Abstract
My Foot was a boutique organization dealing with customized leather products and accessories. The CEO Manmath Shetty considered design, innovation, research & development and hand crafted products – keeping the basics as Indian originals- as core competency of his organization. He was keen to grow his business without losing focus on customization, the hallmark of his success. He intended to explore the possibilities of entering into adjacent spaces (product and customer) by replicating the existing business model. The option of moving from customized to volume customized products for a global market was also a tempting possibility to be explored.
Introduction
Manmath Shetty, the CEO of My Foot, a leather boutique, was at his studio one afternoon. He was toying around with his tools and simultaneously experimenting with some new design. My Foot started as a handcrafted leather products manufacturer which had positioned itself as a provider of customized products with a design philosophy to create shoes that fit the heart and sole. Modern era of shoe design had compromised on personalization to suit the objective of selling to the masses. On the contrary, Manmath believed in working with clients (who seek professional service) rather than just customers to create long-lasting style statements. Manmath was not a typical business person merely seeking growth and profits. He had a strong social conscience and wanted his enterprise to intertwine business with benefit to people around who were economically deprived. His intention was to grow his enterprise to be financially sustainable and simultaneously remain environment-friendly as well as supportive of interests of various stakeholders.
Manmath was satisfied with the success achieved by the firm over the last nearly two decades. Fame, wealth and satisfaction were all his as he contemplated the next phase of growth for the organization. The business model of the leather boutique was built by being close to the customer, assessing her articulated and latent needs and delivering value at affordable prices. As he wanted to expand operations, Manmath was wondering how to take the business to the next level without jeopardizing the very pillars that brought it success.
Genesis and Growth
Manmath Shetty started his business in 1998 in Hubli, a city in northern Karnataka. He was, from a young age, drawn towards footwear—particularly Indian designs—based on the rich culture and tradition of the past. He had no educational background in design, especially in leather design, but the desire to excel and the passion to create something new kept him in a student-like learning mode. He joined a shoe factory as an intern to learn the basics of the trade. Back in the late 1990s when the Internet did not exist in India, he had to fall back on available literature on leather manufacturing which was scantily available. Since it was a challenge to acquire the required knowledge, he decided to learn via reverse engineering. He used to buy shoes, bags and other items of latest designs to eventually dismantle them to study their structure, parts and intricacies and then fix them back. Over a period of time he mastered the art. According to Manmath,
It is an addiction. Sometimes I am so much obsessed with design that I wish to keep creating new ones just for the sake of expression. In fact business and profits become secondary.
During early days of the business, as a shoe manufacturer, he positioned the firm as ‘a boutique with a difference’. As time passed and the firm became popular as a manufacturer of customized products, he changed the positioning to ‘a boutique with …’ (three dots). He wanted customers to fill these dots based on their experience. By this time, My Foot had carved out a niche for itself in the market and was receiving repeat orders from several customers. Manmath was of the opinion that India did not have the problem of a low population country, like Switzerland, where only a few customers visited a retail outlet each day. On the contrary even in a city like Hubli, a district town, the population was so high that even if a small fraction purchased his products, his business would flourish.
Over the years, he became a connoisseur of leather products and started producing a whole range of products which included footwear (health care and traditional), accessories (belts, bags), lifestyle products (book covers, ceiling fan covers) and recycled products (wallets, slippers, satchels, phone cases). The healthcare products were particularly unique as they prevented footwear ulcers as well as reduced pain. They were made of leather and soft microcellular polymer to enhance comfort. Manmath also developed leather convertible helmets for a French freelancer, which could also be used as a bag.
Being a fan of Indian handicraft and artistry, Manmath went about developing indigenous designs. ‘Handmade Indian originals’ were a unique range of products launched under the umbrella of My Foot brand. These products had a blend of original Indian design with modern themes. Upcycling was an interesting approach he adopted. If the sole of an old shoe was in good condition, the top part was removed and replaced with a new upper. Used vehicle tubes and tyres were converted into useful footwear. Manmath claimed that such upcycled products had a life of 8–10 years depending on the user.
