Wednesday, February 24, 2010

Khadims Looks at being the No 2 organized footwear franchise retail brand.

KOLKATA: KM Khadim & Co Ltd was a nondescript footwear shop at Chitpur in Kolkata, one among the hundreds of outlets that dotted eastern India’s footwear factory when it was bought by Satya Prasad Roy Burman in 1965. The wholesaler blended with the multitude of unorganised players that dominate the city’s shoe industry, a trait its shares with the country’s footwear market, for many years.

But in 1993, Mr Roy Burman and son Siddhartha saw that the future was in retail and decided to make the leap. Backed by a formidable team of karigarhs (shoemakers) who deliver low-value products by the thousands, they first set up 3 stores in Kolkata. The move paid off.

Khadim’s — the moniker was retained as a tribute to its previous owner — is today the country’s third-largest organised footwear retailer. It is the top player in the east with a mushrooming empire of 499 retail stores across India. The company’s products go off the shelves off independent dealers as well.

The company also owns a 30,000 sq ft superstore, Khadim’s Khazana, near Kolkata that offers a scrum of products under one roof to people residing in the suburbs as well as two Sona Khazana stores, which marked its foray into the jewellery business.

Though it has a factory that makes wash-and-wear and premium leather footwear, Khadim’s’ success primarily rests on its outsourcing strengths. The company relies on over 200 third-party vendors spread across eastern India and northern leather product hubs such as Kanpur and Agra for sourcing material and finished footwear.

According to a rival company executive, Khadim’s hits the high spots on merchandise and pricing as well as distribution. Khadim’s specialises in affordable products, with prices starting at Rs 70. The wide variety of shoes in its portfolio includes footwear for men, sporty and sports shoes, comfort leather shoes, stilettos and fashion wear. Aggressive marketing has helped in a high brand recall among customers.

The efforts have helped Khadim’s to a turnover of Rs 200 crore in 2008-09 and an estimated Rs 240 crore this fiscal. “We’ve perfected our setup over the years,” says Siddhartha Roy Burman, managing director of Khadim’s.

There have been mistakes though, such as Egaro, Khadim’s lifestyle retail venture, where it burnt its fingers. Egaro was launched with much fanfare in 2007 with two sprawling stores but the plan folded due to high rentals and low footfalls.

“Each failure has been a learning experience,” says Siddhartha Burman. “We should have started small with Egaro as it was new to us. After all, we don’t have very deep pockets.”

Having learnt its lesson, Khadim’s plans to focus singularly on footwear retailing. The company owns only 70 stores while the rest are franchises, a status quo it wants to change. Plans are afoot to open up to 80 stores every year till 2013. “The aim is to ramp up its own stores to 150 and become a Rs 500-crore company by then,” says Siddhartha Burman.

The moves come as the footwear market is estimated to have grown to around Rs 12,000 crore with the entry of a raft of global players such as Skechers and Pavers, a far cry from the handful of companies present in the organised space at the time of Khadim’s entry.

But Khadim’s is unfazed by the changes. “We treat our franchise stores like our own. We share everything with them: our good practices, servicing, team management tips, even the salesman’s salary,” says Burman Junior.

Still, pressure from players in the unorganised segment is mounting as they become cost-competitive and tap into the rural market for growth. But Khadim’s believes it has swathes of customers who will not switch loyalties. “Total footfalls over our own stores and our franchisees is about 40,000 per day,” claims Mr Roy Burman.

The company is also trying to win over new customers through constant innovation. New products such as orthopaedic and anti-skid technology shoes have been launched in recent months. Khadim’s also tries and keeps abreast of the latest fashion trends and fits them into the portfolio.

The company is now taking a shot at surpassing Liberty Shoes, its closest rival, though Bata India is presently out of reach with its 1250-plus retail network. “We are right on track,” says Mr Roy Burman.