Despite of hostile market condition and tough competition, Relaxo has managed to maintain a substantial annual growth of 20 per cent, which is very high as compared to its competitors.
Bata is one name which has been dominating the Indian footwear business from ages. Almost every Indian has adorned this brand once in his life but recently, the brand has been facing a tough run against its counterpart Relaxo. According to the speculations hovering in the market, Relaxo is rapidly climbing up the ladder and chances are that it might overtake Bata soon.
The recent revenue figures show that Relaxo’s revenue figures have shot up to Rs 6,000 crore from 2,000 crore in 2011. On the other hand, Bata has managed to lead the race with a slight margin of 7,069 crore. Despite of hostile market condition and tough competition, Relaxo has managed to maintain a substantial annual growth of 20 per cent, which is very high as compared to its competitors Bata and Liberty shoes. At the same time, both the companies are floating with an annual growth rate of 9 per cent.
Unlike Bata India, which has several outlets, Relaxo focused on increasing the dealer network for its growth. This innovative move struck a right cord for the company and broke the stereotype business model which was being followed from ages.
This saved the fixed monthly costs such as rent, employee cost and power. Industry experts also believe that the feedback on market trends and product demand provided by the dealers helps in catching up with customer expectations. Another challenge was low margin on its products. Relaxo has slippers and low-price shoes in its portfolio. Besides, high working capital cycle was hampering growth as most of the capital was stuck in the system. To resolve this, it gradually shifted the product mix towards high-value products such as floaters and sports shoes under the brand 'Sparx'. Lowering rubber prices also helped. With improving cash flows, it started investing in branding and advertising.
In order to catch the nerves of the youth, Relaxo pulled in some of the big names of Town-B such as Salman Khan, Akshay Lumar, Katrina Kaif etc. this move has hit the nail on the head. Market experts feel that if the company continues to walk on the same aisle, it will soon outrun Bata in the race.