The demand for footwear is constantly rising and there are a number of local manufacturers producing good quality footwear. The consumers are becoming increasingly quality conscious and seek products offering value for money. This trend has led to strong growth in retail footwear outlets all across Pakistan.
Footwear retail outlet is proposed to be set up in urban areas. The shoes shop would cater to the demand for ladies and children footwear, belonging to middle and upper middle income groups.
The proposed shoe shop will have a covered area of 900 sq. ft. Shoes of the required quality and quantity will be sourced from wholesale markets and small shoe manufacturers. The product mix would include ladies and children shoes in all sizes. This product mix is divided into further categories; casual, semi-formal and formal footwear which includes pumps, heels, coat shoes, sandals, slippers, etc. made of leather and other materials. The three categories among ladies and children shoes are further classified by proposed selling prices, ranging between Rs. 750– Rs. 1,125 for ladies shoes and Rs. 375–Rs. 675 for children shoes.
Following factors are critical for the success of footwear retail business in Pakistan:
- Develop strong linkages with suppliers for sourcing good quality products at competitive prices.
- Efficient management of stock to keep inventory cost at the minimum.
- Selection of a central location keeping in mind the target market.
- Knowledge about the latest market trends.
- Induction of trained sales personnel for efficient customer handling.
- Strong competition with similar shops in the same commercial area
There is significant domestic demand for footwear in all the urban and semi-urban areas, year round. Thus, the outlet can be opened in any urban Location in the country, where customers have an easy access to the outlet, like shopping malls, busy markets or similar high traffic.
Most of the shoe manufacturing units and a number of shoe stores are present in cities like Lahore, Karachi, Faisalabad, Quetta, Hyderabad, Peshawar, Sahiwal, Gujranwala and Rawalpindi. Hence, these cities and other comparable cities in the country are considered as a suitable option for setting up a footwear retail outlet.
Furniture and fixture is required for display of shoes and storing of stock. Office equipment such as computer, printer and air conditioner are essential for routine business operations and for giving a professional outlook to attract customers and achieve customer satisfaction.
The turnover will depend on seasonal sales and ability of the venture to attract customers through quality and price incentives. Experienced and efficient sales staff also plays a critical role in determining the sales revenue of the business. The business is expected to have a capacity to sell 15,000 shoes in one year. The proposed project assumes to have a stock of 12,000 pairs at 80% capacity, out of which 500 pairs would be kept in inventory while remaining 11,500 pairs will be sold during first year of operation. The outlet will operate for 12 hours daily.
The total project cost for setting up a footwear retail outlet is estimated at Rs. 2.18 million out of which Rs. 1.01 million is capital cost and Rs. 1.17 million is working capital. The project NPV is calculated to be around Rs 9.16 million, with an IRR of 50% and payback period of 2.58 years. Details of these financials can be studied in the shoes shop business plan in Pakistan by SMEDA.