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Thursday, January 13, 2000

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Can Liberty do it?


Stepping into market leader Bata's shoes is a pretty tall order. Liberty Shoes, however, seems confident the question is not how, but when. How firmly are the company's feet planted on the ground?

RATNA BHUSHAN

It's been some journey for Liberty Shoes Ltd's Executive Director, Adarsh Gupta _ a journey that has propelled him from being a shoe exporter in the early '80s to the country's second largest footwear company, right behind the big 'un, Bata. However, Gup ta isn't swayed by his successful exploits; he has his feet planted firmly on the ground... and, well, in Liberty shoes.

Indeed, this no-nonsense, finger-on-the-pulse attitude has been the cornerstone of the group's strategy and vision. Gupta's agenda is clear: upstage Bata and turn Liberty into India's leading shoe company. Further, drive the company's turnover from the c urrent Rs 300 crore to Rs 650 crore by 2003. Says he: ``We are already the No. 1 company in terms of brand image, innovation and quality. We want to become the leader in sales too.'' An overweening ambition?

Market reactions suggest the claim is not necessarily over-ambitious. Says Parmit Chadha, Director, Paradigm Management Knowhow Pvt Ltd, a Chennai-based research firm: ``Four years maybe a short time for Liberty to outperform Bata. But it will certainly narrow the gap to a large extent.'' Echoes B. D. Nathani, Vice-President, Marketing, Woodland Shoes: ``Though Liberty's turnover is at the halfway mark compared to Bata's, the former could reach very close to Bata within four years.'' Nutshell, a report prepared by Paradigm, reveals that Liberty was rated the No. 2 brand among shoes by the Adam syndicated bi-annual tracking on male fashion done by MBL-RCG about a year ago.

What would further work in Liberty's favour _ in fact, in favour of the entire industry _ is a burgeoning market for footwear. By value, the domestic footwear market is estimated at a little over Rs 5,000 crore, of which the organised sector is worth rou ghly Rs 900 crore. According to Gupta, only about 5 per cent of the total Indian population buys branded footwear, an indication of the huge potential. He observes: ``As a manufacturer, opportunities for growth are enormous. Even if the overall market re mains stagnant, growth will come.''

At the micro level too, the scales seem tipped in Liberty's favour. Though Bata's vice-like grip on the market continues, analysts say it may have lost its sheen somewhat. Says Chadha: ``Liberty is far more focussed and very marketing-oriented. Besides, it has a vast product range.''

Liberty's existing portfolio of 10 sub-brands includes 1,200 styles and it replaces 75 per cent of its styles every year. As for the others, while Woodland deals only in casuals, Lakhani and Relaxo sell mostly in the non-leather segment. Action is predom inantly focussed on sports and non-leather shoes, while sports shoes are the stronghold of Nike, Reebok and Adidas. Competition for Liberty, therefore, is largely fragmented.

Says Gupta: ``At the corporate level, we are fighting Bata. But at the product level, there's no competition because Bata's prices are much lower than ours.''

Liberty has adhered firmly to the 4 Ps of marketing. Observes Chadha: ``Liberty's attempt has been to establish an FMCG-like corporate profile, which is rather unusual for a footwear company. Further, they have clearly defined strategies for each of thei r sub-brands.''

The strategy: Create multi-brands under one umbrella label, plug existing gaps in consumer demographic profiles, and broadbase pricing to a large extent. ``We decided to adopt a multi-brand strategy knowing that the market would shape up,'' says Gupta.

While there's Force 10 for casual sports, there's Geo Sport in the performance shoe slot. Windsor and Fortune are men's formals, Senorita and Tiptopp comprise the women's range, Footfun is for kids, and sandals and chappals fall under the Gliders and Coo lers labels. While the prices are mass-oriented, the communication package conveys a fairly upmarket imagery.

Tracing the tread

Liberty was predominantly in the business of exporting shoe uppers till the early '80s. When the domestic market began to show promise, Liberty set up a unit in 1982 _ its first _ on an investment of Rs 3 crores. The emphasis on differentiation was evide nt even then, when the market itself existed as an undifferentiated mass.

Liberty's shoes were first manufactured using polyurethane technology, setting a precedent of sorts for the domestic market. The manufacturing process involved high overheads, and Liberty responded by pricing its sports shoes at Rs 300 a pair, against th e conventional canvas shoes selling at Rs 50. A risk, but it paid off. By 1989, Liberty became a Rs 35-crore company and sowed the seeds of multi-branding, a strategy that has been reaping dividends ever since.

