Clarks to double India sourcing to 15 m shoes

By: | Published: April 21, 2015 1:00 AM

UK's largest shoemaker Clarks plans to double the number of footwear sourced from India from 8 million to 15 million pairs...

UK’s largest shoemaker Clarks plans to double the number of footwear sourced from India from 8 million to 15 million pairs. The company sources shoes worth $700 million (Rs4,364 crore), which it plans to take to Rs10,000 crore in next three years. “In next 3-5 years, the target is to take it to 15 million pairs,” said S Ramprasad, CEO, Clarks Future Footwork.

Clarks sources shoes from Tamil Nadu factories. “These are large factories where there are Clarks’ sourcing lines,” said Ramprasad.

Clarks is not the only company to source products from here. India is a major sourcing destination for Adidas, Reebok, Nike and Puma, both for domestic and international operations. Despite a preference for the Indian product, it’s China, however,  that continues to be the largest hub for these companies. For Clarks, too, China remains the largest sourcing destination. But things are changing now. Clarks works closely with India suppliers to make premium shoes. The average price for a pair of Clarks shoes is $60, or Rs 3,742. Every piece of leather that goes into the shoe is treated, making it more expensive.

Analysts say in the past five years, Indian vendors have invested significantly in technology and are building capacity to cater to the global demand. Last year, Clarks sold 65 million pair of shoes. And India produced one-eighth of that. “Labour in India is skilled and low-cost. Job creation in this area is huge,” said Ramprasad. India is good at making shoes for men, as far as Clarks is concerned.

In India, Clarks has a 50:50 joint venture with Kishore Biyani’s Future Group. Though it entered India through a distributor, Lifestyle Asia, in 2005, its first major foray was in 2010 via a JV.

Clarks has 56 stores in the country. It also sells through other multi-brand retailers such as Metro and Shoe Tree. However, its plan to open 100 stores in two years has become a challenge because of high rentals, and low footfalls in high-street stores. “Rents are high and we don’t see the kind of productivity we need,” said Ramprasad.

So, the company has decided to look at the franchisee model, especially for expansion in non-metro tier-I and tier-II cities. It already has 12 franchisee stores. Of the 25 new stores Clarks plans to open in the next one year, 15 will be franchisees.

It is also working on a new online platform, as e-commerce forms 10% of Clarks overall sales.

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