Footwear Industry of Bangladesh
Leather & Leather Products industry is export oriented while both domestic & export demand drives footwear industry. The amount of leather produced each year is 350 million Sq. ft.1 Out of the total leather production, 20-25 percent is used to meet the domestic demand while the rest is exported. In the footwear industry, Bangladesh produces 378 million pairs of shoes (all forms of footwear along with leather is included) each year. Bangladesh currently stands at 8th position in the global footwear market in terms of production volume.
The domestic market size of footwear is around BDT 170 billion. Domestic demand for footwear industry is around 200 to 250 million pairs a year.3 Out of the total domestic demand, approximately 24 million pairs were imported in FY’2016-17.4 In 2018-19, Bangladesh had exported $607.88 million worth of leather footwear and $271.53 million worth of non-leather footwear. Global footwear market was valued at $246 billion in 2017 and is expected to reach a valuation of $320 billion by 2021. There are currently 220 tanneries, 2,500 manufacturing units and 90 larger firms operating in Bangladesh.
Domestic footwear industry of Bangladesh has two sections- branded or organized footwear market and non-branded or unorganized footwear market. Unorganized footwear market still dominates the majority of sales. However, the market share of branded footwear is increasing and currently stands at 30% of the total market. Increase in per capita income, fashion consciousness and health consciousness are some of the key drivers behind the increase in the branded footwear market share. High rent fee is the key challenge for increasing the number of retail showrooms for the branded segment.
The overall footwear market is growing at 12%-15% rate. However, inflation consists of a big portion of this total growth and sales volume are not increasing significantly. Footwear business has cyclicality effect as almost 25%-30% footwear are sold during the Eid Al-Fitr period.
Organized footwear market of Bangladesh was dominated by foreign companies mainly by Bata even a decade ago. Most of the local manufacturers were focused on exporting their products. But, in the recent years, local manufactures are entering the domestic footwear market with their own brand to capitalize on the growing demand in the domestic market. Almost 30 exporters have introduced local brands. Some of the local popular brands that are currently operating in the market areBay, Hamco, Jennys, Fortuna, Crescent, Vibrant, Leatherex, STEP, Walkar, Orion, Falcon, Zeils, Shampan etc. Along with footwear brands, clothing brands such as Ecstasy, Sailor, Occult and Freeland are also selling shoes to the local consumers. Apex footwear is currently the largest domestic footwear manufacturer with 17.82 million pair annual production capacity. Most of the exporters have entered the local market in last decade. In the next decade, local footwear manufacturers are expected to increase their share of the domestic footwear industry.
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Domestic Brands in the Footwear Industry
Domestic footwear industry of Bangladesh has two sections- branded or organized footwear market and non-branded or unorganized footwear market. Unorganized footwear market still dominates the majority of sales. However, the market share of branded footwear is increasing and currently stands at 30% of the total market. Increase in per capita income, fashion consciousness and health consciousness are some of the key drivers behind the increase in the branded footwear market share. High rent fee is the key challenge for increasing the number of retail showrooms for the branded segment.
The overall footwear market is growing at 12%-15% rate. However, inflation consists of a big portion of this total growth and sales volume are not increasing significantly. Footwear business has cyclicality effect as almost 25%-30% footwear are sold during the Eid Al-Fitr period.
Organized footwear market of Bangladesh was dominated by foreign companies mainly by Bata even a decade ago. Most of the local manufacturers were focused on exporting their products. But, in the recent years, local manufactures are entering the domestic footwear market with their own brand to capitalize on the growing demand in the domestic market. Almost 30 exporters have introduced local brands. Some of the local popular brands that are currently operating in the market areBay, Hamco, Jennys, Fortuna, Crescent, Vibrant, Leatherex, STEP, Walkar, Orion, Falcon, Zeils, Shampan etc. Along with footwear brands, clothing brands such as Ecstasy, Sailor, Occult and Freeland are also selling shoes to the local consumers. Apex footwear is currently the largest domestic footwear manufacturer with 17.82 million pair annual production capacity. Most of the exporters have entered the local market in last decade. In the next decade, local footwear manufacturers are expected to increase their share of the domestic footwear industry.
Project Overview of BP Footwear & Industries
Project Plan
Due to huge potential of the footwear sector of Bangladesh and sizeable export market, BP Footwear & Industries (BPFI) has taken the initiative to expand its existing footwear manufacturing unit which involves manufacturing of Men’s Dress Shoe, Men’s Sandal, Ladies Sandal, Ladies pumpy, Sneakers and Men’s Casual Shoe.
BPFI has huge experience in the footwear sector and has been working in this industry since a long time. They also have established own brand named ‘FALCON’ and has showrooms in local market. They also work with sub-contracts from renowned brands such as BATA, Apex and many more. They have a mission to export the products to various countries of the world and establish themselves as global brand.
From existing operations, 200 pair men’s dress shoe, 600 pair men’s sandal, 450 pair ladies sandal, 700 pair ladies pumpy, 300 pair sneakers and 300 pair men’s casual shoe is manufactured per day. Total 2,550 pair of footwear are manufactured from existing operations.
From expansion operations, 300 pair men’s dress shoe, 900 pair men’s sandal, 700 pair ladies sandal, 1,000 pair ladies pumpy, 500 pair sneakers and 500 pair men’s casual shoe will be manufactured per day. Total 3,600 pair of footwear will be manufactured from expansion operations.
For implementation of this project, total cost has been estimated BDT 198.01 mn in which fixed costs will be BDT 183.61 and variable costs will be BDT 14.40 mn. In this project, five years’ average sales revenue has been estimated BDT 432.62 mn where average net profit would be BDT 38.95 mn which is 8.87% by considering the utilized production capacity of 75% to 95% over the next five years.
Internal Rate of Return (IRR) of 31.26% and a discounted payback period of 4.25 years. This project will generate the employment opportunities for 62 people.
Full feasibility report and Business plan of BP Footwear & Industries is available to SRCA and BP Footwear.
- Date: November 06, 2020
- Client: BP Footwear & Industries
- Category: Leather Goods, Leather Sector, Leather Shoes