The global footwear market is estimated to be worth $300 billion. This market is driven by factors like rising disposable incomes, urbanization, and changing lifestyles. These factors have led to a significant increase in demand for footwear, particularly in developing countries. The global footwear market is experiencing a shift towards sustainability.

This is a significant shift in consumer behavior, and it’s a trend that’s likely to continue. The Indian consumer is becoming increasingly sophisticated, and they are no longer satisfied with just basic footwear. They are looking for quality, style, and brand recognition.

They have also strategically invested in marketing and advertising campaigns aimed at appealing to a younger and more affluent customer base. This approach has been successful, leading to a significant increase in sales and brand value. Here’s a breakdown of the company’s ‘premiumisation’ strategy:

* **Innovative Designs:** Bata has introduced innovative designs that incorporate modern trends and incorporate cutting-edge technology.

This has complemented the volume growth, which has been in double digits in the post-pandemic years. Higher gross margins have also propelled overall return ratios into a higher orbit from 14% in financial year 2018 to 23% in financial year 2024. However, its relatively newly listed competitor, Metro Brands, which has been in the footwear retailing business for six decades, decided to focus purely on branding and licensing. Over 70% of Metro Brands revenue comes from its private brands and the plan is to strengthen that portfolio. While the flagship Metro brand is positioned as a family footwear store, Mochi is meant for the millennial consumer.

This strategy allows the company to tap into the established brand recognition and customer loyalty of these global brands, while also leveraging its own retail expertise to create a unique and engaging shopping experience. The company’s focus on exclusive brands has led to a significant increase in its revenue and profitability. This is because these brands typically command higher prices than their competitors, allowing the company to increase its profit margins.

**Company-owned stores** allow the company to maintain complete control over its operations, from product selection to pricing and customer service. This control enables the company to optimize its supply chain, reduce costs, and maximize profits. **Franchise model** on the other hand, relies on third-party operators who are responsible for managing the store, sourcing products, and handling customer service.

Metro Brands, a leading footwear retailer, has been actively expanding its digital footprint and e-commerce capabilities. The company has implemented separate platforms for its three umbrella brands, allowing for targeted marketing and personalized customer experiences. Metro Brands is also investing in its digital presence through various initiatives, including website optimization, search engine marketing (SEM), and social media marketing.

This network, however, faces challenges. One of the biggest challenges is the lack of a unified platform. Currently, the company operates multiple platforms, each with its own unique features and limitations. This fragmentation leads to inconsistencies in customer experience, making it difficult for customers to find what they are looking for. Another challenge is the lack of personalization. While BATA offers some personalization options, it is not as comprehensive as competitors.

This strategy aimed to increase brand awareness and reach a wider audience. The company’s focus on building strong relationships with retailers and distributors, along with strategic marketing initiatives, helped to achieve this goal. For example, the company partnered with a leading retailer in the fashion industry, such as Zara, to launch a flagship store in a prime location.

* **Market Sentiment:** The high P/E ratio reflects a strong belief in Metro Brands’ future growth prospects. Investors are willing to pay a premium for the company’s potential, even if its current valuation is already above its historical average.