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Indian Sports Industry in a Nutshell

The footwear sector is a very significant segment of the Leather Industry in India. Footwear is the engine of growth for the entire Indian leather industry and India is

the second largest global producer of footwear after China, accounting for 14% of

global footwear production. of 14.52 billion Pairs.

India Produces 2065 million pairs of Different Categories of Footwear (LeatherFootwear 909 million pairs, Leather Shoe uppers 100 million pairs and Non-leatherfootwear 1056 million pairs)

India exports about 115 million pairs. Thus, nearly 95% of its production goes tomeet its own domestic demand.

The major production centres in India are Chennai, Ranipet, Ambur in Tamil Nadu,Mumbai in Maharastra, Kanpur in U.P., Jalandhar in Punjab, Agra, Delhi, Karnal,

Ludhiana, Sonepat, Faridabad, Pune, Kolkata, Calicut and Ernakulam.

Footwear exported from India are Dress Shoes, Casuals, Moccasins, Sport Shoes,Horrachies, Sandals, Ballerinas, Boots, Sandals and Chappals made of rubber,plastic, P.V.C. and other materials.


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INTRODUCTION

Sportswear has become a big market today with most of the people showing their interest

in sports during their leisure or free time. Now-a-days sports apparel scenario has seen a

major makeover with new fabrics being introduced that provide better fit, more comfort

and are even fashionable. Apart from apparels, even the footwear trend is changing with

the new technological advancements. Sports have become so popular recently that

sportswear industry has wide range of options for everyone including from kids, college

students to men and women. Having sportswear for children may make them feel special

and just as important as the adults. Their attire usually consists of many colorful things

just to spice up there sports dressing. Sometimes these colorful spiced up dresses may

even inspire some of the young kids to get into sports. With over 40% of female fans

interested in sports and increasing number of women athletes, it is very important to have

right clothing for them. Most of the stores today offer a complete line of women and girls

sports apparel or you can even shop on-line. Recently even the men sportswear has seen amajor change with the changing trends. Sports wear are improving with the new

technologies and they have become lightweight, durable that offer protection to the

wearer as well as provide utmost comfort in any type of condition. Sports apparel today is

not only designed for function but most garments today also employ designs that make

them more fashionable.

.

MNC Brands sourced

from India

MNC Brands Sold in

India

Indian Brands sold in India

Acme, Clarks, ColeHann,

Deichmann, Ecco,

Elefanten, Florsheim,

Gabor, Hasley, HushPuppies, Double H, Justin,

Marks & Spencer, Nautica,

Nike, Nunn Bush, Reebok,Salamander, Stacy Adams,

Tony, Lama, Next, Bally

Aldo, Bally, Clarks, Ecco,

Florshiem, Ferragammo,

Hush Puppies, Lee cooper,

Lloyd, Marks & Spencer,Nike, Nine West, New

Balance, Reebok,

Rockport, Stacy Adams

Red Tape, Bata, Liberty ,

Khadims, Lakhani, Metro,

Action


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Nearly 75% of Indias Export of Footwear is to the European Countries and theUSA.

The Indian Footwear Industry provides employment opportunities to a total of 1.1million people, mostly from the weaker sections of the society. Out of this, about

0.2 million are employed in the organized sector, 40% of whom are women.Remaining 0.9 million people are engaged in unorganized footwear sector like rural

artisans, cottage and household units etc.

The Footwear Sector is now de-licensed and de-reserved, paving the way forexpansion of capacities on modern lines with state-of-the-art machinery. To further

assist this process, the Government has permitted 100% Foreign Direct Investmentthrough the automatic route for the Footwear Sector.


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BACKGROUND

Out of the Gym, into the Street, Sports Apparel Has Become a Big, Growing Business.

Sports apparel is no longer confined to gyms. In fact, leisure apparel, especially for

women, and increasingly for teenagers, has become one of the hottest lines in the

garment industry.

Last year, the nations specialty and department stores rang up U.S. retail sales of

sports apparel totalling $43.7 billion, representing 22.8% of the overall clothing market,

and increasing 5.6% from 2005, a 40% faster improvement than the rise in overall

apparel sales. The steady growth of athletic-style clothing has forced clothing

designers to change the direction of their overall lines to include a broader selection of

sports-inspired looks.

Consumers are demanding sports apparel and sporting accessories that possess a

blend of fashion, function and performance However, the largest challenge facing

sports apparel companies will be gaining market share in an already maturing market.

Its important to also recognize that despite its size and growth, the sports apparelmarket remains highly fragmented, with the leader Nike, Inc. having only a 3.8%

market share, and it scales down sharply from there. Moreover, consolidation is

becoming significant, driven primarily by the need for economies of scale in dealing

with suppliers stretched around the globe. The industry has also increasingly become

the focus of private equity firms.

