Transforming Bata India Ltd.

Bata India Limited (Bata), the largest footwear retailer in India, announced a profit of Rs.474 mn on
a sales turnover of Rs.8.9 bu for the year 2007. The profit was attributed to the sales growth
achieved by the opening of new stores and the benefits derived from the restructuring exercises that
the company had undertaken. The sales growth was expected to be sustained by the opening of
more stores and the repositioning of the 'Bata' brand. The restructuring efforts were in the direction
of reducing raw material costs and by offering a Voluntary Retirement Scheme (VRS) to its
workers.

Analysts felt that Bata had come a long way from 2002, when it had reported losses to the tune of
Rs.74.1 mn on a turnover of Rs.7.04 bn. The reasons attributed to the bad performance during 2002
and 2003 were manifold and included lower consumer demand and an overall slowdown in the
footwear industry. Further, Bata's cost of production was high and its marketing effort was weak. Its
brand image reflected value for money (utilitarian) and not fashion or being trendy. This led to its
customers shifting to other brands which were trendier and more fashionable. Hence, though Bata
was the biggest player in the Indian shoe market enjoying a strong brand recall, it incurred losses.

Analysts pointed out that Bata could have addressed the first problem of cost by outsourcing the
products while the second required that the company focus on marketing with renewed vigor.

During the year 2003, Bata chose and adopted a four-layered retail structure to address the customer
profile of a geographic region with matching products. The company introduced new retailing
formats – Flagship stores, City stores, and Family and Bazaar stores to cater to different market
segments. This ensured that the product offerings in different geographic locations were not the
same. For instance, the product offerings in the suburbs were different from those in up-market
areas. The Flagship and City stores sold a large range of brands, along with an array of accessories
such as wallets, handbags and shoe-care products. This was similar to Bata's European retail
strategy. Bata also established Superstores, a new format, where around 1,000 different designs of
footwear could be displayed.

In addition to this, the company utilized its international technology to enhance the product
development capabilities and to create new product portfolios to match a wide range of prices. The
company focused on some of its brands like Power, Bubblegummers, Marie Claire and Hush
Puppies, to make these brands more appealing to the higher end of the market.

Around the same period, Bata realized that the retail boom was occurring in the northern part of
India and in a strategic move relocated its head office operations from Kolkata (West Bengal) to
Gurgaon, a city in Haryana (a state in North India) bordering Delhi. This was expected to help Bata
improve its focus on market penetration and shift its orientation from manufacturing to marketing.
When its head office operations were located in West Bengal, labour unrest in the manufacturing
facilities located in the state had a substantial impact on the overall operations of the organization.
To focus more on marketing, the company shifted its head office to Gurgaon along with the
activities – commercial, retail, exports, management information systems and wholesale.

In 2004, the company introduced trendy international styles for women, men and children. This
helped in building a modern and stylish image for the company. The company streamlined its
distribution network to support its focused marketing effort in the year 2004. It converted three of
its wholesale depots to 'Cash-n-Carry' formats and made investments in its logistics and distribution
systems to improve them. This was to be reflected in the modernization of the retail network
through the development of a state-of-the-art integrated retail management system in partnership
with Infosys Technologies Ltd. Further, investments were made in IT to integrate about 150 stores
for real-time information capturing. The result was that a new trendy fashionable footwear range
was reaching the outlets every week.

To turn around the company, Bata also took some other measures. Sixty unviable stores were closed
down and the outstanding payments of the wholesale segment were reduced to 45 days from 126
days. Further, emphasis was placed on reducing the operational expenses in 2004. In order to reduce
costs, manufacturing was outsourced to tax holiday states such as Himachal Pradesh and
Uttaranchal.

Simultaneously, since the company was overstaffed, it offered VRS to its workers in 2004, and
1,469 employees opted for the scheme. The company also developed a variable pay structure in
Bata stores to align the remuneration costs with the business volumes. Bata was able to convince
the unions to enter into an agreement for capping Dearness Allowance and this helped it in keeping
the major fixed remuneration costs down.

In 2006, Bata decided to create its presence in shopping malls on the one hand and to explore the
franchisee model on the other. It went ahead with the shop-n-shop experience in a multi-branded
store. In the following year, it unveiled a 10,000 sq ft Mega Store at Vadodara (in he Western Indian
State of Gujarat). This store was spread across 4 floors and displayed a range of international
fashion footwear. Customers were offered a choice of 800 designs.

In 2006, the company posted a modest profit and the growth trend continued in 2007. As of 2008,
the company had 1,200 Bata stores in the country and was expecting to cross the Rs.10 bn turnover
mark in the near future. And it was clear that Bata was not ready to let anything come in its way.
For Instance, in February 2007, it suspended 180 employees and 23 shop managers in Mumbai
because they refused to extend their working hours and keep shops open seven days a week.