Even when the concept of bespoke was new in India, he focused on customization working closely with customers to create products which turned out to be long-lasting style statements. Customers in India were seeking machine-made products and Manmath’s approach was new to them. People had doubts about handmade leather products especially when accompanied by an unknown brand. He had to struggle to change this trend. The first few years were very difficult convincing customers about quality and price. As they began using and experiencing the products gradually customers started appreciating the value offerings of My Foot. He did succeed eventually with people coming to his retail stores in large numbers and his work order book overflowing with unique individual orders. Manmath summed up his achievement in the following words, ‘This is my study, interest and graduation. People come to me with their specifications and requirements, and the process has helped me evolve’.
Quality was at the heart of My Foot brand both as an assurance and a deliverable. It was driven by a passion for delivering finely crafted leather goods at affordable prices. Manmath claimed that his motive was not just monetary, which in any case would happen when the business flourishes. He emphasized on practical knowledge and product diversification—related or otherwise. By early 2017, My Foot had expanded itself with a factory called ‘My Sole’, a studio for customer care, a studio for leather products and accessories along with two retail outlets. Both outlets were located in Hubli. My Sole manufactured customized products for My Foot stores.
Using leather in innovative ways was what propelled Manmath. His love of design for leather products was such that he was willing to share his ideas or allow others to utilize his designs to improve the same. Manmath subsequently became a design consultant for several companies. In the ‘council for leather exports designer fair’, he was one of only three participants from India. There were 42 participants from across the globe. By February 2017, My Foot had manufactured nearly 200,000 pairs of shoes, all individually customized. Since the inception of the company, it had shown a consistent growth of around 5 per cent per annum without suffering loss in any year. On average, the firm produced and sold 6,000 pairs of footwear worth around INR60 lakhs a year.
Competition
Footwear being a basic necessity, in a populous country like India, involved high sales volumes. The fragmentation in the industry, because of the presence of many unorganized players, resulted in low volume of sales and profits for individual players. The high industry growth rate had enabled most of the players to survive in a fiercely competitive market. The attractiveness of the market, especially premium footwear, brought in new players, domestic as well as international. However, the extent of competition varied depending on the market segment, which in turn had a bearing on individual company sales and profits. The top-of-the-line companies with iconic brands did not have many rivals, while the low-priced mass market had cut-throat competition with thin margins.
On the whole, the Indian footwear market was complex and full of challenges. It was crowded with a raft of domestic and international players such as Liberty, Khadim’s, Sreeleathers, Metro, Red Tape, Timberland, Puma, Nike, Adidas and Reebok, among others jostling for the consumer’s attention. The market was broadly divided into three segments. The low-priced segment had players, such as Relaxo, Khadim’s and Super House. The middle segment was populated by companies, such as Bata, Action and Liberty, and the premium segment was dominated by international brands, such as Gucci, Pavers England, Steve Madden as well as some Indian brands like Woodlands and Red Tape. The global players, such as Nike, Adidas, Puma and Lotto had a firm footing in the branded sports footwear market for youth, which accounted for 20 per cent of the overall market.
My Foot did not have any threat from these competitors as it occupied a niche market since its products were customized. However, if in future Manmath wished to grow his business via standardization, these competitors will provide a formidable challenge. Besides, even existing consumers compared products of My Foot with other competitors to assess quality.
Pillars of Strength
Design and R&D
Manmath claimed that his firm’s competency lay in design that transformed traditional concepts to trendy ones. The products were not just comfortable but satisfied the users’ fashion sense. This was possible because of the strong research and development (R&D) capabilities of the organization. The design and R&D skills could translate imprints in the customers’ mind or paper sketch into a final product of high-quality leather. Although tools were involved in manufacturing, all the leather products were handcrafted. He picked up cobblers—guys who knew their tools and basics but stuck to footwear repairs—from the streets and trained them on these designs. He wanted these street cobblers to improve their skills and thereby enhance their economic potential and standard of living.
