Bata, the world's largest integrated shoe manufacturer and retailer, is enjoying a strong momentum on a global basis. Without providing specific figures, Thomas G. Bata, president of the group, says its revenues grew by 12 percent in the first quarter and its operating profit jumped by 48 percent, following a similar record performance in 2011.
All the regions of the world have progressed well, but especially Latin America, India and the Pacific. A few days ago Bata India reported a 48 percent increase in first-quarter profits to 360 million Indian rupees (€5.1m-$6.7m) on 31 percent higher sales of INR4.05 billion (€57.1m-$75.1m). The progress was attributed to new and better shoe designs and the opening of 67 new Bata and Hush Puppies stores, bringing up the number of doors in India to a total of more than 1,300.
On a global basis, Bata's good results follow a number of strategic initiatives by the group, which tends to readjust itself every six to seven years. For one thing, Bata has just completed a five-year modernization program for its 20 factories around the world. They make a total of about 100 million pairs annually, representing about 40 percent of the volume sold at retail or wholesale. Another 30 percent is sourced through regional partner factories and the rest through its sourcing offices. Between 25 and 30 percent of the outsourced production comes from China.
The group has reduced the number of its “preferential suppliers” to 50, delivering fresh new products every week for its 5,000-odd directly operated stores around the world. Based on what Thomas Bata called an “integrated retail-centric approach” in a memorable speech given at the World Footwear Congress in Rio de Janeiro last November, the group has created four “centers of excellence” for product design, development and sourcing in Guangzhou, Singapore, Gurgaon (India) and Padua (Italy) to support its global operations.
Interacting over the internet, its “Shoe Innovation Centers” in Padua, Toronto, Guangzhou, Jakarta and Santiago (Chile) develop and roll out between four and five new styles each week, generating synergies and implementing best practices to optimize the quality of the products.
While the number of Bata stores has remained roughly the same over the years, the improved product and the continuous introduction of new ranges of shoes, combined with a wider assortment of accessories, has led to an increase of about 50 percent in the average size of the stores. Also, the profile of the stores has been changing substantially.
In Europe, in particular, where the group operates about 1,000 stores, Bata has been fine-tuning its new Metro Store concept, introduced a little over one year ago. While the smaller stores carry only Bata shoes, the larger ones offer between two and four “clusters” of shoes, each with its own personality, that also offer other brands. They are displayed in a fresh environment, with a clear segmentation by product stories that facilitates the choice of the right style by the customer.
Bata has identified up to seven types of clusters that can be implemented in different stores. After a first experiment in Prague, the first Italian Bata Metro Store opened in February 2011 in a shopping mall near Verona, Le Corti Venete. Others have opened in France at locations such as the 3 Fontaines shopping center at Cergy, near Paris. Elements of this new European concept have been adopted at other locations around the world such as a new Bata flagship recently opened in Kuala Lumpur.
At the convention in Rio, Thomas Bata indicated that this sort of layout and segmentation was a response to important changes that have taken place in consumption patterns in recent years. He said that consumers have become more “schizophrenic” and less brand-loyal. Today's busy customers are looking for different products and different prices points, and they want to make their purchasing decisions quickly. Furthermore, fewer young customers are coming to the stores without their parents. They are coming sometimes in groups with their peers, but in general, consumers of all ages have become more individualistic in their shopping habits, partly because of the internet.
Bata is gradually expanding its e-commerce operations. Especially in Asia, it is using them to offer a wider choice of products and services that it cannot offer at its own stores, such as wedding shoes.
While expanding its store network in India and other countries, Bata has been entering new markets such as Vietnam and Ecuador at retail through the creation of free trade zones.
In Europe, Bata is moving from a country-specific management structure to a fully integrated business model for its 1,000 stores in the region. The streamlining process is bringing in fresh ideas and fresh products. The more homogeneous international approach is allowing all the stores to benefit from common services and synergies. About 30 percent of their offer is common to all the stores.
Outside Europe, Bata's wholesale operations have been growing faster than its retail operations lately, for example through its Aquarella mail-order catalog service in Latin America and by adding the distribution of other brands in some countries. The further development of Bata's own brands is an ongoing project.
In another important integration move earlier this year, Bata put its worldwide activities in the area of professional and safety footwear under a single management, based at its state-of-the-art development and production center at Batadrop, in the Netherlands. The creation of a consolidated business unit in this category is expected to provide a consistently high level of quality for customers in industries such as automotive, oil, mining, logistics and construction, where many companies operate on a global basis anyway.
Bata has been taking action also in the area of corporate responsibility. Under a program launched 18 months ago at a conference in Bali, some 700 employees, families and friends are participating as volunteers in 40 projects under its BCP Bata Children's Program. They are connected through an internal social media network.