Footwear industry in Pakistan looks to tap rising e-commerce craze

Aims to invest Rs2.5b over next three years and open 50 more stores this year.

LAHORE: The footwear industry in Pakistan is striving to embark on an aggressive expansion drive in coming years in an attempt to meet domestic demand and ward off a growing threat from the unorganised sector.

Service Sales Corporation – one of Pakistan’s oldest and biggest footwear companies – is one such player in the industry.

The company, which started its business as a contract manufacturer for a few government institutions soon after independence, was formally launched in 1959 and is now one of the top footwear companies in the country enjoying around 10% of market share.

Its biggest competitor Bata Pakistan Limited is fractionally behind in terms of market share, whereas few other popular brands like Stylo, Borjon and Hush Puppies are enjoying another 10% share, according to statistics compiled by leading industry players. They all represent the organised footwear industry in Pakistan.

Service Sales Corp Chief Executive Officer Shahid Hussain believes that like other industries in Pakistan this industry too has missed the global fundamental shifts, which take the manufacturing sector from west to east.

“Footwear is one of those sectors that have a huge potential for employment generation and exports, but we as an industry have failed to capitalise on the global model, which strengthens the unorganised (undocumented) sector that has grabbed 70% share in the market,” says Hussain in an interview to The Express Tribune.

For Service, the technological shift in the footwear industry began in the early 1990s in Pakistan, but consumer awareness started around 2000.



This was the time when communication channels, media and at later stages, social media started having their impact and created awareness among the consumers.

“Such factors are encouraging imports into the country as consumers become more brand-conscious and demand varying footwear varieties, which put local players in a challenging position,” says Hussain.

“Consumers have their own needs that they meet either via local or foreign brands,” he says, adding the industry should not blame consumers or try and stop them from using foreign brands just because the local manufacturers have missed the fundamental shifts.

Partnerships

Hussain is of the view that in today’s world, one cannot build walls and though the government has created some balance for the local manufacturers with different taxes, the players have to work hard to meet domestic demand and boost exports which are stuck around $90 million.

Apart from launching its own brands in the 1980s, the company also partnered with some foreign brands like Nike, Hush Puppies and Ecco but those partnerships did not get much appreciation from Service’s customer base.

“With those brands we slowly realised that this segment was not Service’s speciality as our customer base came from the lower and middle class,” he says.

“Our customers could not afford those renowned global brands and we gradually had to replace those brands with our own. Such ventures are suitable for small-scale footwear companies.”

Future plans

The company in the next eight years is aiming to double its market share to 20%, for which it will invest Rs2.5 billion over the next three years. At present, it has a retail network of over 500 outlets.

“We intend to open another 50 stores this year as part of our expansion plan. Urbanisation is at its peak and so is customer demand; we have to expand at a much faster pace to remain the market leader,” Hussain says.

The company has wholesale presence in 14 cities, from where it supplies its products to independent retailers. These retailers offer Service products in the cities where the company has not any presence so far.

Service crossed Rs15-billion worth of sales in the financial year ended June 30 and is aiming to increase it further by fully utilising the traditional and social media and focusing on youth as its key customers. Hussain says Service will enter the e-commerce market soon and for that purpose it is currently in talks with the leading players.

“We are working on the e-commerce model since it has become an important tool in today’s world. We are planning to enter this segment with full force and will not consider any restricted model.”

The writer is a staff correspondent 

Published in The Express Tribune, September 5^th, 2016.

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