Shoes Shirts and Our Changing World

Bata once tried what Decathlon is now doing. It failed. This is a story about why and what it taught me about organisations, change, and quiet leadership.

A few days ago, I was at a Decathlon store in Lucknow. The sheer range and volumes on display made the experience a little overwhelming. Overflowing stores and a focus on the retail experience are hallmarks of post-liberalisation India. Those born in the 50s and 60s, as I was, were habituated to being a lot more frugal in all we did and experienced. Decathlon is now much more than just a sports apparel and footwear store. I am sure there is appropriate nomenclature for the segment and customer experience they cater to, just that I do not have the right word for it. 

Among the finest retail experiences of earlier times was to shop at Bata, the shoe store. This is true at least for me, perhaps also because I have something of a shoe fetish! The stores with their neatly arranged rows of shoes, allowed you to choose without the intervention of a salesperson and were a novelty for times when I was still in shorts. I still remain loyal to Bata and believe that they are the best possible choice when shopping for shoes.

The company (Bata) was sorely tested from the mid-eighties onwards. Revenue growth began to slow, and a growing strength of their employees’ unions was beginning to take a toll on their famed retail experience. Their salespersons could be brusque, their behaviour bordering on the rude.

It was at this time that Bata began an ambitious diversification project. To my mind, as I speak purely from the experience of a buyer, they were attempting to transform into a Decathlon of today. The idea was rather prescient, and in hindsight, a good twenty years ahead of its time. The initiative, however, did not pan out as expected and left the company in deep disarray.

The reasons for the failure trotted up, available in the public domain, will do credit to any management consultant. They range from poor leadership, misalignment in strategy, to inadequate market research. What is brushed away as `operational complexities’ is perhaps the challenge of managing the in-store experience, given the resistance of frontline sales staff, who seemingly resented what they believed were additional demands being placed on them.

I recall an experience when a salesperson, when asked the price of a shirt, responded with a `this won’t fit you’, taking it from me and putting it back on the hanger. To keep things friendly, I marvelled at the array of merchandise that was now available at the store. He responded with, `by next year, we will also be selling vegetables!’ That was tough to respond to.

That things were not kosher was possibly known, and perhaps there were efforts at correction. In the early 90s, a Director of Bata, whom I recognised, came to shop at the Patisserie of the Taj Bengal in Calcutta. The store was just shutting down for the day. The manager, however, on seeing the customer, quickly reopened and ensured that he was served. I recall the service being acknowledged with a rueful smile, and his saying, `this would not have happened at any of our stores’.

Even today as a loyal and (reasonably) frequent visitor, it is easy to differentiate between experiences at a Bata store and retailers selling products of equivalent value - apparel or even liquor at some of the new outlets.

The reason for the failure of diversification initiatives is not just financial or strategic. The role of `operational complexities’ is never easy to acknowledge because it often (directly) relates to failure of leadership – the inability to establish processes, the existence of information silos, poor communication, lack of trust and the inability to address an inherent resistance to change.

As a professional, I have had my fair share of failures in attempts to diversify and expand the relatively tiny initiatives that I headed. The `operational complexities’ that I too experienced arose, to my understanding, from two issues. 

Building a square structure on a round foundation is setting up for failure. Operational processes and the mores related to an organisational structure write themselves into an organisation's DNA. They create mindsets that can blindside leadership. As the head of an NGO promoting two for-profits (one a microfinance institution), I was conscious of the need for the development of an entrepreneurial mindset in the new entities, which an NGO working with donor capital may not possess. It did not work too well. Perhaps I remained too `hands on(?)’ or perhaps I could not bridge the gap between social purpose and market needs? A new idea will (often) need a new vehicle. Twenty years on, the enterprises survive but are still far from being called `flourishing’. PRADAN and the Central Himalayan Rural Action Group are organisations that can teach you how to bridge this gap successfully.  

The diversification failure at Bata, led to a sweeping change in senior management. To me, and I could be wrong here, it indicates the inability of operating managers to have taken the board along. Board approvals and the board buying into a vision are two different things. I know, because I have made the mistake of assuming that an approval is good enough to move ahead with. I failed to adequately communicate or ensure that the board had bought into the vision for growing the organisation. They went along because of a lack of alternative at the time, but were waiting for a misstep, with knives out, which were used to good effect at the first opportunity. The scars have healed, but regret at the loss of opportunity remains.    

Let me correct any wrong impressions I (may) have created about Bata India. They are no slouches. They have generated a revenue of INR 35,000 Cr., in the financial year ’23. They have free cash flows of over INR 5000 Cr. With 1800+ stores in India, they command the market with approximately 40% share of organised retail in footwear. They are getting a lot that is very right. No `ifs’, `buts’ or doubts on that.

Just that, in less than a decade, Decathlon now have 100+ stores across India, with revenues that are upward of INR 4000 Cr., in a brand-dominated market, where product outsourcing is now the norm. Decathlon worldwide have reported revenues of Euro 15.6 billion for the financial year ’23.

I will leave it to you to decide if the Bata attempt at diversification is a lost opportunity, or then the failure was a well-disguised blessing. The future will tell if you got it right.