The Telegraph
Thursday , May 22 , 2014
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Bata game plan for small cities

Bata chairman Uday Khanna (right) with Rajeev Gopalakrishnan in Calcutta on Wednesday. Picture by Rashbehari Das

Calcutta, May 21: Bata India will engage franchisees to expand in smaller towns. The company has set a target to open 100 franchisee stores in the small cities in two years.

Bata has also set up a separate rural division. It has put in place a distribution model for the rural areas, which is now being tested in Rajasthan and Uttar Pradesh.

The footwear company will invest Rs 50 crore each in modernising its plants and setting up stores. The company hopes to increase productivity from its Bihar, Bengal and Bangalore facilities by 10-15 per cent.

“The tier III and IV markets (small towns) are growing and we are going into these markets with a different model of operation. We have developed a system that will support franchisees and help them to make profit. We have tested it in 20 stores. Products will be different from the ones in existing stores. It will have to be tailor-made for these kinds of markets. Prices will have to be competitive,” Rajeev Gopalakrishnan, group managing director (emerging markets), Bata India, said on the sidelines of the company’s 81st annual general meeting here today.

The rationale behind the franchise structure, according to Gopalakrishnan, is to avoid putting in a huge capex where the turnover will not cover the expense of setting up a company-owned store.

Bata sells around 50 million pairs of footwear annually through 1,400 retail stores across 500 cities.

In cities, the company plans to open 100 stores. In addition, there will be 20 Hush Puppies and 20 Footin stores.

The Bata stock closed at Rs 1091.25, down Rs 6 from its previous close on the Bombay Stock Exchange.