Shoe Industry
Shoes Industry – PEST Analysis
Political
• Recent merger between Adidas and Reebok
• Use of leather to make shoes by Bata, Red tape
• India is not a sporting Country and hence lesser demand for sports shoes.
• home market lobbying/pressure groups
• Very few sporting events apart from cricket fixtures to attract customers
Economic
• Marginal share of 2.44 percent in global trade worth US$ 97.606 billion
• Estimated target of 12 bn $ (7bn $ export + 5 bn $ domestic) trade by the year 2012overseas economies and trends
• The Indian footwear retail market is expected to grow at a CAGR of over 20% for the period spanning from 2008 to 2011. Footwear is expected to comprise about 60% of the total leather exports by 2011 from over 38% in 2006-07
• Growing middle class and growing buyer power leading customers to look for branded shoes.
• seasonality issues – sports is more of a rage in summers
• Lack of targeting of market segments for kids and women
Social
• lifestyle trends – upward shift
• demographics
• consumer attitudes and opinions changing favourably towards branded shoes
• media views
• consumer buying patterns
• fashion and role models
• buying access and trends
• advertising and publicity Technological
• Competing technology development
• India offers benefits like low cost of production, abundant raw material, and a huge consumption market
• research funding in design and requirements
• manufacturing maturity and capacity
• information and communications
• consumer buying mechanisms/technology
• innovation potential
• technology access, licencing, patents
Porter’s Five Forces in the Indian Shoe industry
Reebok or Nike operates in the ‘upscale’ segment of the Indian footwear industry. This segment was analyzed using the Porter’s Five Forces model. For this, the five forces in the industry were identified:
- Buyers – The buyers are
Political
• Recent merger between Adidas and Reebok
• Use of leather to make shoes by Bata, Red tape
• India is not a sporting Country and hence lesser demand for sports shoes.
• home market lobbying/pressure groups
• Very few sporting events apart from cricket fixtures to attract customers
Economic
• Marginal share of 2.44 percent in global trade worth US$ 97.606 billion
• Estimated target of 12 bn $ (7bn $ export + 5 bn $ domestic) trade by the year 2012overseas economies and trends
• The Indian footwear retail market is expected to grow at a CAGR of over 20% for the period spanning from 2008 to 2011. Footwear is expected to comprise about 60% of the total leather exports by 2011 from over 38% in 2006-07
• Growing middle class and growing buyer power leading customers to look for branded shoes.
• seasonality issues – sports is more of a rage in summers
• Lack of targeting of market segments for kids and women
Social
• lifestyle trends – upward shift
• demographics
• consumer attitudes and opinions changing favourably towards branded shoes
• media views
• consumer buying patterns
• fashion and role models
• buying access and trends
• advertising and publicity Technological
• Competing technology development
• India offers benefits like low cost of production, abundant raw material, and a huge consumption market
• research funding in design and requirements
• manufacturing maturity and capacity
• information and communications
• consumer buying mechanisms/technology
• innovation potential
• technology access, licencing, patents
Porter’s Five Forces in the Indian Shoe industry
Reebok or Nike operates in the ‘upscale’ segment of the Indian footwear industry. This segment was analyzed using the Porter’s Five Forces model. For this, the five forces in the industry were identified:
- Buyers – The buyers are