Market entry for European Footwear Market
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1) The European footwear market is the largest in the world, though it was affected by the 2008 recession. Imports from Asia have increased, while European manufacturers focus on quality and origin marketing. 2) India has an opportunity to enter this market due to lower costs and expertise in leather goods. Retail chains and department stores are a good entry point as consumers seek lower prices. 3) Indian manufacturers should focus on a range of fashion and casual leather shoes, meet European standards, and differentiate based on quality to compete against Asian imports.
Market entry for European Footwear Market
- 1. EUROPEAN FOOTWEAR MARKET AND MARKET ENTRY STRATEGY PGDM-IB GROUP-MARKETING
- 2. FACULTY GUIDES HARSH SHAH (03) PRACHIRANJAN SWAIN(14) ALLEN SANGEETH(15) VISHAL SHARMA(20) SUDDEPT KUMAR SINGH(33) PROF ISTVAN ESZES (ESSCA-BUDAPEST) PROF SUDIPTO CHAKRABORTY (ITM-NAVI MUMBAI) GROUP MEMBERS
- 3. CONTENTS Footwear market in Europe Porters five forces analysis Market access requirements for EU EUs protective measures SWOT Analysis. Possible market entry strategies Market entry strategy-Recommendation Major Hurdles Conclusion
- 4. Footwear market in Europe Largest market for footwear in the world. Supplier of high quality footwear. High volume items outsourced to Asia. Market affected by recession in 2008 . Consumer focusing on low cost footwear. Markets expected to grow by 2011.
- 5. Footwear market in Europe Market Size & Consumption Source-Euromonitor-Mintel 2010
- 6. Factors contributing to the growth Growing economies of Eastern Europe countries Accession of new member states. Emerging middle classes, higher aspirations, and disposable incomes in EE countries. Projected population increase.
- 7. Market Segmentation User Men Women Children Lifestyle Dreamers Homebodies Settled Adventurers Rational Realists Open-minded Organics Demanding. Price & Quality Luxury, >300 Fine, 100-300 Medium, 25-100 Economical, <25
- 8. Production
- 9. Trends Outsourcing in China, Vietnam and India Innovation and added value Attention to workmanship Environmental challenges and opportunities Cost reduction in the supply chain Keep an eye on retailers Wider sales network in the EU
- 10. Trade channels for market entry
- 11. Main Distribution channels Importers / wholesalers Agents Buying Groups Local suppliers International suppliers or fashion houses Retailers footwear specialists Footwear chain stores Independent Footwear shops - Boutiques
- 12. Retailers non-specialists Department stores Sports retailers Hypermarkets, supermarkets and discounters Street markets and factory outlets Internet sales
- 13. Imports Worlds largest importer of footwear. Value: 26.7 billion (2008) Volume: 3.1 billion pairs (2008) Countries: China, Vietnam, India, Indonesia, Brazil and Thailand EU Imports of footwear 2004-2008, million / million pairs Source: Eurostat 2009
- 14. Role of developing countries In 2008 imports were: 43% of total value ( 11.4 billion) 71% of total volume (2.2 billion pairs) The top four importers (UK, Germany, Italy, France) accounted for 61% (50% by volume). Rise of Imports from 36% in 2004 to 61% in 2008.
- 15. Porters five forces analysis Competitive Rivalry -High Bargaining Power of Consumers- Moderate Bargaining power of suppliers High Threat of Substitutes -High Threat of new entry Moderate
- 16. Market access requirements for EU Packaging Environmental legislation( REACH) Intellectual Property rights Size marking Labeling Anti-dumping Anti-fraud policy
- 17. EUs protection of local manufacturers EU has imposed a 10% anti-dumping duty on China & India specifically. European manufacturers have started a campaign of origin marketing to boost their marketing in Europe as well as overseas market. EXAMPLE:- I love Italian Shoes, Made in Spain etc. are some of the campaigns to promote creativity, fashion ability, origin & craftsmanship at different points. European manufacturers have joined with colleagues, designers and trade associations.
