Tuesday, 21 February 2012

Woodland Plans To Enter In China

In a first-of-its-kind move, Woodland Shoes is looking at foraying into markets of China and Southeast Asia, according to the homegrown player in the country's premium outdoor shoe segment.

While the company already sells through other retailers in markets of the Middle East, this is the first serious foray abroad where an Indian footwear retailer is looking at setting up shop in China.

Over the next five years, says Woodland, the ratio of revenue the revenue from operations in India and abroad, will go up to 50:50 as opposed to the current 90:10, respectively.

"At present about 10 per cent of our revenues come from our foreign sales," says Harkirat Singh, MD, Woodland Shoes. "Over the next five years, we expect half of our revenues to come from abroad."

Woodland, which is unlisted, is the first Indian footwear player to be looking at creating an international footprint. Of the other players, only Hidesign, in the apparel and handbag space till now, has some international presence till date.

For the purpose of this foray, Woodland Shoes is already in talks with a couple of Chinese players. "We have finalised two of the leading players," reveals Singh. "We will soon close a partnership with one of them. The nature of the partnership is being worked out."

Woodland is already creating a distribution network for supply to the markets of China and Hong Kong. The ultimate foray will be a mix of sale through existing retailers and exclusive showrooms.

Among other options, the partnership being discussed translates into a knowledge sharing joint venture where the Chinese partner will use the Woodland platform to foray into India and vice versa.

Singh does not rule out a stake sale, saying that while for expansion in India, they have not yet needed major capital influx, expansion abroad might be different. "We are in talks with the Chinese partners," he says. "We might look at offloading some stake as well." The first exclusive Woodland store should be rolled out by October this year.

Woodland currently has 350 stores in India, and retails through other multibrand players as well. The number of exclusive stores says, the company will go up to 500 stores by the end of 2013, at a total investment of about Rs 150 crore.

According to data by market research agency Rncos, the Chinese footwear market is pegged at Rs 75,000 crore -- almost three times the size of the Indian footwear market, which is currently pegged at Rs 20,000 crore by analysts. While the Indian market is growing at 10 per cent, the Chinese market is growing at over 20 per cent, notes Singh.

Rncos says "almost everybody" is sourcing from China. "No one seems to have looked at the opportunity that the domestic Chinese market provides because of the sheer numbers," points out its managing director Shushumal Maheshwari.

The Chinese market is dominated like India, by unorganised players. In the organised segment, the leading players are Yue Yuen, Li Ning, New Balance Athletic Shoe, Nike, Pegasus and Brown Shoes.

According to other analysts tracking the company, while the Woodland foray into an international franchisee model might be new, the company has a range and product that might just make this a success.

"The look and the feel; the name of the product is not really Indian, might just appeal internationally," according to Pinaki Ranjan Mishra, partner and national leader, retail and consumer products practice, Ernst and Young. "Also, given that the range is specialised, Woodland might create a market." Woodland sales stood at Rs 570 crore. The company has projected these to grow to Rs 700 crore for the 2012 financial year.
http://www.business-standard.com/india/news/woodland-plans-to-foray-into-china-/465198/

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