Metro Brands to open 225 new stores in 2 years, reduce online discounts

Leading footwear retailer, Metro Brands Limited plans to open 225 stores over the next two years, taking the store count up from its current 836, the company said. In FY 2023-24, the multi-outlet footwear brand opened 97 stores across the country.

"We remain focussed on our aggressive store expansion strategy, with a target to open 225 stores over the next two years," according to the company.

Besides, the multi-brand footwear retail company has also planned to reduce discounts on e-commerce platforms. During FY 2023-24, MBL's e-commerce business grew 33% year-on-year. E-commerce comprises 9.5% of its overall business, currently.

"We aim to reduce discounts, enhance operational efficiencies, and improve the customer experience. Rapidly achieving high e-commerce targets through aggressive discounting could harm our brands," it mentioned in its annual report.

MBL, the creator of Mochi and Walkway brands, has anticipated margin erosion risks in its online sales due to promotions and discount competitions on digital platforms, which are aimed at stimulating sales. However, offline sales model and brick-and-mortar presence could play a key role in safeguarding margins, according to the company's statement.

'Leveraging power of Gen AI'

Metro brand is also leveraging Generative Artificial Intelligence to improve sales and business operations. The company has implemented an AI-based 'Planning and Merchandising system' to optimize inventory. According to MBL, the AI-based system has an advanced algorithm to analyze and predict trends and streamline stock levels.

Additionally, the brand has piloted an AI-driven Store Operations Management System, combining CCTV with machine learning to standardize store operations for real-time monitoring. The company claimed that it was providing multiple training programs to employees to leverage AI tools in daily operations.

'Financials'

India ranks as the world’s second-largest producer of footwear after China. The Indian footwear market was valued at Rs 123,500 crore in FY 2023-24. The industry is expected to witness growth, with a CAGR of 11%, reaching Rs 191,000 crore by FY 2027-28.

Metro Brands's revenue from operation increased by 10.7% to Rs 2,356 crore in FY2024. The company's profit increased by 13.7% to Rs 415.47 crore in the previous fiscal year.

MBL said that its sales revenue was driven by products priced above Rs 3,000, which contributed 50% to the total sales. "Our Crocs brand segment is performing well, while FitFlop is witnessing good traction. These efforts have contributed to the share of products priced higher than Rs 3,000, increasing from 44% of sales in FY 2022-23 to now at 50%. A year earlier, they were at 34%," MD Farah Malik Bhanji said.

Recently, the MBL partnered with US-based footwear retailer Foot Locker to sell premium sports, athleisure, and sneaker brands in India. Foot Locker has a presence in 2,600 retail stores spanning 26 countries across the US, Europe, Asia, Australia, and New Zealand. During Q4 FY 2023-24, the FILA business demerged from Metro Athleisure. "Immense R&D efforts are underway to identify the right products and markets to effectively reposition it and ensure stronger resonance," MBL said.