The move is part of the multinational company’s post-pandemic strategy to set up regional hubs and teams for both designing and manufacturing of footwear to feed its global stores network. The footwear retailer is also looking to set up similar facilities in Latin America as well as other parts of Asia, he added.
“The coming together of a sourcing hub will give us an opportunity to really take forward our global sourcing. In a way, almost all our global sourcing was coming out of China. So, this does give us an opportunity to be China plus one (strategy). It could be India, it could also be Indonesia or Bangladesh; in Latin America, it could be Brazil or our own factory in Colombia could do much more for the region," Kataria said.
The pandemic had disrupted supply chains and goods movement across the globe leading to product shortage. That apart, freight costs have also moved up significantly. As a result, many companies are looking to localize production and supply chains to reduce their dependence on a single region.
“Instead of having just one sourcing opportunity— from China — we’re saying, we can have five sourcing hubs and one among them will be based out of India which will be a source for several of our markets, depending on the right design, the right quality and right pricing."
To establish a sourcing hub Bata is looking to have a common collection, a common product line, partners or vendors who can manufacture best-in-class products and “to ensure logistically we are able to get to the right levels, from shipping, transit costs and duty structures."
Collection and merchandising teams in India are already servicing demand from other regions. “So, one of our successes out of India has been the floats range of casual footwear based on a breakthrough design. They tried it out in India and now they are actually sourcing it, making sure it’s got the relevant lines, SKUs (stocks) and sizes for the whole world," Kataria said.
Prior to covid-19, sourcing of goods from India was ad-hoc, but sometimes, products were exported to Europe and Kenya, he said. Scaling of the sourcing operations has already started and “the plan will be fully in place by the middle of next year", Kataria added.
The company has a strong base of suppliers in India, who produce a variety of products. The latest move could help the company expand its supplier-base.
Kataria said the Indian market had steered well despite the pandemic-led disruptions, and the current inflation-related challenges that are causing ripples across global economies. In the first quarter of FY23, Bata India’s operating revenue grew over 250% from ₹267 crore to ₹943 crore. Consolidated net profit grew 71% in the same period.
“India has done really well to navigate through this. It is at a sweet spot and it’s our opportunity. Fortunately, we don’t have too much exposure to the developed world, which is, I think, currently bearing the brunt," he said.
Europe is also facing multiple challenges, including the ongoing conflict in Ukraine, as well as an energy crisis. As a result, markets outside Europe have contributed to the footwear company’s growth in recent times.
“Growth for us has come from the other markets in the recent past and I think it will continue—that’s an opportunity for us. I’m actually quite optimistic about our business in Italy as well; Spain was our biggest growth market last year. We’re very cognizant of the volatility and macro-economic issues, which are coming up, so we do need to tighten our belts, especially in Europe," he added. “But I’m actually looking at it with a reasonable level of optimism."
Founded in 1894, Bata Corp. is a family-owned business, which sells over 150 million pairs of shoes annually via its 5,300-plus outlets, and owns 21 manufacturing facilities across five continents, including four in India. Its products are sold in 70 markets globally.
