Walk’ing The SCM Talk

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Walk’ing The SCM Talk

Walking has been the secret sauce in Skechers’ impressive growth in India, since the company’s launch in 2012. Though Skechers has been a relatively recent entrant in the Indian footwear story but in just six years of being in India, it has become a brand worth Rs.3.4-billion. India makes for 1.2% of its global revenue and the company is hungry for more. During an exclusive interview with Swaminathan K, Head Supply Chain, Skechers South Asia Pvt Ltd, he asserts, “We want to be a product driven brand rather than a discount driven brand.”

Once upon a time, a shoe was just a shoe. Now, the consumer is inundated with choicest of varieties based on the usage, age and type of feet. Today ‘performance’ and ‘lifestyle’ have become the key to reach out to the more-conscious buyer and that’s where Skechers has made its mark since the time it stepped into the Indian territory. Taking a leaf out of its global strategy template — a distinct positioning around comfort, a range for all age groups and a wide collection of styles in many color combinations across gender, Skechers has been outperforming its counterparts in gaining market share.

Operating under the license agreement with the Future Group from 2012 till the end of 2018, Skechers U.S.A., Inc., a global leader in the footwear industry, in January 2019, purchased the minority share of its joint venture in India, transitioning the business to a new wholly-owned subsidiary of Skechers U.S.A, Inc.

The company believes that combining the experienced team and Skechers’ proven sales and marketing capabilities will allow it to grow the brand and its presence in a faster, more efficient manner, ultimately meeting its fullest potential. Skechers has a substantial existing retail network of over 200 stores, a strong wholesale business and a recently launched e-commerce site that can be built upon.

Testifying the growing strength of the company, Rahul Vira, CEO, Skechers South Asia Pvt Ltd, stated, “Skechers in India has achieved great success over the past few years. As we look into the future, we are delighted to be a wholly-owned subsidiary of Skechers. This development will enable us to amplify our growth plans, accelerate the expansion of our operations and build a stronger network to further gain market share in India.”

This strengthening presence of Skechers inspired us to track their supply chain. To understand the nuances, we got a rather rare opportunity to interact with one of the most dynamic supply chain professionals – Swaminathan K, SCM Head, Skechers, at their swanky headquarter in Mumbai. Here’s the excerpt…

How do you see the sports category growing in India?

During 1990s, we would hardly see people having the habit of walking or running, leave aside buying a pair of running shoes. Rising sports activity has significantly increased the sportswear market size globally. The surge in health and fitness also drove the growth of the demand. Consumers are wearing sports-inspired footwear in their daily lives. These trends propel the growth of the footwear market globally. According to market research of Strategy, the footwear market is projected to reach $371.8 billion in 2020. Europe would become the largest market, and Asia Pacific would be the fastest growing market.

There is an increase in demand for high performance footwear, and this is what made brand Skechers enter India. With the changing lifestyle, the trend has caught up in India. It is more important for us to cater to such a growing demand. We realized that India loves to walk, so we revolutionized ‘WALKING’ in India by bringing in a range of walking shoes catering to the country’s need. Understanding the trend and consumer behavior, we launched slip-ons as a shoe category. People in India still have to remove shoes at certain places as a mark of respect and tying laces was proving to be a tedious activity. Comfort of our product along with the culture of our country has given rise to the most popular category of shoes for Skechers. It is an exciting space to be in. The shoes industry itself is growing at a CAGR of 15%. We are working on casual and lifestyle footwear and we will also grow accordingly.

Our growth has been phenomenal so far. Visibility and awareness is something that we are chasing and working on with that objective to enhance our base.

What has been your USP?

One of our biggest USPs is the range of products we have. We have shoes for all age groups, across gender and need. Our range comprises of wide variety of performance shoes across Running, Walking, training, Golf, followed by a vibrant range of lifestyle and fashion footwear and a prominent range of kid’s footwear. So, we decided to take our products to the consumer for them to experience, because we have seen that anyone who tries a pair of Skechers, buys a pair of Skechers.

We would like to understand from you the import equation that you have to manage with…

Our imports mainly take place from far East – China and Vietnam, which are also the global manufacturing hubs for Skechers. Vietnam ports are not as advanced as Chinese ports because of which goods don’t come directly to the destination countries. They are routed through Singapore, which greatly increases our lead times, which need to factor into during our demand mapping process. Despite all these complexities, we have kept lead time of 150 days. We have kept maximum 3 months inventory at our DCs. We have a globally appointed forwarder who helps us push the product transition from Vietnam to India with least hassle. Additionally, in Far East, we also have an issue with the Chinese New Year where goods get stuck at the port level if we don’t do advance shipping. We do last minute cut-off sailing of the vessels that we have, and they hand it to the forwarder at the load port so that we are able to ship it out just in time before the festival starts. Earlier we used to have less than container load eating up cost and speed, now we started consolidating, which helped us in shifting from LCL to FCL.

