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Ashish Dhir; Nikita Maheshwari; Sumeesha Dhawan, 1Lattice
Ashish Dhir; Nikita Maheshwari; Sumeesha Dhawan, 1Lattice
Ashish Dhir, Senior Director (Consumer & Retail); Nikita Maheshwari, Business Analyst; Sumeesha Dhawan, Business Analyst, 1Lattice Ashish Dhir: Ashish Dhir heads the Consumer & Retail and Government & Public Sector verticals at 1Lattice. He has varied experience of 25+ years in management consulting, strategy and business development in consumer, retail, and textile sectors. An MBA from Lancaster University, UK, Dhir can be reached at ashish.dhir@1lattice.com Nikita Maheshwari: Nikita Maheshwari is a Business Associate and has been with 1Lattice for 2 years. An Economics graduate from Lady Shri Ram College for Women, Nikita works on deriving meaningful market insights for the Consumer & Retail team with a focus on Fashion, Apparel, Textile, and Jewellery sectors. Sumeesha Dhawan: Summesha Dhawan is a Business Analyst at 1Lattice and part of the consumer and retail sector. A recent Statistics graduate from Lady Shri Ram College for Women, she collaborates with experienced and insightful professionals contributing to the synthesis of valuable insights.

Stepping into Growth: Unveiling the Indian footwear market

From the intricately crafted leather juttis of Rajasthan to the sturdy rubber chappals worn by farmers across the country, footwear in India boasts a rich tapestry of tradition and regional variations. However, the Indian footwear landscape is no longer solely defined by its heritage. Today, it is a dynamic and rapidly evolving market, poised to become a global force. As the Indian economy continues to evolve, the footwear industry stands at an exciting crossroads, marketed by innovation, sustainability, and dynamic shifts in consumer behavior. Footwear, which used to be a functional necessity has transformed into a powerful expression of personal style.

Today, the choices we make in footwear do not just impact our daily comfort but also our environmental footprint, social responsibility, and support for innovation. The Indian Footwear industry has acknowledged and embraced these changes wisely.

This article delves into the intricate world of footwear in India, exploring its multifaceted nature. We will get an overview into the market and notable investments that are shaping the industry. We will also help identify different drivers and trends encouraging the growth of Footwear in India. Additionally, we will explore India’s position in the export and import markets to understand the global positioning of the burgeoning Footwear Market.

By understanding these diverse elements, this article aims to provide a sneak-peak into the Indian footwear market. It will introduce businesses, investors, and anyone with an interest in this vibrant sector to the immense potential it holds.

Market Segmentation, Size & Trade Position

The Indian footwear market presents a vibrant and diverse landscape, a plethora of styles catering to every need and occasion. To navigate this dynamic terrain, we can categorize this market into five distinct segments, each reflecting a unique purpose and consumer demand:

  • Casual: This expansive segment encompasses the everyday essentials – comfortable flip-flops, sandals, and loafers
  • Sports: This includes Running shoes, sturdy hiking boots, soccer cleats among others
  • Formal & Party: This segment may range from Oxford shoes to high-heeled pumps
  • Ethnic: Exquisitely crafted juttis, kolhapuris, and a plethora of regional footwear styles
  • Specialty: The ‘Specialty’ segment addresses specific functional requirements. Orthopaedic footwear provides comfort and support for those with foot-related ailments, while rain boots offer protection during the monsoon season.

This diverse market is expected to reach a staggering Rs 139.6K crore by FY25, propelled by a robust Compound Annual Growth Rate (CAGR) of approximately 13%. This growth trajectory signifies the burgeoning demand for footwear across all segments – from the comfort-driven casuals to the performance-oriented sports segment, and the ever-evolving realm of fashion footwear.

The Indian footwear market is not only experiencing growth domestically, but it is also making significant strides on the international stage. Footwear exports from India witnessed a surge of 21.6% from FY22 to FY23, showcasing the increasing demand for Indian-made footwear on the global market.

However, this growth is accompanied by a rise in footwear imports to India, with the value reaching US$ 859 million in FY23, reflecting a 49.4% increase. While the United States remains the top destination for Indian footwear exports, followed by the UAE and the Netherlands, imports primarily originate from China, Vietnam, Indonesia, and Bangladesh, with China contributing a substantial 38.2% of India’s total footwear imports.

As per a government report, Tamil Nadu produced 45% of India’s footwear exports over the last five years in collaboration with several brands like Giorgio Armani and Gucci.

Driving Forces & Challenges Shaping the Indian Footwear Industry

The footwear industry in India is experiencing significant growth driven by several key factors. The increased demand for sports shoes, spurred by the pandemic’s emphasis on health and wellness, has led individuals to prioritize physical fitness, thus fueling the market for specially designed footwear that offers comfort, performance, and durability tailored to various sports and activities. Moreover, India’s growing population, projected to reach approximately Rs 151 crore by 2030, presents a vast consumer base poised to propel the demand for footwear across different segments. Despite the challenges posed by price inflation, with the Consumer Price Index (CPI) indicating a consistent uptrend, the footwear industry stands to benefit as higher prices are expected to boost overall industry revenue.

Millennials, comprising a substantial portion of the population, are influencing consumer preferences, particularly favoring comfort and fashion in footwear choices. This demographic’s affinity for trends such as sneakers as fashion statements has significantly contributed to the growth of certain segments within the industry. Furthermore, technological advancements, including investments in research and development, have led to the introduction of innovative features in footwear, such as smart shoes equipped with fitness tracking and health monitoring capabilities. These advancements are resonating with consumers and driving adoption, thereby contributing to market expansion.

