The shoe must go on! An overview of the Indian footwear industry

The Indian footwear market has seen many changes in customer behaviour towards footwear.

Earlier it was considered an essential item, but slowly it is consumed as a lifestyle purchase. Higher disposable income leads to the demand for branded footwear in the market. Furthermore, thanks to the increased awareness about healthy living amongst the urban population, especially in the post-pandemic period, the need for athleisure and sportswear is expected to increase.

Key Factors of Indian Footwear Industry

Shoe numbers

As of the fiscal year 2020, the footwear industry claims a share of 1.5% of the entire retail sector. But do you know how much average footwear is consumed per Indian? In India, per capita footwear consumption (in 2019) is 1.9 pairs which is much below the global average of 3.2 pairs. The USA leads the consumption in the world with 8.1 pairs; Japan stands next with 6.4 pairs and China consumes 3.3 pairs.

In terms of total no. of pairs, India consumes 2.56 billion pairs in fiscal 2020, witnessing a growth of 4.5% from fiscal 2015. Fiscal 2021 recorded a fall of 35% in footwear consumption due to COVID and a robust growth of 8-10% CAGR is expected between fiscal 2022-25. Total footwear consumption is estimated at 2.9 billion pairs by 2025.

Some of the prominent players in the Indian footwear market include Bata, Khadim, Liberty, Metro, Paragon, Relaxo and Mirza International Ltd.

In value terms, the footwear market is expected to grow at a CAGR of 15% to 17% from ₹ 920 - ₹ 950 billion in Fiscal 2022 to approximately ₹ 1,380 - ₹ 1,450 billion in Fiscal 2025. This growth is also due to the increase in Average Selling Price (ASP). The ASP in fiscal 2015 was Rs. 308 per pair and grew to Rs. 376 per pair in fiscal 2020. In the future, ASP is expected to grow at a CAGR of 5 -7% and is expected to reach Rs. 490-515 in fiscal 2025.

The main reason for demand in premium footwear is young demographics, higher disposable income, better availability of designs and brands.

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Organised vs. Unorganised

In metro cities, we have seen many exclusive brand outlets (EBO) and Multi-brand outlets(MBO) and other large-format stores and online channels. But did you know how much is contributed by this organised sector in the Indian footwear market? You will be surprised to see that It only contributes 30.6% as of fiscal 2020. The remaining 64.9% (which translates to a market size of Rs. 294 billion) comes from the unorganised sector, which typically includes small local brands, local brick and mortar shops, street vendors, and unbranded footwear sales. However, organised players' market share has been increasing at a CAGR of 15% in the last 5 years.

Men vs. Women – Who owns a higher share?

Primarily footwear can be classified based on Men's, Women's and kids' segments. As per FY 2020, Men's footwear has a share of 57.9%, Women's share is 32% and Kid's command a share of 10.1%. In FY 2025, Men's share is expected to shrink to 56%, and women's share is expected to rise to 34.1%. Kid's footwear has a low market share of 10% but has some interesting insights. Change in shoe size as the child grows up leads to a higher frequency of footwear purchases in the kid's segment, but unorganised players primarily cater to this segment compared to the men's or women's segment.

The kids' segment's share is low at approximately 10% as of Fiscal 2020. Due to changes in shoe sizes as the child grows up, the frequency of footwear purchase is higher in kids' segments than men's or women's segments. On the other hand, the tendency to spend on branded shoes for kids is typically lower than men's or women's segments. In addition, the kids' segment is catered mainly by unorganised players, with price points typically lower than organised players.

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Are we price conscious?

Industry can be segmented into the mass, economy, Mid and premium segments. Mass segment occupies the lion's share of approximately 56%, but their share fell from 62% to 56% from fiscal 2015 to 2020. On the other hand, the economy, mid and premium segments showed a growth of around 12% in this period.

However, mass segment market share may expect a further drop to 51% by fiscal 2025. On the other hand, the economy, mid and premium sections are together expected to grow at a comparatively higher rate of 10% to 11% CAGR during fiscal 2020 to 2025.

For reference purposes, a pair below Rs. 500 is considered a part of the mass segment; the Economy segment is priced between Rs. 501 to Rs. 1000 per pair, Mid segment is priced between Rs. 1001 to Rs. 3000 and premium segment is above Rs. 3001 per pair.

Demographic division

The west, north and south region enjoy an almost equal market share in the range of 26-29%, while the eastern region has 18%.

Online footwear sale

Online retailing of footwear contributes nearly 2.5% to 3.5% as of fiscal 2020. It is expected to grow at a 26% - 30% CAGR from fiscal 2020-2025. In value terms, this would be equivalent to Rs. 25 billion in fiscal 2020 to Rs. 80-85 billion in fiscal 2025. Key players in the footwear industry and financial insights.

Financials of the leading industry players*

* Data as on 21 Dec, 2021. Source: icicidirect.com

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Conclusion

Overall, the footwear industry is likely to benefit from the growing disposable income of Indian consumers, change in consumer attitude from branded products, rising women workforce and increasing urbanisation. The footwear sector is highly competitive, where the unorganised sector is currently dominating the market and lots of global brands are also fighting for their share in the market. It would be an exciting time ahead for the footwear industry. Let the best foot move forward!

Source: Few of the industry related details are taken from Metro Brands Limited DRHP