What was the agenda for your India visit?
We try to come here as often as we can because the business is growing quickly which is a good thing. The idea is also to make sure we are in tune and there are no surprises, to asses the need for talent, capital, space for new distribution centre and office space. Our model is pretty much the same around the world and we are growing everywhere. Our goal is to grow as quickly and efficiently as we can.
What's the growth rate like?
It's significantly high and we are hoping for 100% growth this year. Going from 50 stores to 100 this year will increase retail footprint, bring new markets and consumers. In fact, we see great growth potential and will try and continue to grow the retail pie year on year as we go forward.
You are banking on franchising versus owned stores for doubling store count this year.
We have a big franchise model around the world. Having said that we are also opening a lot of owned stores to demonstrate the look, feel and profitability of the stores. I think we bring more to the table and are not telling somebody to do things that we are not willing to do ourselves. Our stores are typically spread across 1,200 square feet, of which between 400 and 500 square feet is for front end and balance for backend including stocking of the products. As the brand gets stronger we will look at have larger stores of 2,000 square feet.
What's the capex like for each store?
It depends from store to store. In dollar terms it would be roughly around $50,000 excluding inventory.
The inventory sold in India, does it come from any specific geography?
We don't have local sourcing and all of it (inventory) is imported from the Far East.
Given the increased focus on Make in India, would you look to set up a manufacturing unit here?
Sure, that's certainly part of out future plans. As we get big enough and get scale we will look at local manufacturing. I think that will happen once we reach about 3-4 million pairs annually. We are hoping to get to about a million pairs this year.
Is online picking up for Skechers in India?
Not here not yet. It's a lot like the US, they are too competitive in price and we are not at a point yet where we'd want the brand to compete on price. So we have kept it relatively low. We are present online but we don't play it aggressively like the other brands do.
I believe you are looking to expand the offerings in India going beyond shoes?
Not yet but it's in the plan and we will. There will apparel and some accessories among other things. Once we get bigger stores we will start having all of that in these outlets. It's not going to happened so soon. Probably will happen in the next couple of years because we want to build our footwear market first and that's how we have done in a lot of other markets. Apparels and accessories is still very small business.
How do you go about building visibility for the brand? What is your A&P spend like?
It's a mix of television, print, digital / social, experiential. The advertising and promotional (A&P) spend is a little higher in the Indian market compared to what we spend worldwide where the average is about 6% of sales. In India the range is between 10% and 12% or even more sometimes.
What are the possibilities of Skechers going solo in India?
Right now we are very comfortable with the JV approach. We have taken the JV approach in entire South East Asia and our biggest JV is in China which we think will be our first billion dollar business outside of the US. I think we should reach that figure in three years or may be even two.
What's your view about doing business in India and China?
With things like high import duty and ownership related issues, it certainly has been more difficult to do business in India that it has been in China. Having said that, I feel things are changing and getting better. Our JV in China has been around significantly longer than India but I see them on the same path and my view is that India can be equivalent to China somewhere down the road.