R&D in the organization started with customization. Each customer’s requirements were different and therefore required research. Research could pertain to material (leather, fabric), design (traditional, modern, hybrid), style, cost or a combination of these. The emphasis was on developing new designs not just following customer requirements and expectations. Manmath had an unwritten policy that for every 19 customer-specified orders the 20th product should be an original one born out of the research efforts of the in-house team. Research also focused on podiatry 1 including orthotics 2 and diabetic footwear where the footwear becomes too specific and customized. Since customers came up with their own specifications, the delight was to be seen to be believed when the final product conformed to their expectations. This experience was just not possible in other shoe stores.
Modular Design
Manmath followed the ‘modular design’, a concept wherein parts were designed in such a way that these could be used in several end products. For instance, if a skilled cobbler made leather belts, it was done in a manner that the same piece of leather—the basic building block—could be used in the manufacture of say bags, satchel and so on. The idea was, at least for the initial phase, not to alter the basic designs of the local folks. While the native design was encouraged, efforts were made to train cobblers to refine leather processing, cutting and stitching, so that the final product would be aesthetic and consequently appealing to customers across the world. Supporting the local designs was an image booster and confidence enhance to the artisans.
Social Orientation and Worker Retention
Besides street side cobblers, Manmath worked closely with certain shepherd communities in north Karnataka for whom manufacturing leather products was a part of their livelihood. Since he had a deep social orientation, he started to impart professional skills to such persons and even supported them with regular job orders to provide them a better livelihood. This initiative saw about 70–80 workers getting trained under him, few of whom even won state-level awards for their skills in producing outstanding pieces of leather products.
However, retaining these workers was a challenge. My Foot spent time, money and effort on training the workers for about a year and a half without really earning any return from them. Such apprentices were paid a monthly stipend. Once they became semi-skilled, which was somewhere between one-and-half to two-and-half years, they became self-sustaining since they could earn a living. After two-and-half years, the workers were fully skilled cobblers and could be used in the firm’s business. But this was the time they started leaving the services of the firm for community or social reasons. Only around 20 out of the initial 80 were left with Manmath.
Strategies had been initiated to retain talented workers. A system of annual rewards based on performance was in place. Because of the transparency of the system, employees knew about the guidelines for securing the rewards and worked to gain the benefits. Eight hours of work was expected during a working day. Replacement of workers in case of resignations was taken care of by a process created specifically for this purpose. A chain was created such that each skilled worker was assigned a semi-skilled worker. Similarly, every semi-skilled worker had to supervise a fresh unskilled worker. Skilled and semi-skilled workers were paid salaries. At any point of time if an employee left, generally another was there to succeed. Loyalty and performance were given prominence. Manmath was of the opinion that many more unskilled workers could be trained and embedded with skills. However, it was a burden on him as he had to pay stipend to such workers for 1 to 1½ years before they could truly contribute to the firm. He felt that if some financial support was to be provided by the government, then it would be a yeoman service to several unemployed and unskilled youth.
Since retaining workers was a major issue, he adopted a different approach. He encouraged persons from different communities, with weak economic background, to come under his fold for training in their respective villages. The objective was identification of potential employees, make the trainees employable and at the same time prevent migration to towns and cities. My Foot also started working with women workers and found them to be better employees with higher levels of commitment. Women were urged to form self-help groups to become self-reliant and not depend on their husbands many of whom were alcohol addicts. Such self-help groups were formed and once the women folk started earning they became self-reliant financially and were even in a position to provide education to their children.
Customization
Bespoke, based on made to order, brought out the customization capabilities of the organization grounded in customer intimacy. This was what customers loved about My Foot: the ability to assess each customer’s needs and translate it into a product that proved to be unique and satisfying. Manmath knew well his customer’s foot. While designing a product, he incorporated nuances of their tastes as well as preferences into the product. Similarly, in case of a handbag, he knew the customer’s colour preference or height so that the bag correctly fitted her shoulder. Besides, customer service had been honed to perfection, which resulted in several of customers becoming repeat buyers. The word of mouth vis-à-vis the firm’s products had spread with several non-resident Indians (NRIs) making a beeline to the firm to order what was close to their hearts. Success did not come without a fair share of challenges. Understanding finer nuances of customer needs was initially a major hurdle, which he overcame by spending more time with them. Another issue was to properly communicate each customer’s specific requirements to the workers in his team.
