We are trying to look at how customers are responding to the increase in prices and being cautious: Bata CFO

“Our strategy towards casualisation, premiumisation, having good product stories that consumers can participate in is something that we are continuing to focus on and apart from tier 2-tier 3 cities, we are selectively opening stores in the metros as well,” says Vidhya Srinivasan, CFO,

I want to understand the demand and the pricing scenario because demand has come back but on the other side if I look at pricing, whether it is on the commodity front or the transportation front or advertising front, everything has gone higher. How would you map the demand versus pricing scenario for us?
We have posted the highest ever sales in the last quarter and we have seen demand uptick across all our different channels. We have seen it across multiple geographies with tier two, tier three towns showing uptick. So, that is certainly a good indicator. Obviously ISPs have increased as well mainly as a function of input cost increasing and sometimes and also the GST tax rate change which impacted us.

But we are also trying to look at how customers are responding to the increase in prices and being cautious. We are trying to balance both.

Smart Talk

Do you think the demand is back and is here to stay or is this an artificial sugar rush which has happened because the world has normalised post Covid?
It has been multiple quarters now. While there was a bit of a sugar rush initially, it is more or less stable now. Now people are back to offices, back to schools and reopenings. People have settled down and the demand is more real.

Where is the demand really coming in from? In metro cities, the malls are all packed and so are the Bata outlets. But what about tier 2 and tier 3 cities? Is demand as robust there too?
We have certainly had an uptick in tier two, tier three cities. We opened a lot of our franchise stores in our tier two-tier three cities and there we are seeing very good growth which is also reinforcing the fact that we have opened 20 more franchise stores last quarter.

We continue to ramp it up towards a trajectory of 500 stores. It is happening on two fronts. One, there is a growing awareness in tier two-tier three cities about branded products and that is coming through as far as demand is concerned. We are also expanding our presence both through franchise outlets and therefore it is creating additional demand for us.

I understand that you also hiked prices and there has been an uptick in your average selling price. Has that been absorbed well across categories and markets?
Like I mentioned a little bit earlier, we have had to increase prices mainly because of commodity prices going up and also the GST rate hike, which had an impact on us. But by and large, there is no fall off in demand. We are aware that we have a certain presence in certain price bands and therefore we are trying to ensure that we have products there, so that the consumer has a choice.

Out of the 1,500 odd stores that Bata has, around 300 are franchises. Is this the new strategy? Are you going to press on the gas there and focus on the smaller towns?
Yes and no, in the sense that certainly this is where our focus is going to be. We are expanding our franchise door network. We are opening 20-30 stores quarter on quarter and I think we are at around 320 plus. We will be 500 fairly soon. That is certainly an important focus area for us and it is doing well both in terms of growth as well as sales at the outlets.

Apart from that, we are also focussed on our portfolio and that is something that we are really pushing the gas on as far as especially metros are concerned.

So our strategy towards casualisation, premiumisation, having good product stories that consumers can participate in is something that we are continuing to focus on and we are selectively opening stores in the metros as well. It is not like we have taken our eyes away from the metros.

Coming to product diversification, you have disclosed that casual as well as formal share is 50-50% in the product portfolio. How do you see yourself innovating? I walked into a Bata store recently and I was quite blown away by the sneaker collection, the canvas collection. For the younger generation, what can we expect outside from the school offerings?
Thanks, I am glad that you liked our collection. We observed that during the pandemic, people were more used to being at home. They wanted more comfort as far as their footwear is concerned and therefore there was a move towards casualisation and also a move towards sneakerisation, especially amongst the younger consumer group.

One of the things that we have done is to increase our range and our causal portfolio, like you mentioned. We launched floats, flip-flops, sandals, sliders and we have spent a lot of time and effort kind of expanding our range. We have also launched something called Sneaker Studio which is essentially a wall, a one-stop solution that would offer about nine different styles around sneakers. I think consumers have reacted well to that. We have had a 40% increase in demand for sneakers from 2020 onwards and that is something we are continuing to ramp up. It resonates well with younger consumers.

What has happened in the quarter gone by versus what is happening in the current quarter? you are almost in the middle of this current quarter in which commodity prices have come down, rubber prices have come down, international leather prices have come down. Will you go back to pre-Covid margins considering the decline and the turn has already happened?
I do not think I can really comment on what our margins are going to be going forward but what we can say is that in the coming quarter, our main focus is gearing up for the festive season, puja around the corner. A lot of our focus is making sure that we have got the right inventory mix to address that and being prepared for the festive season demand because that is a very important season for us.

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