The Changing Size of the Indian Footwear Industry

Published by Sharekhan Education | April 18, 2022

The Changing Size of the Indian Footwear Industry

Amit Pathak | Sharekhan Education

Over the years, footwear has evolved in India from being a bare necessity to a full-fledged lifestyle product. Footwear is now an essential fashion accessory that enhances one’s appearance. Recent trends developing toward health awareness are leading people to perform physical activities, fuelling the usage of athletic footwear. According to a report by Invest India, India is the second-largest consumer and producer of footwear in the world, with those values set to increase 8-folds by 2030.

Segments

The footwear industry can be divided into four distinct segments based on their price:

1) Mass – Any pair of footwear priced below the Rs. 500 threshold belongs to the Mass segment

2) Economy – With the price of one pair of footwear ranging anywhere from Rs. 501 to Rs. 1000

3) Mid – The price of one pair of footwear ranges from Rs. 1001 to Rs. 3000

4) Premium – The segment where each pair of footwear costs over Rs. 3001

The economy, mid, and premium segments are likely to grow at 10%+ CAGR during the 2020-25 period.

Growth

In India, the per capita footwear consumption is around 1.9 pairs, far lower than the global average of 3.2 pairs (the US leads the pack with 8.1 pairs). But that 1.9 figure is bound to improve as a result of various factors such as:

• Growing disposable income of Indian consumers
• Young demographics
• Changing attitude towards branded products
• Increasing urbanization
• More women joining the formal economy

The organized sector in the Indian footwear market consists of around 30%, and the remaining 70% comes from the unorganized sector, which typically includes street vendors, small local brands and localized brick and mortar shops. The organized players’ market share has been increasing at a CAGR of 15% over the past 5 years. Organized players are gaining market share through Exclusive brand outlets (EBO), Multi-brand outlets (MBO) and online channels.

Looking Ahead

Incoming trends hint at a steady move from the mass segment to upper segments such as economy, mid, and premium. Companies like METRO are well-positioned to benefit from the exciting opportunities in Indian Footwear Industry. Metro, alongside brands like Mochi & Crocs, are among the aspirational Indian brands in the footwear industry.

The industry is likely to grow at a CAGR of 15-17% between FY22-25E with Average Selling Price (ASP) expected to grow at 5-7%. The government has allowed 100% foreign direct investment (FDI) through the automatic route for the footwear sector. Exciting times lie ahead for the Indian footwear industry. Incoming pun – Let us hope the industry puts its best foot forward!

Want to start investing but don’t quite know how? To get started, we suggest you go ahead and register for our free Power Money Workshop. Or simply join our investing education program – Stock Investor, to polish your investing skills. Not only do we teach you the step-by-step process of identifying fundamentally sound stocks, but you also learn how to invest like a professional. So, come and experience it yourself!

By Enrolling yourself in this stock market course, a learner can learn the basics and the various aspects of trading in Futures and Options Trading.