In a rare TV interview, Thomas Archer Bata, Global Chief Marketing Officer at Bata, tells CNBC-TV18 that they are expecting margins of the Indian business to be strong.

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Bata expect company to end FY18 with topline growth in low double digits and expect strong margins on back of more premium push.

"India's share to Bata Global revenues currently at 15-16%," he said, and expected India to be the largest market for Bata by 2019.

Bata said, "Expect India business to clock revenue of $1 billion in four to five years."

The company will be opening 80-100 new stores every year in India, he said.

Edited Excerpts:

For most Indians, Bata is actually an Indian brand. But at the same time, you are now trying to rediscover the brand. Why do you want to do it, many would wonder, just leave it as it is?

I think, for us Bata in many ways is an Indian brand. At least, it has an Indian soul, it has been here for so long, it has been part of the culture, and countless generations have grown up wearing school shoes, father and son visiting stores together. So why do we want to change the image? It is because as the world becomes more globalised, it is really necessary for us to be on top of the trends. If you like it or not, the perception is that international brand, it is a little bit more aspirational than the local brand.

Your biggest strength was Bata, Indian brand, sense of familiarity, has that now become your Achilles heel?

To an extent the tradition does help us, it means that we are relevant, we are trusted, but it is hard to be cool when you are a traditional brand. So our challenge is to bring a little bit of coolness to our tradition and appeal to the younger generation.

So your biggest challenge then would be the fact that I have worn Bata, my parents may have worn Bata, but the challenge is will my kids wear Bata;?

Absolutely. It is how do we get your kids to come, 20 year olds, 25 year olds and just the whole kind of transitional generation.

So how are you doing that?

First of all, we are starting off with products. We have to have the right products. So we have taken an approach whereby we actually really understand the consumers, understand what they are looking for and then we bring those products as quickly as possible to market. So we introduced lots of new collections in our Power brand, North Star brand, Bata brands, which are bit more relevant to young consumer and second of all is cool engaging marketing that they can actually see. What I always hear from Indian consumers is I have not seen Bata marketing in years, so, that is something we are trying to change now.

You are trying to reintroduce different kinds of brands, would I find those brands always under the Bata showroom or is there even a possibility for to spin them off as a separate brand identity and perhaps separate stores for them?

Totally yes, absolutely. It is actually something we are doing at the moment. Let us say for example Power, it is a brand that we have completely rejuvenated over the last year and a half. Now we have signed up the vice-captain of Indian Women's Cricket team, Smriti Mandhana, and she is basically helping us launch some of our more premium lines.

So, now we are bringing much more colourful, technological lines to the brand, slightly higher price point, but extremely good value still. Opened real purpose Power store, a few weeks ago in Noida and we intend to spin that off. We wanted it to create a strong athletic brand in its own right. Then we are looking at other brands such as North Star, Bubblegummers, each catering to a slightly different segment.

That will be a complete overhauling of so far your branding strategy which you have followed since 1932. if each of these brands could potentially then have their own distribution network, then it is like completely changing the way you have done the business.

It is a big change. However, we believe that the father company Bata is guaranteeing the trust, that quality which people have been used to. Each one of the brands has to take its own life at some point. They have to build their own story, and their own association with the consumer.

Currently it is only brand Power, which has its own distinct identity outside of the Bata retail?

We have always had Hush Puppies, it has probably been the first one we did. In terms of appealing to the youth segment Power is going to be the first big play we are making.

How many more brands will follow Power?

The youth segment in general is interesting. So, Bubblegummers is a concept we are looking very seriously at. As consumers join middle class, as they care more about child, child health, safety, we think the kids premium market is going to grow exponentially and we are already seeing signs of that.

Even though the brand is so ubiquitous across the country, I was trying to dig up what your market share would be and I am also trying to figure out how do you compare Bata's market share because you produce all kind of shoes. Is there some number or something that you can share with me, where does it stand right now?

We are definitely the largest footwear coming in India. Unfortunately market data is a little bit difficult to come by because you have strong informal sector. But if you look at us we are twice the size of our closest competitor. I think we still have huge potential if you look at brand recognition compared to the volume that we sell today. We are market leaders in the sports category, Power is the largest sports brand in India. It is not necessarily recognised as such, so that is something that we will be working on going further.

Overall you are producing between 55-60 million pairs of shoes. How do you see this quarter that has just gone by, how do you see finishing financial year 2017-2018?

For us, 2017 was a good year. We had great bottomline growth, we had good topline growth. This year our challenge is to accelerate topline growth. Last few years we have been delivering great profits, exceeding expectations. This year with all these new initiatives coming online we will be disappointed if we didn't get into the double digits kind of growth.