The study also points out that with functionality and versatility being so important,

vendors have responded with stylish clothing for both men and women to go from the

gym to the streets: World-famous apparel designer John Varvatos has partnered with

legendary sports company Converse to design a line of shoes and clothing in an effort

to reinvigorate the retro brand. Actress Scarlett Johansson has lent her name and

input to help design a women's line for Reebok, while actress Eva Longoria recently

signed on to be the new face of Bebe Sport . Clothing designer Stella McCartney,

daughter of the famous former Beatle, lends her design expertise and her name on

everything from yoga gear to ski pants for globalsporting goods giant Adidas .

SPORT WEAR EXPORT INCREASE


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CUSTOMER SEGMENTATION

Retail Sports segment in Indian is very price sensitive and has been steadily growing over

the year. Major part of the demand is met by the unorganised sector and still there is a

shortfall of 300 million pairs. Branded shoe market only account for 20% of the entiremarket. While international brands largely dominate the higher end of the spectrum, the

lower end of the market is dominated by home-grown players as well as unorganised

players. While men's footwear is the biggest target category (contributing almost 48%),

children's (11%) and women's lifestyle footwear (41%) is not behind in the race.

Segment wise classification of price ranges in the mens Sports segments:

Segments Price in Rs % of growth

Mass market 185 700 60% (Liberty Bata)Economy market 700- 1000 30% (Bata Liberty)

Sports market 10003000 7% (Nike Adidas)

Premium leathers 3000- 5000 5% (Charles and Keith)

Luxury 10000- 50000 1% (Gucci Louis Vuitton)Segment wise classification of women Sports wear segment:

Segments Price Range s in Rs % of growth

Traditional footwear 699 999 5%Designer Footwear 599 799 10%

Formals 299 699 40%

Casual Wear 499 799 25%

Sports Shoes 500- 699 20%


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Popular brand in retail Sports wear

This showroom has average monthly revenue of around Rs. 30 lacs. The breakup of their

revenue as per our survey made is like this: 50% from foot wears, 40% from apparels and

10% from accessories. When asked about their USP, we came to know that this brand is

known for its comfort level. It focuses a lot on the comfort zone of its customers. This

company concentrates on the collection for women and kids as well. So it easily targets all

types of people. The prices of its products are higher than other brands like adidas,

reebok, etc. But still these companies stand as a competition for nike.

After talking to the store manager we came to know that this showrooms averagen

monthly revenue is around Rs. 15 lacs. The breakup of the sale is: 25% comes from

apparels, 10% from accessories, and 55% from foot wears. So, we see that REEBOK has its

main part of revenue from foot wears. When asked about the USP, the manager said that

this company uses various technologies in its products which help them creating productsaccording to the need of various people. Till now, it has got 42 different technologies used

to produce the items. They consider adidas and nike as their main competitors. The pricing

strategy of adidas is almost the same but that of nike is a bit higher. The stocks that they

have in their showrooms keep changing every 3 months and they keep bringing in new

and fresh stocks. Their target customers mostly include the youth.


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ADIDAS

The data collected about adidas showroom says that their average monthly revenue is

around Rs. 37 lacs. Their revenue break up goes like this: 15% from track pants, 20% from

shorts, 20% from collar t-shirts, 20% from t-shirts, 10% from accessories and 15% fromothers (jackets, pullovers, etc.). They consider nike and reebok as their main competitors.

Their main focus while making their products is comfort. They give the most importance to

the comfort level of the customers and that also becomes their USP. They have also been

providing a very good after sales services to their customers. There is a club called adiclub

opened by adidas for its customers. All the customers are made aware of this club and

they can join in that club. The customers can provide their feedbacks, suggestions, etc.

about their products being a part of that club. This activity also gives them an opportunity

to be in regular contact with their customers. Their target customers are of all age group.

They do not specifically target a particular age group.

PUMAThis brand is mostly considered as a lifestyle brand. The prices of the products are higher.

The average monthly revenue of this particular showroom is Rs. 30 lacs per month. Their

revenue break up as per the items for male and female is 65:35. On the other hand the

revenue break up as per the items is: 55% foot wear, 35% apparels, and 10% accessories.

