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In recent years, the total sales of e-retailers have increased manifold. With the introduction of Reliance Jio, these e-retailers have been able to penetrate into rural markets as well.

This massive digital penetration has posed some problems for the local handmade footwear industry. With the digital leap, a sizeable portion of the local handmade footwear consumer market has shifted to online buying as the prices offered online are competitive and the variety is also more. However, this digital progress has not been able to trouble big footwear companies like Bata, Khadim’s and Relaxo, which are showing promising growth. It is the smaller units with weaker finances that are being faced with a plethora of problems. Rover, a Kolkata-based footwear producer, wholesaler and retailer had to stop their production and take contracts from other companies to resell their products.

The Indian footwear producing market is largely unorganised with many small household level production units competing evenly with big brands in the affordable footwear category. It is this section of unorganised household level small producers that have taken a severe beating after the digital wave. The demonetisation drive implemented in 2016 had also adversely impacted the sector. This sector, which is informal and mostly based on cash transactions, faced a severe fund crisis during that period and is still recuperating from the damage.

Reason for change in demand

The main reason for this change in demand can be linked with the brand value which e-retailers offer. Buying products online lifts the self-esteem of buyers in this inexpensive segment and self-esteem has always been a great reason for the demand for major products. The price factor is also one of the reasons for this shift in demand. The e-retailers are providing footwear at a price which is equivalent to the cost of production incurred by most of the small-scale manufacturers. Lack of labour is another reason. Small-scale production units used to employ labour at very competitive wages. But with the growth in economy, there has been a serious dearth of labour in these units. The return policy of the e-retailers is also one of the major reasons. The consumers are now able to return their products to their e-retailers within 10 days of purchase which was not possible with local brands.

Impact

A major portion of the Indian local handmade shoe market is informal and small in scale. Due to their diminishing demand, many of them have either changed their business mode from production to retail or have ventured into some other business. Syed Ziauddin, a Kolkata-based shoe manufacturer and businessman informed BE, “Earlier I had 30 workers manufacturing footwear but after February 2018, I have just five workers. This is because of a drastic fall in demand for our products in the local wholesale market.” He blames the emergence of e-retailers for his misfortune.

The way out

The household shoe manufacturing sector has clearly lost their edge. A former handmade shoe manufacturer Kalim Haram has shifted his business. He is now in the retail sector. Some of the erstwhile local shoe manufacturers have ventured into the PU leather industry while others have migrated to the retail sector. Lack of ability to change with the evolving needs and failure to grasp emerging consumer behaviour can be said to be two of the contributory factors for this shrinkage of the handmade shoe market. Inability to compete with the competitive prices offered by the e-retail segment - owing to their deeper pockets - is another
major reason.