In order to maintain its growth momentum, Bata aimed to open 200 new stores by 2010 and explore
institutional markets such as hospitals, hostels and defense establishments Bata also intended to
launch clothing products by the end of 2008. In January 2006, Bata and Reliance Industries Ltd.
announced a tie-up that would enable Reliance to retail its labels through the 1,200 Bata stores in
the country Bata, on its part, would be provided with exclusive space in all Reliance Footprint
stores, which were being rolled out in the country.

In 2010, Bata Company has undergone a transformation in all areas of its business whether it is
sales, profitability, shoe line, visibility and the ambience of its stores as they have renovated their
72% of the stores. The changes were continuous and ongoing in all the areas of operations be it
from manufacturing, retail restructuring to customer experience. Company introduced Home-
Delivery Service for the products which customers were unable to find in Bata Store through
courier service without any additional cost. In 2010 Bata also opened 108 new large format stores
across all major towns in India.
The Company has continued its strategy of expanding its retail operations and has opened 189 new
stores in 2012 across metros, tier 1 and tier 2 cities.
The Company has also continued expansion of its Hush Puppies brand with the opening of 15
exclusive new stores and 12 shop-in-shops stores across the country. Recognizing the needs of
young customers, the new retail concept - FOOTIN was created in the year 2012. It was a new
business model of the company with a very different approach to cater to the youth who are style
conscious and trend-savvy shoppers at very affordable price. As the world started to move towards
digital platforms for shopping, new initiative like E-Commerce enabled website and a dedicated call
centre for customer queries and suggestions, etc., have been introduced to enhance customer
satisfaction.

To grow exponentially in the market and earning a name in footwear section, In 2015 Bata started to
provide other accessories to its customers. Apart from the new and latest range of footwear
Company also started to offer a wide selection of accessories like bags, belts, scarves, sunglasses,
wallets, etc., to cater to the customers' life styles. Due to certain unexpected problems in the
implementation of new supply chain IT systems, the retail stores of the Company failed in getting
supplied with adequate stocks of footwear which in turn affected the performance of the company
in 2015.

There were 1293 stores of Bata Company in India by the end of year 2017 and has sold a good
number of 47 million pair of footwear in India. During the year, Company worked with around
10,000 children across 19 schools across the Country. With 44% girl children in these schools,
many programmes have been focused to encourage and promote education of girl child. The
company took care from renovation to maintaining the infrastructure and providing all the facilities
to these schools and promoted and encouraged students to study which comes under “Bata
Children’s Program”. This will help the company to get a recognition in towns and areas where it
can open stores in future and displayed the foresighted vision of the company.

The brand have kept it very authentic. They have gone back to consumers, heard from them what
they think of the brand and really reflected that in their communication. In late 2017 and early 2018
company has launched a new set of footwear which were focused on casual and party purpose. The
marketing and promotional ads were also focused on the new launches and how company is not just
about formal footwear now but casual too, in various promotional advertisements company has
accepted that what image the company had in their customer’s eyes and made an effort to change
that. This change of moving from professional to every segment of footwear increased the number
of sales in 2018 and recorded the highest sales of 29,970 million Rupees.

As there was a major Corona Virus outbreak all over the world and COVID-19 crisis where
companies started to panic, Bata took this as an opportunity to show humanity and give to society
where Bata-Nagar factory prepared 35,000-plus masks and 4,000-plus face shields that were
distributed among the employees, their families, the police, hospitals in the vicinity and local
communities. Apart from that the company has already provided more than 6,000 pairs of washable
footwear to medical staff in hospitals. As Bata is committed towards sustainability via concerted
green initiatives, upgrading the systems to reuse the water in the processes and recycling the
products, Bata came up with an idea of rewarding 20 Bata club points for the customers who refuse
to take paper bag on the time of purchase and the points can be redeemed in future purchases. Bata
is still trying to expand and opening its new stores in various towns and after the relaxation of
lockdown started more than 1200 of stores again. Bata India's revenue from operations for the
quarter ended March 31, 2020 stood at Rs 619.70 crore, down by 9 per cent as compared to the
corresponding period previous year "primarily due to suspension of the company's stores towards
second half for the month of March 2020 as per government directives for COVID- 19".
While the Pandemic will definitely have an impact on the consumer behaviour but Bata believes a
strong trust mark and with investment in the quality will again gain the trust post the crisis.
The company is going slow on opening of new stores and might take the route of Franchise stores
route but anyhow will increase the customer reach.
To enable Omni-Channel sales Bata along with E-commerce websites and their own websites using
Whatsapp to stay in touch with their customers which seems like a great strategy. With this
customers need not to download a new app or visit a portal for any queries.