Their main focus is on status and style. They provide a feeling of high lifestyle to their

customers. Their main aim is not to compete with other sports brands. Puma has targeted


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customers of every age equally. This was the total study that we made on the retail

outlets of various brands. The main aim was achieved as to understand the various

strategies that these brands use, their revenue break ups, their USP, etc. This was all

about the survey of the outlets

MARKETING STRATEGIES AND

COMPETITION

ADIDAS

Entered India as part of global strategy

Adidas decided to enter India as part of the companys global strategy to take direct

control of the markets in Asia.The domestic demand was not high when the companystarted India operations. In the first 9 years, India was the smallest sub-division in Asia, in

terms of revenue. The company believed that India had the potential to become a huge

market considering Indias large young population and the changing demographics.

Currently out of the 13 subsidiaries in Asia, India is ranked number 7 and the management

believes it has the potential to climb up to number 3. The merger with

Reebok will strengthen adidas in India. In most countries, adidas is significantly bigger

than Reebok. However in India, Reebok has a larger share of the market.


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SWOT Analysis

STRENGTHS:

Easy availability of low cost of labour. Exposure to export markets. Managements with business background become quality and environment

conscious.

Presence of qualified leather technologists in the field. Comfortable availability of raw materials and other inputs. Massive institutional support for technical services, designing, manpower

development and marketing.

Exporter-friendly government policies. Tax incentives on machinery by Government.

Well-established linkages with buyers in EU and USA.

WEAKNESSES: -

Low level of modernisation and upgradation of technology, and the integration ofdeveloped technology is very slow.

Low level of labour productivity due to inadequate formal training / unskilledlabour.

Horizontal growth of tanneries. Less number of organised product manufacturers. Lack of modern finishing facilities for leather. Highly unhygienic environment. Unawareness of international standards by many players as maximum number of

leather industries are SMEs.

Difficulties in accessing to testing, designing and technical services. Environmental problems. Non availability of quality footwear components Lack of fresh investment in the sector. Uneconomical size of manufacturing units. Competition among units vying for export orders leading to undercutting. Little brand image. Poor labour productivity. Lack of awareness about consistent in

plant training and retraining- Inconsistent quality high rejection rate

Low machine and material productivity.Lack of quality job work units

Delayed deliveries Weak support infrastructure for exports


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OPPORTUNITIES: -

Abundant scope to supply finished leather to multinationals setting up shop inIndia.

Growing fashion consciousness globally. Use of information technology and decision support software to help eliminate

the length of the production cycle for different products

Product diversification - There is lot of scope for diversification into otherproducts, namely, leather garments, goods etc.

Growing international and domestic markets. Exposure to newer markets through Fairs/ BSMs Retain customers through quality supplies and timely deliveries Aim to present the customer with new designs, infrastructure, country & company

profiles.

Use of modern technology

Exhibit strengths in manufacturing, for example, strengths in classic shoemanufacturing, hand crafting etc.

De-reservation of the footwear sector.THREATS: -

Entry of multinationals in domestic market. Stiff competition from other countries.(The performance of global competitors in

leather and leather products indicates that there are at least 5 countries viz,

China, Indonesia, Thailand, Vietnam and Brazil, which are more competitive than

India.)

Non- tariff barriers - Developing countries are resorting to more and more nontariff barriers indirectly.

Improving quality to adapt the stricter international standards. Fast changing fashion trends are difficult to adapt for the Indian leather industries. Limited scope for mobilising funds through private placements and public issues,

as many businesses are family-owned


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THE INDIAN FOOT WEAR RETAIL UNORGANISED SECTOR

India is the country having the most unorganized retail market. Traditionally it was a

family's livelihood, with their shop in the front and house at the back, while they run the

retail business.More than 99% retailer's function in less than 500 square feet of shopping

space. Global retail consultants KSA Technopak have estimated that organized retailing in

India is expected to touch Rs 35,000 crore in the year 2005-06. The Indian retail sector is

estimated at around Rs 900,000 crore, of which the organized sector accounts for a mere

2 per cent indicating a huge potential market opportunity that is lying in the waiting for

the consumer-savvy organized retailer. Purchasing power of Indian urban consumer is

growing and branded merchandise in categories like Apparels, Cosmetics, Shoes,

Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that

are widely accepted by the urban Indian consumer. Indian retailers need to advantage of

this growth and aiming to grow, diversify and introduce new formats have to pay more

attention to the brand building process. The emphasis here is on retail as a brand rather

than retailers selling brands. The focus should be on branding the retail businessitself.There is no doubt that the Indian retail scene is booming. A number of large

corporate houses Tata's, Raheja's, Piramals's, Goenka's have already made their

foray into this arena, with beauty and health stores, supermarkets, self-service music

stores, new age book stores, every-day-low-price stores, computers and peripherals

stores, office equipment stores and home/building construction stores. Today the

organized players have attacked every retail category.