Delivery Process
Product delivery process had been streamlined. The moment a customer entered the shop his/her needs were assessed by showing catalogues or sketches. Materials to be used were finalized, design frozen and tentative delivery date and time fixed. Fifty per cent of the final product price was taken as advance and the rest was paid at the time of delivering the product. On the delivery date, customer arrived for trial. If satisfied, the sale was immediately completed. Such was the confidence that as soon as a customer stepped into My Foot it was 50 per cent assured that the sale would be through and the rest was taken care by customer care. The past record showed conversion rate of visitors to the store to final customers was over 90 per cent.
An outstanding feature of My Foot was providing customers a unique visiting card. The card provided a space for customers to write down details about their meeting with the proprietor. It was Manmath’s feeling and experience that this process assisted customers in remembering the discussion and resulted in higher levels of customization. It gave the entire process a personalized touch and helped develop intimacy.
At a certain point, Manmath had a fleeting thought of setting up a professional leather training institute, but soon realized that this would mean not just a huge responsibility but its commercial feasibility appeared bleak. Such an endeavour would have required sizeable investment which had to be taken in the form of a loan. He was not sure on how long it would take to repay this loan. Expenditure on expensive tools, hiring graduates or diploma holders from prominent institutes, satisfying their expectations and retaining them all appeared a herculean task. He felt working with empowered women was a more feasible way out with their strengths in traditional handcrafts.
Future Plans
Manmath was keen to grow his business but without expanding geographically. Since his business model was based on customization, he was unsure about marketing products via the Internet and e-commerce companies. He wished to strengthen the existing pull strategy by emphasizing local craftsmanship. This, he felt, would happen owing to the unique product proposition of My Foot ‘Manmade Indian Originals’. He intended to further develop the network of local artisans. These artisans would be the suppliers of inputs to produce several end products. This supply chain would also enable the organization to diversify into manufacturing new products and serve new customers.
The artisan network would assist him in various product diversification initiatives. They could be, for instance, weavers who would provide handwoven cotton and jute fabric needed in manufacturing several leather products with unique character. Manmath’s intention was to develop these artisans economically, stop their migration to overcrowded commercial centres and provide them with sustainable livelihood. He was confident that there was adequate potential demand for customized leather products in the current geographical area of operation of the firm. He was not worried about competition since his strengths were loyal customers and strong R&D.
Non-resident Indians from north Karnataka region formed part of this clientele. He nurtured them carefully and catered to their tastes and preferences. He was aware that satisfied NRIs would engage in favourable word-of-mouth campaign that would get more footfalls to My Foot. To spread awareness of his organization, Manmath attended several relevant conferences across the globe to show case his designs and attract customers. He intended to attend many more of such conference in future too.
Manmath had two dreams, one to make ‘Manmade Indian Originals’ a global niche brand and the other to scale up operations of My Foot. Since he was not keen to set up multiple retail stores outside Hubli, the other option was to use the reach of the Internet. The supply chain to match large orders was not an issue owing to the established network of efficient and time tested artisans. His major concern was funds. Twice in the past, Manmath had pumped in money but it proved insufficient. Besides, he was just ploughing back profits which he knew was not the ideal approach to scaling up. The risk element for him was high and he needed external funding. He had several orders but was hard-pressed for working capital. In case the ‘Manmade’ brand suddenly gained momentum, he would be hard-pressed to manage working capital to deliver orders.
Conclusion
Given the strengths and limitations of My Foot as well as the opportunities available, Manmath was wondering on the future course of action. Should he maintain his social orientation on converting unskilled workers into skilled artisans and thereby strengthen the organizations’ competencies on customization? Was he losing growth opportunities by not expanding into new geographic territories? Was this because of the fear of the inability to continue the existing focus on customization? Should he give up the strategy of customization alone and look for a combination of standardization of some products and stick to customization for others? By ignoring the Internet and e-commerce medium, which were revolutionizing the world of business, was My Foot going to be the loser in the long run? Manmath knew that he had to do his homework thoroughly before deciding on the best future course of action for his firm.