Julius Barigaba
6 July 2009
Nairobi — World famous shoe manufacturer Bata, has embarked on an aggressive expansion strategy which has seen an increase in the number of its stores in Uganda in a move to regain a foothold in the country's 20-million pairs a year shoe market.
The strategy has also seen the company introduce high-end shoes for ladies made in Singapore and for men made in Pakistan, while at the same time it has transferred all its shoe manufacturing concerns to Kenya. The latter happened in 2005, and the company blamed the regular power outages in the country.
The machines were lying idle half the time, and a decision was taken to relocate all manufacturing functions to Kenya.
Because of this, Bata Uganda had to reinvent itself by widening the shoe line in order to plug the gap that had been left when the shoe making function was lost.
Company officials told The EastAfrican that the strategy was already paying off, and that the company had recovered from low sales -- under a million pairs back then, to 2.5 million pairs sold last year.
Although this figure also includes the sales from its low-end of the market, high value men's dress shoes have also had an impact on the company's sale figures.
To date, Bata has opened six outlets in up-market Kampala in the past one year to target high-end buyers.
Another four stores have been opened in upcountry towns of Gulu and Koboko both in the north, Kumi in the east and Kisoro in the southwest as the firm looks to grow its outlets to 32 stores.
"In the first five months of this year alone we have already sold 1.3 million pairs of shoes," said merchandising manager Nelson Mbwala. "We are trying to change the face of Bata in Uganda. "We have realised that there is a growing middle class in need of decent shoe shopping outlets. That is why we are opening stores in upmarket shopping malls and in other low- end shopping centres to accommodate the different classes in society. Our target is 20 new stores in Kampala this year," said Mr Mbwala.
Currently, Bata has 13 stores in Kampala alone, and a few upcountry outlets that were shut down are also set to reopen.
Until the early 1980s, the company had a store in each of the country's major towns. However, only the Kabale town store survived into the 1990s.
In the 1980s, Bata lost its share of the market following cheap imports from China and Dubai, proving that the company had not exploited this side of the business.
Though Uganda's electricity shortage played a big part in the closure of the Bata factory, observers say the shift in strategy -- importing high end shoes from factories outside the country -- had long made the Uganda plant redundant.
The fact that the company is now doing roaring business speaks volumes of Bata's positive change of strategy.
Gideon Badagawa, executive director of the Uganda Manufacturers Association said, "This speaks for itself. That Bata is opening up more outlets is because they are in a better position to sell more than they did when they had a plant here."
Mr Badagawa has been critical of Uganda's high cost of doing business that has seen a number of companies relocate to Kenya.
He said, "It simply means that the business environment here should be improved. That's why Bata went elsewhere to reduce costs. But that's not a good sign for other manufacturers in Uganda because we need employment. We need to add value to our products. We need to make shoes and also export finished leather products. What Bata did was a business decision because private investors are looking for profit, but it is not a good sign for our industry."
Recently, Bata opened an up market store at Oasis, Kampala's newest shopping mall, which also houses the giant retailer Nakumatt.
This and another outlet also strategically located at Garden City, another premier mall, stock mainly high end shoes. Several other stores are located in busy shopping centres but targeting different levels of income.
Stores opened in the past year are Bata La Bonita, Bata Esso Corner, Bata Lubowa, Bata Quality Shopping Mall, while another store is to open soon in Entebbe.
The many new outlets are a telling statement that Bata is enjoying the benefits of regional integration under the East African Community Customs Union.
Up to the time it closed the manufacturing plant in Uganda, Bata was selling 3.2 million pairs of shoes in Uganda, but this figure plummeted by more than half following the closure, according to sources.
Bata shoes manufactured in Kenya are exported to Uganda and Tanzania under the EAC Customs Union Common External Tariff.
Currently all school shoes, plastic shoes and slippers and only 20 per cent of men's dress shoes are manufactured in Kenya and brought into Uganda, attracting only value added tax, which the company recovers.
On the flipside though, the company is still grappling with dumping of cheap Chinese shoes in the country.
While Bata is trying to stay in business by maintaining realistic pricing for genuine leather and synthetic products, shoes from China cost much less and can be found every where.
Officials also decry the volatile exchange rate that has in recent times forced prices upwards.
Top range mens dress shoes that retailed at Ush85,000 ($42.5) when a dollar exchanged for Ush1,700 last year, now cost Ush110,000 ($55).
Mr Mbwala concedes that this has slowed the business somewhat.
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