There have been rumours that Bata could be winding up operations and exiting the Kenyan market. Is this the case?
I oversee five regions which are Asia, India, Africa and the Middle East as one, Europe and Latin America. Of these five, the Africa and the Middle East business, which is headquartered out of Kenya, is our fastest growing region. In 2023, we are seeing growth in high double digits when compared to 2022.
To be straight up, we are not just here but continue to be bullish about the business in Kenya. This country is a major production and sourcing hub for us, we export a lot from here into several markets around and this will continue. Our shareholders are clear that we are here for the long term.
How much investment are you deploying into the Kenyan market in 2023?
This year we are investing $2.5 million (Sh357.6 million) in this market to grow our business both in retail as well as the factory for production.
This is a huge step up for us also because we are coming out of the pandemic and as you can imagine, during the pandemic cash preservation was important so spending was tighter.
There’s a bit of a backlog on the renovation and opening of new stores which we are now catching up on. We currently have over 100 retail stores.
Kenya and the larger eastern Africa region have a vibrant second-hand shoe market. In an environment where inflation has escalated and consumer wallets are depressed, how are you coping with this competition?
Four of the regions we operate in are emerging markets and this kind of competition is not new to us.
What is important is for us to make sure that we can provide footwear at several price points that are relevant to the multiplicity of our consumer base and create value for money for them.
We are working towards seeing if we can use franchise partnerships as we have done very successfully in other markets and hopefully go deeper into Kenya and Eastern Africa.
In the bigger urban towns, which have high capital expenditure, we keep the business while we engage franchise partners in areas where we have a limited presence.
Just how large do you think Bata’s franchise pool could be in Kenya and eastern Africa?
It’s hard to tell but there are two ways to look at this. If you look at India, for instance, we have about 500 franchise partners and that means that out of the total 2,000 stores across the country 500 of them are under franchise arrangement.
Then there is the second option which exists in markets like Georgia or Brunei where we don’t have a direct presence but our franchise partners are present.
So maybe there is an opportunity in a market like Ethiopia for master franchising where someone opens multiple stores without our direct presence.
Many manufacturers are currently grappling with elevated foreign exchange pressures. How has the Bata experience been as far as this is concerned?
The good thing for Bata Corporation is that a large part of our sales in Kenya is our production whose sourcing is local and this has enabled us to manage foreign exchange better than most of our competitors.
We export a lot from Kenya into Zambia and Zimbabwe, which are two of our big markets as well as Rwanda, Democratic Republic of Congo and Tanzania.
As I see it, there is a bigger opportunity within this region for us to use the production in Kenya as well as local sourcing partners and boost foreign exchange earnings.
How did Bata Corporation navigate the Covid-19 shock and the disruption of supply chains?
There was a supply chain impact but we manufacture a lot of our product in Kenya and simply had to be more careful in making sure that our raw materials were in place.
We made sure we were carrying a little bit more inventory of raw materials. We were also able to leverage our footprint for example we have manufacturing in Zambia, in Zimbabwe and the construction and we could be able to source from either market depending on peak demand and peak supply even when one market faced challenges. So, I think we were lucky.
Which is your fastest-selling product in the Kenyan market?
Safari Boots and Toughees do very well in this market but an emerging success story is the Power sneakers. We brought it from China initially but now I am glad to tell you that the factory here will be producing the sneakers in Kenya and the production line is ready to go live very soon.
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