NEW DELHI: A clearer tax structure, opening up of malls in India’s tier-2 cities, and a pick-up in internet commerce is prompting England-based family-owned footwear company Pavers Shoes to step up business in India, 11 years after it first started selling its leather footwear here. The retailer is present in India through Pavers Foresight Smart Ventures, a partnership between London-based shipping-to-retail conglomerate Foresight Group International and Pavers Shoes, which owns the brand Pavers England. Stuart Paver, managing director, Pavers Shoes, who was in India recently plans to add 30 stores to the existing 40 over the next 18-24 months. In an interview, he talked about the improvement in ease of doing business in India and the lessons he’s learnt thus far. Edited excerpts:
Isn’t India still a small market for you?
It’s got the potential to be huge. We’ve been here 11 years now, and we’ve gone through a few incarnations and evolutions. Most retailers come here for 3 years and then leave, but we’ve learnt our lessons. We have seen the difference, things such as GST, have made to operating here, and we are now very-very convinced about the viability of the business going forward. We found GST to be a huge game changer for retail. It also made it easier for us to buy more products in India from the best Indian factories because under the previous taxation system most of them decided to just export only, and would not supply to the domestic market because of a lot of different taxations. But now with GST, we are able to buy from the best factories in India. So, our sourcing has gone up from 30% that was stipulated in the single brand FDI policy to what we think will end up to 60-65%. We are up to 50% right now.
Any other government initiative that helped you?
I think they have helped remove a lot of the red tape that surrounded a lot of the businesses and we get far fewer issues with officials just looking for creating trouble for the wrong reasons. So, we find it has become an easier place to do business. And the election has just given us a lot more confidence that over the next five years there will be a lot more reforms coming through. The new majority will sort of release that pent up opportunity for India.
You’ve seen a lot of shifts in your business model in India. Where do you stand today?
We’ve allocated between ourselves and Foresight Group (UK-based), a lot more cash to invest—we will invest $500 million in India over the next five years. A lot of that will go into ports and infrastructure projects (one of Foresight’s main business). But a portion of that is also coming into the retail business. You’ve said we’ve changed the model a lot—India demands that you keep going that way or this way to get to your destination, because there isn’t a straight line. And, we are now seeing, certainly in tier-2 and tier-3 cities, a lot more opportunities that weren’t there five years ago. Earlier you had to have shops in Mumbai, Chennai, Bengaluru and Kolkata and, once you got out of tier-1 cities, nobody thought there was any availability to shop in markets beyond that. But it is changing, and that’s where the big opportunity comes in.
We had relied too much on airports and we really lost focus on expanding our business outside them. We have changed the management team and the whole structure.
So the airports model didn’t work well?
It worked. It is just that the growth in that was very limited. We have another 7 airports (stores) that we are looking to open at the moment, but we are about coming to the end of the airports (expansion). The internet is a big investment area for us at the moment—very viable because people buy our products at the airports and are then searching for them because maybe we don’t have too many local stores.