Competition in shoe market is heating up – SSC

Just a few days before Service Sales Corporation (Pvt.) Limited (SSC) celebrates its 60th anniversary BR Research met with the marketing team over some pertinent yet never asked details and questions. Following is the edited detail.

About SSC:

SSC specializes in the footwear category with key brands as Servis, Shoe Planet and CALZA. The firm also has other brands under its umbrella that include Don Carlos, NDURE, CHEETAH, LIZA, and TOZ. With the largest retail presence in the country, SSC is operating through a network of more than 450 retail stores, and over 2500 independent retailers in wholesale network across Pakistan.

The history of the firm dates back to 1959 when Service Sales Corporation (SSC) was formed, with its first outlet opening on Mall Road, Lahore. In less than a decade, SSC reached its 100 store milestone. In 1983, CHEETAH, the first sports shoe brand was formed. Later in 1988, Don Carlos – a premium men’s formal footwear brand was launched. Trying to be at forefront of taking new initiatives to provide the best experience to its customers across Pakistan, SSC introduced LIZA in 1993 - the first local women’s shoes brand. Its later endeavours include Shoe Planet in 2003 - a high fashion shoe store in the country and CALZA in 2016 – for SEC C & D.  How its brands cater to the various consumer classes can be seen in the illustration.

SSC Vision:

“To remain a sustained market leader, setting higher standards in industry practice and a meaningful impact on the lives of our customers, employees, community and shareholders through innovation and capability.”

Brands:

Highlighting the three main businesses – Servis, Shoe Planet & CALZA - Mr. Sharjeel Hasan, Head of Marketing said that SSC’s tagline - Forward Together is the essence of whatever they do; SSC is a brand that is progressive and is moving ahead with time while adapting as well as contributing to changing scenarios.

Servis – is a family footwear store and is the largest contributor in SSC’s success. Having been invested in heavily through advertising, trade marketing, digital media, and customer service initiatives, it today is one of the leading footwear brand across the country. “Servis is SSC’s main pillar brand in footwear. SSC has nurtured this brand through successive generations of management and has positioned it as one of the most recognized, trusted and respected brands of Pakistan. It engages its customers round the year with some of the most memorable seasonal launches, sales campaigns and promotions at its various retail formats, which made Servis a household name across Pakistan”, says Hasan.

Shoe Planet, on the other hand, is SSC’s high fashion but economical footwear retail banner, which houses multi-gender fashion brands that are at par with the international quality standards.

SSC (Service Sales Corporate Pvt. Ltd) saw a huge potential in unorganised retail market for expanding business. It is evident that unorganised market is usually cheap and lacks good quality products, there is not even single brand catering to the need of a common Pakistani. Therefore, SSC decided to seize this opportunity by introducing a brand that promises more than what was offered by the current unorganized market. SSC already had a successful label by the name of CALZA so following the observation, the firm introduced it as a brand for this market where it changed the names of its factory outlets (FOL) to CALZA. The brand now has its own range of products that are fashionable, durable and affordable. CALZA has around 70 stores and right now it is the 5^th largest retail shoe brand in Pakistan which contributes an immense value to SSC group.

Market:

When queried about their opinion on retail market dynamics and its structure in general, the team at SSC underlined that in terms of current market size, around 35 percent rests with the organized sector, while 65 percent continues to remain with the unorganised sector. The organized sector can further be broken down to 25 percent by the domestic Pakistani formal sellers, and 5 percent by the foreign sellers.

Mr. Sharjeel Hasan also said that the market is fragmented due to low barriers of entry. However, new local start- ups give their best for maximum two years and have to shut down business in most cases due to rentals and unsold stocks thus cost of doing business becomes too high.

Business Model:

SSC business structure has three major components that are Retail, Wholesale and Corporate. Retail has three brands that are Servis, Shoe Planet and CALZA. Wholesale works with independent retailers nationwide while Corporate deals with institutions.

Servis Stores, which are the oldest and most widely spread format within SSC has a spread of more than 350 stores and offer brands such as NDure, Don Carlos, Liza, Skooz, T.Z, Cheetah and Hush Puppies. Shoe Planet, the high fashion has two labels Reeva and Regale. The brand has a network of 14 stores in metro cities and expanding. Whereas CALZA, the family shoe brand, has a spread of 70 stores across the country with its own rang of product line.

“Our Wholesale Business is spread across Pakistan, which deals with both types of customers (retailers and whole sellers) through a very attractive discount structure and a wide product range.” SSC Wholesale Business currently consists of 14 Wholesale Business Centers (WBC), which serve as a touch-point for over 2,500 Registered Dealers and about 4,000 stockists.

Current and Future Growth:

SSC believes that the shoe industry is expected to grow at a steady 10 percent each year over the next five years. Factors that it highlighted as the key growth drivers include urbanization, growing population, youth becoming more informed and interested in shaping their own “image”, and evolving fashion sensibility due to social media exposure.

Talking about the emerging trends in the retail sector, the team says, “Social media is highly influencing the youth; millennials prefer a more “casual” lifestyle, consumer exposure has increased thanks to a variety of media channels. So fashion sense and trends are changing fast, which we foresee as a future challenge. In order to maintain a leading sustainable position, it will be imperative to keep a tab on customer pulse.”

How will the next wave look like in the retail sector? SSC highlighted that competitive environment, seasonal weather changes and infrastructure changes will keep the shoe industry on its toes where the ‘wow’ factor would be the customer experience.

About the firm’s future plans, SSC shared that being Pakistan’s leading retailer, they have always been at the forefront of taking new initiatives to provide the best experience to customers. “In coming years we see SSC attaining sustainable growth through increased market penetration and best retail practices.” Answering the query if any major Pakistani and foreign players are expected to get into the sector, SSC said that the competition is heating up as various apparel brands and local brands have already started investing in shoes. “There is news of international brands like Diesel entering Pakistan as well!”