On firm footing

Force 10, Liberty's first sub-brand, was born in August 1990 and among the factors that initiated its launch was a casual footwear wave sweeping the market. Top-end brands such as North Star and Power from Bata, Carona's Puma and Lotto were keeping compa ny with mid-market names such as Action, Lakhani, Flash and Diamond. Further, there was enough evidence to suggest that multinational giants Nike, Reebok and Adidas were all set to make inroads into India. The name Force 10, a creation of Chaitra Leo Bur nett, was meant to convey style, aspirations, team strength, leadership and pace.

It did all that and more. Against Liberty's image of a brand for middle-aged, conventional consumers, Force 10 came across as very `with it'. The positioning: Fashion accessory, not performance shoe. Force 10 started out in the Rs 575-670 price bracket, but in 1993-94, Liberty slashed its prices down to Rs 450. The result: volumes spiralled up to Rs 10 crore, a Rs 4 crore rise from the previous year.

That was half the job. The communication package did the rest. Handled by Montage, it placed the brand in the `cool' league. The Forces 1-10 campaign talked of nine youth forces _ burgers, colas, jeans, CDs and so on. The 10th force, of course, was the s hoe. A rage, the campaign eclipsed competition completely. While the `forces' were altered to match current trends, the likeability remained intact.

By 1994-95, Force 10 became Liberty's flagship brand in value, notching up sales of Rs 32 crore. Today, Force 10 is sub-branded further into four variants categorised by price: Force 10 SDX (super deluxe) at Rs 1,695; DX (deluxe); LX (luxury); and SR (su perior) at the bottom at Rs 295 upwards.

Not only did Force 10 help Liberty arrive, it paved the way for nine other sub-brands. Recalls Woodland's Nathani: ``By catering to the mass family footwear segment, Liberty took away a substantial chunk from Bata.''

Liberty's current top grosser is Gliders, a range of beach slippers, which contributes a 40 per cent-plus share to its turnover. Gliders is available in four ranges: for children; for 12-18-year-olds under the parental guidance slot; for adults; and for universal consumers. The price range straddles the Rs 160-1,600 points.

Coolers includes sandals and slippers, and these are priced higher than Gliders. A couple of months back, the Coolers range was extended to include women's footwear.

Saying it loud

Coolers, Senorita and Footfun are the other frequently advertised brands. For the past few years, Liberty's ad budgets have been fluctuating between 4-5 per cent of sales. Observes Chadha: ``Unlike Bata, which relies on existing distribution networks for generating publicity and is hardly on television, Liberty is a consistent advertiser. In fact, it's the most consistent advertiser among all footwear companies.''

Says Karurendra Mathur, Director, Montage, on the Liberty account: ``The common thread in all Liberty advertising is common people fulfilling their desires.'' So, whether it is the Force 10 teenager aspiring for MTV yuppiness, or the man in the Gliders a d seeing his boss as a coconut seller, or the Senorita woman shedding inhibitions to play that girlish prank, the emphasis is on letting people be themselves.''

Unlike competitors, celebrities have rarely been used by Liberty. While Action rode on Sachin Tendulkar, Lakhani had the Salman Khan-Sangeeta Bijlani duo. Observes Mathur: ``We haven't felt the need to get large-scale tactical support through celebrity e ndorsements. Celebrities are stars, while Liberty is about people.''

Where they pinch

Gupta admits that Geo Sport, Liberty's ninth sub-brand positioned as a special application shoe for golf, cricket and football, sells the least number of pairs. The problem lies not so much with the product, but with market conditions. Going by the fate that Nike and co met, it's no secret that speciality sports shoes haven't picked up. Liberty expects to reverse Geo Sport's fortunes by broadbasing its prices from Rs 450-1,600, against the current Rs 1,000-1,600. Quick to rectify mistakes, Liberty also phased out Ricardo, a designer range of men's footwear in 1996.

The company's distribution network includes 150 distributors, 6,000 multi-brand stores and 350 exclusive outlets, while for manufacturing, there are two centres in Karnal, Haryana, with a combined capacity of roughly 50,000 pairs a day. It has opted for franchisees in exclusive stores, with nearly 70 per cent of these in the North. Liberty hopes to shed its North-centric focus by adding 100 more exclusive stores in two years in the West and South. According to the Paradigm report, Liberty has depended t o a large extent on its retail network to achieve critical mass.

Another conscious decision has been to restrict discount sales to 15-day durations, in the belief that longer sales can hurt image. A similar eye for detail is evident on all fronts. Clearly, Liberty is at pains to put its best foot forward.

GROUP ACTIVITY

THE Liberty group has interests in footwear, components, seeds and gas lighters. The two largest entities of the group are Liberty Shoes and Liberty Enterprises. According to Nutshell, in 1996, Liberty had planned to enter into gas lighters, food product s, beverages and entertainment as a hedge against uncertainties in footwear. But the following year, it decided against that and sharpened its focus on footwear. According to Chadha, Liberty's good brand image and fairly well laid-out strategy will be bo lstered from the investors' angle if it merges all group companies.

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