Coming to the domestic conditions, initially there were certain restrictions at the port level itself at Chennai port from where we earlier used to move our products to the Indian market. But now we have shifted our port to JNPT, which is a well-organized port in the country and not much congestion has been witnessed over the past few years. To streamline goods transport, we always file an advance bill of entry and our goods get cleared from the port within 1-2 days. Initially we faced lot of clearance issues, but now things have simplified. Additionally, duty payment online has also helped us.

Now coming to our warehouse, we have a single DC in Bhiwandi, which distributes products pan-India. Though there is a challenge of single DC catering to the entire length and breadth of the country with lot of FTL and LTL challenges to cope up with, coupled with the import related challenges, we have never faced stock-out situations at any of our stores. The idea here is not to keep on increasing the number of warehouses for the sake of satisfying customers’ requirements, we believe in increasing the speed and offering them the convenience of buying in-store, online or click and collect. We have even tied up with some of the best courier partners in the country who can reach out to every nook & corner of the country in the shortest timespan to make this happen. During a collection launch, there is a push of the new collection to enhance visibility and later, it’s all about replenishments and striking the demand supply match.

Any disruption in the import chain will lead to front-end issue. Again, as I mentioned early, we have got only one DC, which makes things more complicated. The most difficult part is doing a scalability exercise. Planning scalability with this complexity is even tougher. We have mapped out our plan for the next 5 years and created space basis that mapping. We have done EDI with the warehouse at our ERP system, which has increased efficiency. Various permutations have been carried out with our courier partners based on their stronghold and service capability in a region. For the last 4 years, we have been growing exponentially. To handle such a growing volume, we have built a very skilled team at the inbound and outbound channels to streamline goods movement from the DC. Our partners have created a cross-functional team, which can handle both to reduce any inconvenience. It has been made scalable with a view to expand capacity. We are looking at the modular way of business to cater to huge demands we are witnessing over the past few years.

One of the challenging parts has been the scalability. Growing at an exponential rate with the added complexity of only imports has been extremely challenging because there is a huge rush. But we love the pace of the business and are always ready to take on challenges and push the boundaries ahead.

How does the forecasting happen?

The process is fairly pre-defined. We study our historical sales data to develop an estimate of the expected forecast of consumer demand, accounting for the projected range and retail growth of the company. The order lead time are as per industrial standards followed by right strategy and planning of the supply chain management every season.

What’s your perception and strategy on omni-channel retailing?

We are present across major online portals in India. Not being aggressive on the same has been a business strategy for us, since they follow discounting model. We have recently launched our website for India www. skechers.in, which will have almost all products available throughout retail channels of Skechers. We are working towards also implementing in-store devices to further enhance the shopping experience.

How do you select a 3PL?

When we select a 3PL, it’s basis their prior experience in managing clients in the same space we are operate as this gives us an added advantage of knowing the complexities of handling the merchandise, have modularity in space and are well equipped to handle local manpower issues. Added boost can be if they can provide us with the courier service – warehousing & distribution put together.

You have experience in managing both the ends of the spectrum – be it 3PL or the user side. How do you weigh one over the other?

I would like to state that grass is always greener on the other side. This experience has helped me tremendously in understanding the key challenges a 3PL faces in managing demand. Being on the other side, you understand what the customers want because you are actually the face of the brand and interact with them directly on a regular basis. Depending on that, you provide a solution, which is scalable. On the user side, you understand the constraints and their specialties in managing a particular task. How you can push service providers to get a job done. In the end, it’s always about collaboration between client and service provider. I also believe in outsourcing because we are in retail and this helps to strategize our core competence while giving the supply chain expertise to the experts. I believe it’s the logistics service providers’ duty to advise the user industry and not the other way around.

How complex is the category you manage to do business with?

Well, the shoe industry is cyclical in nature. While consumer confidence is at a high encouraging sale with several new product lines coming out, footfalls in stores has been soft. International growth is strong. However, this poses its own set of risks such as increased border taxes and weak economic growth. In the shoe industry, climate and culture is another important consideration.

How do you plan to gear up for the competition?

We want to see Skechers on maximum feet in India and presence at all potential markets. We plan on reaching the retail footprint of 500 stores across all potential cities, markets and Malls in India.


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