The Indian retail scene has witnessed too many players in too short a time, crowding

several categories without looking at their core competencies or having a well thought

out branding strategy. The growth rate of super market sales has been significant in

recent years because greater numbers of higher income Indians prefer to shop at super

markets due to higher standards of hygiene and attractive ambience. With growth in

income levels, Indians have started spending more on health and beauty products. Here

also small, single-outlet retailers dominate the market. In recent years, a few retail chains

specialised products have come into the market. Although these retail chains account for

only a small share of the total market, their business is expected to grow significantly in

the future due to the growing quality consciousness of buyers for these products

.Numerous clothing and footwear shops in shopping centres and markets operate all over

India. Traditional outlets stock a limited range of cheap and popular items; in contrast,

modern clothing and footwear stores have modern products and attractive displays to

lure customers. With rapid urbanization, and changing patterns of consumer tastes andpreferences, it is unlikely that the traditional outlets will survive the test of time. Despite

the large size of this market, very few large and modern retailers have established

specialized.

There seems to be a considerable potential for the entry or expansion of specialized retail

chains in the country. The Indian durable goods sector has seen the entry of a large


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number of foreign companies during the post liberalization period. A greater variety of

consumer electronic items and household appliances became available to the Indian

customer. Intense competition among companies to sell their brands provided a strong

impetus to the growth for retailers doing business in this sector. Increasing household

incomes due to better economic opportunities have encouraged consumer expenditure

on leisure and personal goods in the country. There are specialized retailers for eachcategory of products (books, music products, etc.) in this sector. Another prominent

feature of this sector is popularity of franchising agreements between established

manufacturers and retailers. A strong impetus to the growth of retail industry is

witnessed by economic boom and driver of key trends in urban as well as rural India.

Major challenges in running domestic retail


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a) Retail presence: till recently, most companies invested in own stores as the means togrow and expand. With commercial rents increasing in last few years, capital required for

expansions was a bottleneck.

b) Credit Management: Brands that had no local presence, but preferred the third-party retail route had to face the challenge of receivables, often the credit period as high

as 120 days.

c) Brand:Many of the leather firms are SMEs, have great experience in trading andvendor management, but completely lack brand building experience. Even when attempts

were made, they lacked focus and consistent efforts, thereby diluting the impact.

d) Low IT investment:Except the major leather manufacturers, none of the companieshad an ERP connecting POS data so as to effectively manage inventories. It was not

common to have round the year discount offerings to get over the inventories.

Organised footwear market Vs Unorganised footwear market

The average growth in the industry has been estimated at 12% and is estimated to touch

Rs 47000 crore by 2025. Presently the Indian organised foot wear market is dominated by

mens footwear segment that contributes for nearly 60% of the market where the casual

footwear has been better off with two thirds of the share in the mens segment. Theunorganised players have the lions share in the ladies and kids segment with 80 percent

share. The organised footwear brands have less penetration in the ladies footwear

segment mainly due to the complex buying behaviour of Indian women. The ladies and

kids segment is one of the fastest growing segments in the branded footwear market and

many foreign brands like Catwalk have ceased the opportunity and have set their

footprints in this segment which has been untapped by major traditional Indian footwear

brands. Considering this many of the Indian footwear brands have seen growing

opportunities in the segment to widen their product portfolio, widen their risk appetite

and increase their market share in the footwear segment by contributing to newer

growing consumer segment which will boost the bottom lines of the retail players. Thebusiness models of the footwear retail players have been different with a wide popularity

of stores in high streets, malls and new formats such as store in store has been catching

up even with international brands having gone the store in store model which has been

the most cost effective model in terms of testing the markets.


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CONCLUSION

Sportswear has become a big market today with most of the people showing their interest

in sports during their leisure or free time. Now-a-days sports apparel scenario has seen a

major makeover with new fabrics being introduced that provide better fit, more comfort

and are even fashionable. Apart from apparels, even the footwear trend is changing with

the new technological advancements. Sports have become so popular recently that

sportswear industry has wide range of options for everyone including from kids, college

students to men and women. Having sportswear for children may make them feel special

and just as important as the adults. Their attire usually consists of many colorful things

just to spice up there sports dressing. Sometimes these colorful spiced up dresses may

even inspire some of the young kids to get into sports. With over 40% of female fans

interested in sports and increasing number of women athletes, it is very important to have

right clothing for them. Most of the stores today offer a complete line of women and girls

sports apparel or you can even shop on-line. Recently even the men sportswear has seen a

major change with the changing trends. Sports wear are improving with the newtechnologies and they have become lightweight, durable that offer protection to the

wearer as well as provide utmost comfort in any type of condition. Sports apparel today is

not only designed for function but most garments today also employ designs that make

them more fashionable.

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