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- 1. Fundamental Analysis of METRO BRANDS . Submitted by, Akash A V
- 2. Outline Highlights of the overall industry Key Points about the Industry Concepts and Different Strategies in Retail Market Analysis of footwear retail segment Why are we analysing the Footwear Industry Business analysis Market for men, women & children’s footwear Pricing Segments: Mass, Economy, Mid & Premium Company analysis – Metro brands Metro’s revenue mix and P2P Analysis Business Strategy OF PEERS Financials And share price of METRO and also PEERS OF METRO
- 3. Highlights of the overall industry • Revenue in the Footwear market amounts to US$27.51bn in 2023. The market is expected to grow annually by 4.60% (CAGR 2023-2027). • The market's largest segment is the segment Leather Footwear with a market volume of US$18.95bn in 2023. • In global comparison, most revenue is generated in the United States (US$98.26bn in 2023). • In relation to total population figures, per person revenues of US$19.38 are generated in 2023. • In the Footwear market, volume is expected to amount to 2,705.6m prs. by 2027. The Footwear market is expected to show a volume growth of 1.8% in 2024. • The average volume per person in the Footwear market is expected to amount to 1.8 pairs in 2023. • By 2023, 98% of sales in the Footwear market will be attributable to Non-Luxury goods. • Recently, Union Minister Piyush Goyal also said that India’s footwear sector has immense potential, and it can increase production and exports 10 times in the near future.
- 4. Key Points about the Industry An observable global trend is that the retail industry does well when the economy does well. Why & how does this happen? GDP of a country = C + G + I + (X — M) C= Country's Pvt Final G= Govt.'s Spending I= Investments in the Country (X— M) = Net Exports (Exports— Imports) In India, 59-60% contribution to GDP comes from Pvt Consumption Expenditure. Other countries like the U.S.A. have higher Pvt Consumption Expenditure. This simply indicates how much we consume. The greater our consumption the more growth there is in the retail sector.
- 5. Concepts and Different Strategies in Retail Market A heterogeneous market – where different strategies work. Example: In the U.S.A low cost retailers like Walmart & Costco have done well in the last 4-5 decades. Luxury retailers like Louis Vuitton & Hermès have also done well. DMart's business strategy is: Everyday low cost, everyday low prices. This is a Value Focused strategy. V-Mart has also done well. Its strategy is creating a mass value brand. You can get products for as low as ₹250-300 They're targeting a different segment Moving to a different category: Titan, Titan means trust. Titan's jewellery business has achieved 10% market share after 2 decades. There's a different type of strategy playing out here. Indian cos like Bata & Relaxo have also done well in the industry. Other e.g. include Vedanta Fashions Ltd.; it owns Manyavar, Manyavar has become a brand associated with any wedding festivities in India. Manyavar is leaning towards luxury retail for Indian weddings. Trent has 2 business strategies: Value Fashion & Fast Fashion.
- 6. Relaxo, strategy is low cost catering to masses. Metro Brands' avg. selling price is ~6-7x higher than Relaxo. Bata, on the other hand, falls in the middle. It's important for us to know that retail as a sector within a growing country also does well.
- 7. Analysis of footwear retail segment There are 5-6 terms you must know about to understand the Retail Industry. There are 2 Modes of Store Ownership. 1. COCO Model 2. FOFO Model 1. COCO Model: e.g. include D Mart & Metro Brands. Metro Brands model is Co. Owned & Co. Operated (COCO) 2. FOFO Model: Franchise Owned & Franchise Operated. To scale up your business, decided to distribute franchises of your co. e.g Vedant Fashions, Bata (gradually moving towards FOFO model) because the scaling is faster this way. Cons of the FOFO & COCO model.
- 8. These are 2 models of Store Ownership. There are different Types of Outlet Selling. 1. Exclusive-Brand Outlets (EBOs) - Page Industries' Jockey stores that sell only one brand is an e.g of EBO i.e, Exclusive brand outlet for 1 brand. 2. Multiple Brand Outlets (MBOs) e.g., Shoppers Stop (departmental stores) have several MBOs where different brands are sold. Metro Brands, have their own & other brands. This is an e.g, of MBO: 3. Large Format Stores e.g Lifestyle & DMart if you have a shoes counter in such stores is an e.g. of Large Format Stores. This is also called SIS: Shopping In a Shop. 4. E-Commerce E-Commerce within the Footwear Industry is rapidly growing & it's expected to contribute 9.8% towards the industry.
- 9. Why are we analysing the Footwear Industry Compounding market cap of the top footwear retailers
- 10. Business analysis Sectors that create wealth globally, usually domestic sectors also create wealth in India. Types of Footwear & Market Sizes
- 12. Market for men, women & children’s footwear
- 13. Market for men, women & children’s footwear Gradually organised market is increasing in the footwear industry.
- 14. Pricing Segments: Mass, Economy, Mid & Premium
- 15. Percentage Wise Mix As the middle class grows, the aspirational expenditure will also grow. Whenever aspirational expenditure increases, India's current per capita expenditure on footwear increases which will reduce the replacement time of footwear.
- 17. Company analysis – Metro brands • Metro Brands include a mix of their own brands & other brands, 70-75% of their business comes from their brands & 25-30% business comes from 3rd part brands.
- 18. Selling Model/Value Chain of Distribution. 1. Metro sells through its own Exclusive Brand Outlets (EBO) 2. Multi Brand Outlets (MBO) 3. Large Format Stores 4. E-Commerce platforms like Mantra, Jabong etc. 5. Distributors who further sell to the Retailers. There are 4 different formats in Metro Brands
- 20. Top Down & Bottom Up Investing. Top-Down: Metro's focused on the Premium, Mid & Economy segments. Bata is focused on the Mass (Mid) & Economy segments. Relaxo is purely focused on the Mass segment & that's probably Relaxo's Moat. P2P Analysis
- 21. Business Strategy OF PEERS ARE Relaxo owns its manufacturing units Metro has a 100% outsourcing model Campus In-House Manufacturing for uppers is 10% In-House assembly. 90% Uppers Outsourcing Khadim's has 2 manufacturing plants in Kolkata & Kanpur. They follow an Asset Light Strategy. They've also signed 2 exclusive outsourced manufacturing facilities Mirza has 6 integrated manufacturing facilities pan-India. Outsource production of footwear to China who exclusively manufacture for Mirza. Bata's 4 manufacturing plants are located pan-India
- 22. FINANCIALS OF PEERS OF METRO
- 23. SHARE PRICE GROWTH OF METRO & ITS PEERS
- 24. METRO BRAND GROWTH STRATEGIES Store Expansion Addition of new brands like Crocs, FitFlop, etc Crocs acceptance in India High TAM Repeat Purchase Repeat Purchases through the Loyalty Programme CHALLENGES Inventory led model Change in taste & preference of the customer Recent IPO
- 25. Conclusion • The footwear industry is a large and diverse market that includes a wide variety of products, from athletic shoes to dress shoes to sandals and beyond. • Some key trends in the industry include the growing popularity of sustainable and eco-friendly materials, the increasing use of technology in shoe design and manufacturing, and the growing importance of e-commerce and digital marketing in reaching customers. • Additionally, the industry is highly competitive, with many large companies and numerous smaller, independent brands vying for market share. • Overall, the footwear industry is likely to continue to evolve and change in response to shifts in consumer preferences, advances in technology, and changes in the broader economic and political landscape.
- 26. THANK YOU