched, extensive selection of different shoes Accessibility Professional customer service Competitive pricing Place Retail stores Factory outlet stores Online/E-Commerce Price Price range Rs. 700 – 2500 Promotion Radio, TV, Print Advertisements Social Networking Websites Women Fashion Magazines Create Radio Jingles for spreading awareness of the product Association with a celebrity – Katrina Kaif

Suggestions Retail commissions are very low, so many shops do not want sell Relaxo footwear. Should focus more on Sparx and Flite brands which are more preferred products by the distributors. Focus more on fastest selling SKUs Spend higher on commissions and offer better credit terms to retailers Over-concentration in North India markets - RFL sells almost 65% of its products in the north Indian market thereby creating a very high dependence on the states of north India wile leaving a large market untapped. Company should expand distributor–retailer network to South, East and West India

Over 50% of the retail shops have managed to break even while the remaining continues to make losses. Should pursue a good mix strategy of few self-owned and franchisee models, to minimize risk and share risk with partners Focus on increasing presence in multi-brand retail outlets that has presence in malls and high street stores Should expand its self owned stores throughout India. Stores should focus more on spreading brand awareness in addition to improving sales In order to shift focus to parts other than North India, increase the sales force to cover all regions of India. 3rd party field force can be used for faster implementation of sales expansion strategy Improve exports in countries in Europe, Africa and other Asian countries

Drive Online Sales Online shoe shopping currently accounts for about 8% of the footwear sales in India and is expected to reach about 20% by 2015. Relaxo’s online sales are limited to shopatrelaxo.com. Majority of the online shoe shoppers buy from Myntra.com, Jabong.com, Yebhi.com, etc. that sell shoes from various brands. Relaxo Footwear should thus also be available on these websites which would improve visibility and drive sales. Relax Shoppe are only present in 9 states and thus online presence will boost sales from areas currently out of reach. Source: ASSOCHAM 2012 As far as men:woman ratio is concerned, Indian footwear market is dominated by men’s segment which accounts for about 55 per cent followed by ladies’ and kids’ segement which account for about 30 per cent and 15 per cent respectively.