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Bata strategy to extend retail reach

Bata India Ltd, the largest shoe company in India, is overhauling its retail strategy to cope with the new dynamics of the marketplace after the Centre opened up the segment to foreign single-brand stores.

The company has decided to be more visible in shopping malls, open up to the franchisee model and also create the shop-in-shop experience in a multi-branded store.

“We have to explore all the new possibilities in the market. Most of the single branded retailers are into shoes. Bata has to innovate to stay ahead of competition,� P. M. Sinha, chairman of Bata, told The Telegraph from Gurgaon.

In 2006, the company plans to open 40 new stores across the country. Bata has 1100 stores in India now.

Five out of the 10 shops the company has opened in the first quarter of 2006 are in malls.

Bata will create an international feel in its new stores and modernise existing ones. The strategy seems to have paid off already.

“We have experienced a 20-40 per cent sales growth in all the shops which have been modernised,� Sinha explained.

The company is talking to a number of mall developers across the country to take up space in the new malls.

The company hopes to push up sales through flagship stores vis-Ã -vis wholesale channels.

In 2005, it had restricted sales through wholesale channels as they kept very high outstandings. As a result, receivables were down by Rs 20 crore in the year.

Back in black

Strict measures and modern stores helped Bata return to the black after three years.

Even though net sales grew marginally from Rs 694 crore in 2004 to Rs 706.7 crore in 2005, Bata made a profit of Rs 12.4 crore against a loss of Rs 6.27 crore in 2004.

Sinha attributed the turnaround to the steps taken by the company to bring down costs and an innovative product mix introduced during the year.

He is confident that sales growth would be more robust in 2006.

“I am hoping for a 10 per cent growth in the topline, while the profitability will be much better than in 2005,� Sinha added.

The company offered the VRS to about 1,000 people in 2005, which reduced staff cost.

During 2005, the company also kept a strong tab on the production line. Manufacturing was planned to suit market needs. Focus was on improving the women’s shoe segment where Bata was historically weak.

Bata plans to explore opportunities in institutional space like hospitals, hotels and defence establishments.

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