The fourth-generation scion of the family that owns Bata Shoe Co. on strategies to tackle the challenges in the Indian market, and the confusion created by the same first name
One thing Thomas Archer Bata is unlikely to do is name his son Thomas. The fourth-generation scion of the family that owns Bata Shoe Co. says his father, grandfather and great-grandfather were all named Thomas (his great-grandfather’s name was spelt without the “h") and it has led to enough confusion over the years. “Invitations from embassies addressed to my father used to reach my desk while I was young. Love letters meant for my father used to reach my grandfather," says the 29-year-old with a wide grin. Between sips of white wine, he adds, “Diversity is good for every family and business, be it in naming people."
The global chief marketing officer at the Lausanne, Switzerland-based company was in India recently for a Bata event. I met Thomas, who was sporting a Nehru jacket and a pair of Bata shoes, at The Imperial hotel’s Patiala Peg bar in Delhi.
As history goes, Thomas’ great-grandfather Tomáš Bat’a visited India and decided to make and sell shoes in the then British colony. In 1932, Bata started making shoes in Konnagar, on the outskirts of Calcutta (now Kolkata). Within two years, demand grew, and the company moved its factory to a town that is now known as Batanagar. Of its five factories in the country, the Batanagar factory alone produces nearly 12 million pairs of shoes annually.
India is Bata’s second largest market after Italy—it sells 57 million pairs (as of FY17) of shoes in the country annually. Annual global sales are at around 230 million pairs. But though it’s the market leader and a household name here (so much so that many people think of it as a home-grown firm), the company is facing challenges of slowing growth and staying relevant in a hugely competitive market.
After years of growing sales and increasing profit, Bata India (listed on the Bombay Stock Exchange in 1973) started struggling post-liberalization. The company could not deal with wage issues, strikes by workers unions and supply-chain problems—be it sourcing raw material or managing retail stores. It seemed to be stuck in time. The stores looked archaic, the products out-of-fashion, and business suffered so much that the firm reached near-bankruptcy in 2005 after reporting losses for three consecutive years.
At that point, Marcelo Villagran, chief executive officer of Bata Chile, was brought to India to turn things around. Villigran promptly started a cost-cutting exercise. Unprofitable stores were shut, others got a new look, longer business hours, and the company decided to keep its outlets open on Sundays. It worked.
Thomas, who lives in Prague and works in Chile, knows seven languages, including Spanish, Russian and Czech. His favourite holiday destination is Canada (he was born in Toronto). “I absolutely love the mountains in western Canada. If I have time to go anywhere, I’ll go there, he says. He plays the guitar, likes skiing, and loves to cook on weekends if he’s at home.
Bata India reported a sudden surge (42%) in net profit in 2010, at Rs95 crore, and continued the momentum for the next five years before reporting a decline in both profit and sales in 2016. And though it managed to arrest the decline in sales, profit slipped further in FY17 (Rs159 crore from Rs218 crore previous fiscal).
This time, group chairman and Thomas’ father, Thomas G. Bata, decided to task Thomas with salvaging the flailing Indian market.
Thomas, who completed his master’s in political science and government from the University of Edinburgh in 2011, had joined the family business right after as a flagship manager at a department store in Prague, about 300km from Zlín, a small town in erstwhile Czechoslovakia, where his great-grandfather Tomáš Bat’a, with his two siblings, Anna and Antonín, founded the T & A Baťa Shoe Company on 24 August 1894.
He seems to be the perfect choice for the Indian market. Thomas was instrumental in Bata Chile’s growth, where he joined as general manager in 2012, with focused marketing and aggressive retailing. He was elevated as the group’s global chief marketing officer in 2016.
Not just that. In his own words, Thomas developed a new store concept for Bata in Prague, Czech Republic, that ensured the company’s growth—it has since been emulated in other countries.
India is a new market for him, one he has been looking after for six months. He has set himself a goal—to cross $1 billion (around Rs6,400 crore) in annual sales by 2020, up from the current Rs2,504 crore.
Towards that end, Bata India has brought on board a bunch of young graduates from schools like the National Institute of Fashion Technology (Nift) to design shoes that will be stylish, affordable and suit Indian tastes. There’s also better mapping of consumer behaviour to determine which kind of shoes should be showcased in which store. Bata discontinued its famous 95-paise pricing over a decade ago. But all price tags for Bata shoes still stop at “9" (179, 449, 599, 699, etc.).
This will continue but Thomas says Bata India needs a new set of consumers—the millennials, young working middle-class, and women. It’s now targeting women with a new campaign, including a TV commercial with the tag line: Me. And Comfortable With It. “Our research and insight reveals that the modern Indian woman is comfortable with her choices, her emotions, her femininity, and with challenging gender roles—in essence, ‘comfortable in her own style and shoes’."
He is clear about why Bata failed to sustain growth. “Stagnation," he says. “When a company gets into that mode (stagnation), things become bureaucratic and it loses focus, it starts to go into decline. And that’s what happened."
So though the company still commands India’s estimated Rs55,300-crore footwear market (source: Euromonitor International) with a 6% share, it failed to innovate and stay relevant to even its loyal consumers, says Thomas.
It sold what its factories had been producing for years and did not bother understanding changing consumer preferences. It did not change with time. “That was a mistake. And that’s the big change that we have undertaken. We are going back to our consumers and now we’ll produce what they need or look for. We need the young generation to buy Bata shoes," says Thomas.
Over the next few years, Bata will add about 100 new outlets a year to the existing 1,265 stores across India. Bata already sells some India-specific brands such as Sandak, Sparx, Scholl, Mocassino, Ambassador, Bata Comfit and Eva-Lite. But Thomas is betting on more India-specific products and marketing strategies. “The potential here is huge. It won’t be easy, but it all depends on how we execute our plans of addressing the needs of each consumer and make the right investments," he says.
While he is free to change the way the company markets shoes, Thomas usually discusses his plans first with his father—the passionate yet matured business mind, as he prefers to describe him.
Being born into a family with such a rich legacy has its benefits after all. “I never needed any training or formal guidance to know the nuances of selling shoes. It came naturally," he says, though his first job, albeit an informal one, was when he was in college: at a Japanese restaurant where he started as a help and rose to part-time chef. It is there that he learnt cooking, a skill that has helped him in his personal life.
In business, however, there’s another change in the market that Thomas needs to address—online retail. “It is still low. But this is one area we need to address better and faster. India has just skipped the analogue generation and gone straight to digital. We need to make sure we are ready for that. We need to be ahead of our competitors," he says. On this front, he will take the help of his sister Charlotte, a communication specialist and style blogger (pairing luxury and fast fashion with Bata shoes on her blogs), who now oversees Bata’s global digital marketing strategy.
If everything goes well, says Thomas, India will become the largest market for Bata globally by 2020, overtaking Italy. “India is a huge market and the country is growing faster than all European markets," he says.
The elusive $1 billion revenue dream is not new. Thomas’ father had said in 2013 that the company hoped to touch the mark in three-four years. Thomas believes it’s possible by 2020—with strategic investments and good executions of plans, of course. This time, he says, the target can’t be missed.