Bata will slow down expansion of its own store network and hand out more franchises to tap into rural and semi-urban markets.
This is something we have never done before, referring to the plan. Currently, all our stores are company-owned.
Rajeev Gopalakrishnan, managing director and chief executive officer of Bata.
Bata, which has at least 1,265 retail stores across 500 cities, has started experimenting with the franchise model: its partners have launched around 30 stores in Gujarat, Madhya Pradesh and Uttar Pradesh.
Typically, Bata launches around 100 stores every year, but this will change as the company will now focus on expanding its distribution network through franchisees. Over the next two years, Bata aims to add 200-300 new stores under the franchise model.
The rural market has a lot of potential, said Gopalakrishnan. But the company needs to offer a different product line. Bata already has within its portfolio some products that are expected to do well in rural markets, but the company needs to develop more.
In the last fiscal year, Bata added only 26 new stores. The company also sells select lines through some departmental stores. Currently, 80-85% of its revenue come from its own stores.
Online sales are growing, but for Bata, it is still at 1.5% of its total revenue, Gopalakrishnan said. Bata sells from its own e-commerce platform and through other online retailers such as Jabong and Amazon, but offers only a small collection for sale through this channel to protect its own retail outlets.