British shoe retailer C&J Clarks International intends to expand its operations in the SAARC nations through its Indian joint venture company with the Future Group — Clarks Future Footwear. It has recently started a master franchise operation in Sri Lanka with a single store and intends launching new stores in Nepal, Bhutan, Maldives, Mauritius and Bangladesh.
Clarks opened its first store in India in 2011 through the equal joint venture. Clarks Future Footwear will control operations in the neighbouring countries by appointing master franchises in these new markets.
“India will continue to be the largest market in the region. The new countries in the SAARC region are going to be small and niche for us and will be supplied by a manufacturing base set up in countries such as India, China and Vietnam,” said S. Ramprasad, CEO, Clarks Future Footwear.
In fact, India is already supplying 30 per cent of the UK-based company’s requirements for its global operations through its arrangement with local manufacturing companies.
Chennai-based Farida Group and Bangalore’s Sara Soles are two of the companies that are manufacturing for Clarks footwear.
However, in spite of local sourcing, Clarks is not able to reduce prices for the Indian market. The average price of its premium footwear is Rs 3,000 with the positioning ‘style with comfort’.
“Footwear continues to be a highly taxed category. High customs and excise along with local duties such as octroi and VAT lead to almost 35 per cent of the sale price of the footwear. There is no big advantage even if we are locally sourcing from the country,” added Ramprasad.
Besides, delay in mall development has slowed down the pace of expansion for the retailer, as it plans to launch a variety of stores sizes ranging from 600 sq ft to 2,500 sq ft across malls and high streets. “We expect to have a total of 40 stores this year, but due to mall development delays there might be hurdles,” said Ramprasad.
Clarks is using the Future Group-owned retail network such as Central and Pantaloon and also retails through multi brand retailers such as Lifestyle, Shoppers Stop and Reliance Footprint with about 300 points of sale.
In India, the footwear retailer is trying to reduce costs by extending the end-of-the-year sale period.
“We are trying to sell our inventory at a discount by extending the sale period, but hope to report operational profits by 2014,” he said.