CASE
STUDY
DEBRIEF
Aditya Birla Fashion
and Retail Ltd.
ABFRL In The Footwear
Business
About ABFRL & the Footwear Category
Aditya Birla Fashion and Retail Ltd. (ABFRL) is a part of the Aditya
Birla Group (ABG), a global conglomerate spanning across over 35
countries in North and South America, Africa, and Asia. ABFRL
emerged in May 2015 with the consolidation of ABG’s branded
apparel businesses comprising Aditya Birla Nuvo Ltd.’s (ABNL)
Madura Fashion division and ABNL’s subsidiaries – Pantaloons
Fashion and Retail and Madura Fashion & Lifestyle.
ABFRL currently holds a portfolio of some of India’s most-loved
brands, including Louis Philippe, Van Heusen, Allen Solly and Peter
England. It also caters to the youth through Forever 21 and
American Eagle. Through recent partnerships, it has also added
several designer brands to its portfolio, including Jaypore,
Shantanu & Nikhil, Sabyasachi, Masaba and Tarun Tahiliani.
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The Footwear Industry
India is the second largest footwear manufacturer in the world with
9% of the annual global production. About 90% of the footwear
produced in India is consumed domestically, while the rest is
exported. India’s consumption stands at around 2 billion pairs and
is the third largest globally after China and USA. However, the
Indian footwear market is under-penetrated with a per capita
consumption of only ~1.7 pairs against a global average of 3 pairs.
Unlike most global markets, the Indian footwear market is skewed
towards men accounting for nearly 60% share against a global
average of 40%. However, with improved education and
employment opportunities for women, and their resultant
economic empowerment, there has been a substantial increase in
the demand for trendy and stylish footwear among women. Many
brands have capitalized on this trend and increased their offerings
to women, most notably with Bata, the country’s largest player in
the footwear industry, opening all-women stores and bringing in
celebrity icons as their brand ambassadors.
Reebok India Case Study
ABFRL Partnership with Reebok
In 2022, ABFRL entered into a long-term partnership with
Authentic Brands Group, giving it exclusive rights to distribute and
sell Reebok products in India and ASEAN countries. With this
addition to its portfolio, ABFRL will be able to expand in the sports
and leisure footwear space. Reebok has a long history in India,
where it was the largest sports footwear brand by revenues at one
point of time (2009).
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Reebok Footwear Current Business Scenario:
Reebok for its India operation, currently sources ~1.2million pairs of
footwear per Season (6 months). 70% of the volume out of this is
sourced locally from India and balance 30% is imported. The 70%
volume sourced from India is primarily non-performance basic shoe
category, the balance 30% imported footwear is technologically
advanced performance footwear.
As part of long-term strategy, Reebok India wants to expand its
presence in Sports performance categories like Cricket, Badminton
and Tennis. Apart from this, Reebok already has a huge presence in
categories like Running, Training, Walking and Classics.
The key competitors in the markets are Adidas, Nike, Skechers, Puma
and Asics.
Peer Performance FY19-21 (₹ cr.)
2200
2044
1650
1413
1250 1228 1215
1100
945
831 798
775
628
564 578
550 407 434
321
0
Adidas Nike Reebok Skechers Puma
FY19 FY20 FY21
Sale of Footwear by Category: Volume 2013-2018
mn units
2013 2014 2015 2016 2017 2018
Children’s Footwear 206.1 239.0 279.7 320.2 360.5 407.8
Men’s Footware 454.9 509.4 573.1 637.3 701.7 770.7
Women’s Footwear 252.2 290.0 336.4 384.5 433.7 490.6
Footwear 913.1 1,038.5 1,189.2 1,342.0 1,495.9 1,669.0
(source: [Link]
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The Problem At Hand
For any technical or performance shoes, the technological advancement
required in India is either negligible or very slow. Primarily the materials
and production technology are available in countries like China,
Indonesia, Vietnam or Cambodia. This is heavily due to the investments
done by countries like China, Taiwan and Korea in South-East Asia.
Details of sourcing challenges includes –
1. Very limited production of performance wear in India, limited facilities
in Agra and NCR region. One of the prime reasons – Raw material
required to make performance footwear like Chemical silicon is primary
available in China & Taiwan
2. No producers of high-quality upper mesh fabrics required for
performance shoes.
3. Some of the cosmetic treatments like mosaic which are done on
footwear to increase fashion quotient is not of high standard in India.
4. Limited machinery to produce high tech bottoms like CM EVA
5. Most of the competitors like Nike, Skechers, Puma are exporting over
90% of volumes from international markets.
6. Government of India is in the process of bringing BIS certification for
footwear manufacturers which will make sourcing even more
challenging.
What should be India’s game plan to counter and bring this footwear
technology in India so that we can reduce our reliance on South-East Asia
for the performance shoe category.
Basis your analysis answer above questions.
Points to Note
• To the extent possible, provide real consumer insights and consumer
validation to support your answers.
• To the extent possible, provide clear rationales for your answers
• State assumptions clearly
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GOOD LUCK
to you as you move
towards the next
Phase of Stratos 2023
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