However, the industry faces several barriers that warrant attention. Counterfeit products continue to undercut the market for genuine footwear, resulting in revenue losses for legitimate manufacturers and retailers. Complex inventory management remains a challenge, with excess inventory leading to high holding costs and impacting profit margins. Moreover, the presence of a significant unorganized sector presents hurdles for organized retailers in terms of pricing competitiveness and market penetration. Intense competition, characterized by price wars and pressure on profit margins, further exacerbates challenges within the industry. Additionally, the labor-intensive manufacturing process, involving tasks such as cutting, sewing, and assembly, poses difficulties in managing workforce fluctuations and associated costs.

In navigating these growth drivers and barriers, stakeholders in the Indian footwear industry must adopt strategic approaches to capitalize on emerging opportunities while addressing challenges effectively. This includes implementing measures to combat counterfeit trade, optimizing inventory management practices, and enhancing operational efficiency in manufacturing processes. By doing so, the industry can sustainably expand its market presence and capitalize on the dynamic landscape of consumer preferences and market trends.

Trends & Recent Investments

The industry is witnessing a profound transformation, driven by a multitude of emerging trends shaping consumer behavior and industry practices. Heightened environmental consciousness among consumers is propelling the demand for sustainable and eco-friendly materials in footwear. In response, footwear companies are embracing recycled materials, vegan leather, and sustainable manufacturing processes to minimize their environmental footprint.

Simultaneously, the integration of Virtual Try-On and Augmented Reality (AR) technologies into online shopping experiences is revolutionizing the way customers interact with footwear, allowing them to visualize products before making purchase decisions. The COVID-19 pandemic has further accelerated the shift towards online shopping and contactless retail experiences, amplifying the importance of digital innovations in the industry. The rise of sneaker culture is another prominent trend reshaping the market landscape, driven by the growing influence of hip-hop and streetwear. Limited editions, collaborations, and the flourishing resale market are key features of this trend, reflecting evolving consumer preferences for niche and distinctive footwear options.

Furthermore, there is a notable surge in the adoption of non-leather footwear in India, driven by factors such as affordability, durability, and increasing awareness of environmental and ethical considerations. This shift underscores a broader movement towards sustainable and ethical fashion choices. E-commerce and Direct-to-Consumer models are gaining traction, with brands increasingly focusing on building their online presence and bypassing traditional retail channels to engage directly with consumers. Innovation remains a central theme, with a strong emphasis on comfort-first designs and functionality to meet the evolving needs and preferences of consumers.

Lastly, collaborations between fashion and luxury brands with athletic footwear companies are becoming increasingly prevalent, aiming to merge style and performance while delivering high-quality products that resonate with discerning consumers. As the industry continues to evolve, these trends underscore the imperative for adaptability and innovation to thrive in an ever-changing market landscape.

This shift towards stylish, comfortable, and functional footwear is attracting significant investment allowing new brands to carve a niche for themselves in the global fashion landscape. Recent investments in footwear in India reflect the boom in the footwear industry and the change in consumer perception. Some recent investments include the following:

  • Agilitas Sports: Founded by Abhishek Ganguly, the former MD of Puma India and South-East Asia, has raised Rs 100 crore from Nexus Venture Partners. This funding is aimed at developing a range of consumer brands in the sports footwear and apparel sectors, catering to consumer needs which are shifting towards comfortable, and sporty.
  • Inc.5 Shoes: The legacy footwear brand raised its maiden venture funding of Rs 83 crore in a round led by Carpediem Capital. The retailer plans to use the funds to expand its store count, and expand into new categories. Inc5 focuses on creating comfortable footwear with premium materials.
  • Solethreads: D2C footwear brand raised Rs 31 crore in a Series A round led by Fireside Ventures. Solethreads aims to expand its business which is focused on innovative products that apparel to Gen-Z and early Millenials.
  • Neeman’s: The burgeoning awareness of sustainability is also shaping the Indian footwear market. Neemans, a Mumbai-based brand, is leading the charge with its eco-friendly footwear collection. Their shoes use recycled materials and plant-based alternatives, resonating with consumers who want to look good while doing good for the planet. Neeman’s raised close to Rs 40 crore / USD 5.15 million in a Series B round led by Sixth Sense Ventures.

Conclusion

The winds of change are therefore sweeping through the footwear industry, driven by evolving consumer preferences, rapid technological advancements, and a growing emphasis on sustainability. This dynamic landscape presents a compelling opportunity for the Indian footwear market, projected to reach a significant value of Rs 139.6K crore by FY25 with a robust CAGR of 13%.

However, a competitive terrain awaits. Established players face a formidable challenge from innovative startups and the burgeoning resale market. To maintain a competitive edge, companies must strategically embrace technological innovations, leverage data analytics to gain deeper insights into consumer trends (such as the surge in popularity of sneakers), and consider transitioning to sustainable materials.

Millennials and Gen-Z are at the forefront of this transformation, demanding footwear that prioritizes not just style and comfort, but also environmental responsibility. This shift necessitates transformative innovations in materials and manufacturing processes, ensuring the industry seamlessly adapts to these evolving needs.

Undeniably, challenges persist. The rise of counterfeit products and the complexities associated with inventory management within a partially unorganized sector demand careful planning and creative solutions. Navigating this dynamic market requires a proactive approach to addressing these issues head-on to ensure the industry’s continued growth and stability.

Looking ahead, the potential for significant expansion in the Indian footwear market is undeniable. By capitalizing on emerging opportunities and confronting existing challenges strategically, the industry is poised for a remarkable journey of growth and expansion.

Sources:

  • 1Lattice existing IP: The Sole of Fashion, Footwear Industry Report
  • 1Lattice deal database
  • PMNDP (2023)
  • GlobeNewswire
  • Ministry of Commerce and Industry
  • Infometrics

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