Earlier you have said that $1 billion revenue is what you are targeting. You have to double that from where you are or perhaps even more than that. Can you give us a timeline then, when do we see that happening?

Realistically we expect to get in the double digits this year and then maintain that. So, with that rate we are looking at four to five years timeframe, it depends a little bit on how quickly we can ramp up some of our initiatives. We have initiatives like Power, we have identified the sports athletic market in India as a huge opportunity, relatively uncompetitive compared to other countries, especially in the segment that we are looking at which is let us say the mass market, mid prices. We think Power can play a huge role in accelerating our growth as well as expansion to smaller cities.

Another thing that we have identified is that there are over 450 cities in India with 100,000 people where we don't actually have a presence. So, those are the towns where we have started to dabble a little bit and started to open franchise stores. The results have been very interesting. So, that is a low hanging fruit that we see.

In big cities the stores are directly operated by Bata but in the smaller cities you are adopting a more franchise led model?

Yes.

Since you mentioned that you expect to end this financial year on a low double digit kind of growth and you would be disappointed if you didn't. So, far in the first three quarters your overall revenues have grown by about 6.5-7%, that means you are expecting a substantially good Q4?

We are expecting this quarter and the next quarter to be even better because many of our initiatives that we have launched last year are just coming into force now because there is a bit of a lag time. Products such as the Red Label Collection, we believe have huge potential in terms of revenue growth. We are going to market aggressively, announcing some new collaborations, new brand ambassador in the next few days.

Who would that be?

Kriti Sanon is our new brand ambassador. We are working with her to launch this Red Label which appeals to younger demographic.

Can you explain the Red Label format, you started this in Italy and now you have started here. Tell more about this, how is this different from what Bata is already doing here?

This is a new format that was developed about six months ago in Italy. Concept behind this format is to make the product the king. We have incorporated red and white as the primary brand colour to give it a much more identity than our previous concepts. It has a fresh new look, very modern, very easy to shop, where service becomes the essential factor in the shopping. So, products, service and if you look it is a very attractive, very different from the past.

Can you give us a sort of a roadmap over the next two to three years, or let us just say over the next four to five years since you have said that is when you will hit $1 billion revenue. It will come on the back of how many more additional new stores?

At the moment we are opening about 80 to 100 stores a year. We are also remodelling a large number of stores in the new concepts and we expect that to maintain or even increase, especially if we look at rolling out our franchise model. That will give us an opportunity to accelerate the number of openings.

But roughly 80 to 100 is what you have been doing, and that is roughly what we will see?

We expect to continue with that.

As you stand here today, what do you think are two or three of your key challenges?

Our number one challenge remains the same as it was, appealing to a larger demographic and younger consumers. I think it is a tradition that takes time, I do not think, especially a shoe brand, equity is built over a very long period of time. It is not that impulsive. So people already have preconceptions of what they expect. So just to get those people surprised, let them come one time, that is all we need, come back one time, you will be surprised by what you see and then you are converted. So that is probably number one.

Our second challenge is how to incorporate technology into our business. I think we have been, if you look at perhaps the market in general, there has been a huge shift towards e-commerce, towards researching online, towards analytics in your purchase decisions, etc. This we are catching up, we have our Bata Club with 18 million members already here in India, which are giving us feedback on constant basis, we have our e-commerce shop, which is growing but we are still not offering to the level that we want to offer, a seamless omnichannel experience. This is something that we are going to be delivering in the next little while.

How are you seeing this whole e-commerce revolution because your presence there is still negligible considering your size? Can you be more specific about your plans as far as e-commerce omnichannel that you spoke about?

First of all we believe brick and mortar retail will always remain an essential part of our business model. We, as people, if you like it or not, we are social beings, we like to go out of our house, we like to go to a shop. However, what will change is that the research of what I want to buy will be predetermined. So, we believe people will be looking on their phones, will be sitting on their couch at home choosing the shoes they want and maybe they are not going to necessarily order to their house, but they will book it at least online, come to store, try it on because sizing is still a big issue in footwear and people are scared to order online, come to store, have the experience which is quite pleasant, and then hopefully buy something else which is another thing that we like.

So India is now your second largest market after Italy. Over there, of course, growth is stagnating. One would assume it is just a matter of time for India to becomes your largest market. Can you give me a sense by when do you expect India to be the numero uno for Bata?

We expect 2019 will be the year that India would become the number one business for us.

Currently it contributes 26-27%?

Little bit less, we are talking more like 15-16%.

When do you then, would you see India's share going up now considering all these?

I think it does, especially if we are talking about reaching our $1 billion target, India just with the mass of population and is the fastest growing economy in the world, it will only be natural that India should keep increasing its share.

First Published:Apr 20, 2018 4:08 PM IST