SME Times News Bureau | 15 Feb, 2012
Growing at a compound annual growth rate (CAGR) of about 15 percent the Indian footwear industry is likely to reach about Rs 38,700 crore by 2015 from the current level of about Rs 22,000 crore, apex industry body ASSOCHAM said.

India produces nearly 300 crore pairs of footwear annually, exports over 10 percent and accounts for about 15 percent of annual global footwear production which is over 2,000 crore, according to a study titled ‘Indian Footwear Industry: An Analysis’ released by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) on Tuesday.

“The domestic footwear market is driven by growing fashion consciousness together with increased disposable income among India’s urban middle class which contributes about 45 percent of overall footwear market making India the second largest global producer of footwear across varied segments after China,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the findings.

“Low cost of production, abundant availability of raw material, ever-evolving retail ecosystem, buying patterns and a huge consumption market are certain basic features that sets apart the Indian footwear market,” said Rawat.

Driven by larger penetration into tier II, III cities and growing rural market various premium footwear brands are foraying into India’s non-metro market which holds enormous growth potential and account for about 55 percent of the overall footwear industry.

Per capita consumption of shoes in India (number of footwear worn by an individual) is currently about 2.5 shoes per year, said the study.

The global footwear market which is growing at a CAGR of about five percent is currently estimated at about Rs 10.15 lakh crore is likely to reach Rs 12.34 lakh crore by 2015, said ASSOCHAM study.

Indian footwear market is dominated by men’s segment which accounts for about 55 percent followed by ladies’ and kids’ segement which account for about 30 percent and 15 percent respectively.

Nearly 70 percent of the labour-intensive footwear industry in India is in the unorganised sector and employs about 15 lakh people majority of whom are rural artisans, cottage and household units, while the organised sector accounts for remaining 30 percent and employs over five lakh people.

The footwear industry is divided into various segements – formal, semi-formal, casual and sports. Adidas, Bata, Balujas, Converse, Da Milano, Lee Cooper, M&B, Metro, Nike, Provouge, Puma, Reebok, Red Tape and Relaxo are certain well known footwear brands in India.

Most of these brands have their exclusive outlets and account for about 55 percent of the footwear market while multi-brand retail outlets account for about 30 percent.

In the non-leather footwear segment there is huge demand for slippers as it is cheap, convenient and suits the needs of the rural consumer as it can be used as multi-purpose footwear. Rural India accounts for about 60 percent of slippers manufactured in Indian footwear market.

Online shoe shopping is a significant segement that is fast emerging in terms of footwear sale and currently accounts for about eight percent of the overall industry and is expected to reach about 20 percent by 2015.

“Consumers in India have become more fashion and brand conscious and due to fast changing fashion trends young professionals tend to update their footwear collection every two to three months and maintain a separate budget of their salary only for shoe shopping,” said the ASSOCHAM study.

ASSOCHAM interacted with about 1,000 young professionals in the age group of 21 to 30 years to evaluate their footwear purchasing tendencies in 10 cities (100 respondents in each city) of Ahmedabad, Bangalore, Chandigarh, Chennai, Delhi-NCR, Hyderabad, Kolkata, Lucknow, Mumbai and Pune.

The sample included equal number of male and female respondents with a monthly salary between Rs 15,000 and Rs 50,000. Nearly 40 percent of respondents said they upgrade their shoe collection every two months and usually spend about Rs 6,000 to Rs 8,000 every four months on branded footwear.

Almost of all of these said they manage a separate budget of 10 percent of their monthly salary for shoe shopping. Nearly 25 respondents said they spend about Rs 3,000 to Rs 5,000 every quarter on shoes. Remaining said they spend over Rs 1,500 every two to three months to buy new shoes.

An interesting aspect of the survey is that majority of women respondents (60%) of the total women interviewed said they buy minimum of two pairs at a time and are more concerned about style and looks than comfort and endurance and are not that brand conscious and throng local markets more often for the best deal. While nearly 45 percent of men said they prefer buying branded shoes as they are more concerned about quality, price and strength of the product.

Respondents said they shop for shoes almost everywhere be it the traditional shopping markets, specialty stores, high-end designer stores, retail chains and the branded stores. Changing fashion trends, desire to look good and staying ahead in the peer group are certain reasons cited by the respondents to buy new shoes.