- 18. To still be competitive in the market the Indian manufacturers can cash on upon following factors:- Indian Core Competency Cheap labor Direct marketing strategy Past experience
- 19. SWOT Analysis Strengths: Ready availability of skilled & cheap manpower. Availability of raw material. Government incentives. Ability to assimilate new technology & handle mass production requirements. Emphasis on product development & design upgradation. Weaknesses: International price fluctuation. Lack of warehousing support. Lack of strongholds in global fashion market. Unawareness of international standards required.
- 20. SWOT contd. Opportunities: Rising potential in domestic market. Utilization of Information Technology & Decision Support Software to optimize the production cycle. Use of e- commerce in direct marketing. Threats: Major part of industry is unorganized. Stricter international standards. Difficulty in obtaining bank loans. Limited scope for mobilizing funds. High competition from Eastern European & Asian countries.
- 21. Possible market entry strategy Importers/wholesalers Agents Buying groups Retail chain stores and department stores Direct sourcing
- 22. Why should we enter with leather product Slowdown in Europe leading to customers to go for lower price footwear. Chinese producers are facing serious problems due to rising labor cost, which has risen by around 40% since January 2008, and currency appreciation. Chinese products, which used to be cheaper by around 10% compared to the Indian products, are no longer cheaper. Implementation of the European Union (EU) anti-dumping duty. Indias expertise and skilled labour force in leather industry.
- 23. Contd. India has state-of-the-art manufacturing plants. Export of footwear from India increased manifold over the last four decades. Today, Indias footwear export is valued at US$ 1507.51 million, constituting 44.33% share in total export of leather & leather products
- 24. Mode of Entry Europe is a highly competitive market as it is home to many major fashion houses. Being a new player, a pre-established channel of distribution is ideal to minimize risk factor. An ideal market entry channel could be through Retail Chain & Departmental Stores . Local retailers like Shoezone, Stylo, Vivarte, Deichmann etc. are some of the potential retailers in EU footwear market. These retailers require & search quality oriented & reliable suppliers. After the global slowdown, consumers are more price sensitive & are increasingly looking at non-specialist retailers for buying all the stuff. Super/Hyper markets & Departmental stores have become the obvious choice for shopping.
- 26. Branding Strategy Multi branding strategy, focusing on a wide array of fashion leather shoes, dress shoes, fashion lady dress shoes, casual leather shoes, winter boots, women leather sandals, womens ballet flats etc. Focus on obtaining greater shelf space outnumbering the competition. Saturating the market by filling all price & quality gaps. Focusing on Brand Switchers who like to experiment with different brands. Generating internal competition to keep Branding managers on their toes
- 27. Major hurdles Indian manufacturers will face tough competition Major competitors according to segment are:- Luxury (>300 )- Dolce & Gabanna, Prada & Gucci etc. Fine-euro (100-300)-Bally, Burberry Boss, Chloe etc. Medium- (25-100)- Converse, Dr. Martin, Nike, Adidas etc. Economical- >(Euro 25) -Imitations of successful brands and non branded.
- 28. Conclusion EU being largest importer has got great opportunities. Main concern is that we have to differ our products according to different culture in different countries of Europe. During recent times due to recession these European countries are trying to cut its cost and innovate. After detailed study and analysis we selected best possible solution and product that a developing country like India can export. Keeping countries like china in our mind as a tough competitor we have tried to find out the deficiency and the way we can seize this window of opportunity to our advantage.
- 29. Recommendation On the basis of study of European footwear market few suggestions can be brought out. Detailed study of the market before entry. Keeping in mind the environmental, consumer health and safety & social concerns in mind before exporting. To recognize our own competitiveness and efficiency and to focus on technology & innovation. To follow the European standards and regulations for exporters.
- 30. References http://www.cbi.eu/marketinfo/cbi/docs/the_luggage_and_leather_accessories_market_in_hungary http://www.powerhomebiz.com/vol136/shoe.htm http://www.cbi.eu/marketinfo/cbi/docs/the_footwear_market_in_the_eu http://www.ehow.com/way_5831822_strategic-economic-trends-shoe-industry.html