The King of Hawai: How Relaxo became a $3 billion footwear giant with the help of chappals!
One million - that’s the number of slippers manufactured by Relaxo, every single day! Not impressed already? How about this - 13% of India’s total footwear production capacity comes from a single company, Relaxo! Although the company didn’t invent the product (that credit goes to Bata), the humble hawai chappal propelled Relaxo to become one of the biggest footwear companies not just in India, but across the world. So much so that the company sells over $300 million dollars worth of footwear, everything from slippers to sneakers, each year. Owned by the Dua family, Relaxo has been able to create a global footwear brand out of India valued at over 3 billion dollars. What started in 1976 with just a single product has today turned into a multinational company with over 400 types of footwear across 4 brands. This is the story of Relaxo - how one family’s relentless pursuit of quality created the largest footwear company in the country by number of pairs sold.
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Let’s go back to 1971, when the Dua family inherited the business of cycle parts & footwear after a bitter separation dispute between the various branches of the family. Ramesh Kumar Dua, the current managing director of Relaxo, was 17 years old at the time, as he witnessed the family business dispute. Due to the separation, his father had to take on the responsibility of recouping nearly one lakh rupees owed to the family business. However, the creditors refused to repay, and the business had to eventually write off the money. Dua’s father had to make some drastic changes if the business had to survive. The cycle parts business was let go of and the Dua family decided to solely focus on footwear instead. With the Emergency imposed by the Indian government in 1975, it was the right thing to do as there was a severe shortage of parts as well as a slump in demand for bicycles in the country. However, everyone still needed chappals!
So, in 1976, the family decided to focus on creating a footwear brand, starting with just one product - the now ubiquitous hawai chappal. The family rented out a property for INR 350 as well as received an advance deposit of INR 10,000 which became the initial capital for the business. Rakesh Dua was convinced that rubber footwear was the way to go. He decided to gain expertise in the rubber industry & moved to the UK to enroll at the Plastics and Rubber Institute. It was not that easy, however, as Rakesh was a commerce graduate and did not meet the eligibility criteria for the institute. He persisted & tried to convince the institute to let him in, saying that he was there just to learn and not to get the degree. Seeing the determination in the eyes of the young man, he was admitted to the program and began understanding the business of rubber before returning back to India and helping his family with the business in 1983.
In 1984, Rakesh decided to create a formal brand for the footwear business, by the name of Relaxo. In the initial years, he focused on both quality and quantity, setting up multiple manufacturing facilities under different names across the country. This was done so because the government had reserved the footwear industry for small scale manufacturers. However, this policy was scrapped in 1995, and Relaxo grabbed the opportunity with both hands! The company set up a plant at a cost of INR 7.5 crores that could manufacture 50,000 pairs a day. This was a massive jump in scale for the company, made possible with its recent IPO, which had raised INR 4.5 crores at the time. As the economy was picking up post liberalization, Dua decided to focus more on advertising and create a strong brand in the footwear industry. Since then, the company has roped in Bollywood actors like Salman Khan & Akshay Kumar, which has over time paid big dividends for the company & the brand.
Today, Relaxo has become the de-facto market leader in the slippers category, as well as the biggest footwear brand in the country in terms of pairs sold. The company now sells a whopping 18 crore pairs of slippers each year! In 2003, the company had an annual revenue of INR 150 crores, which had jumped to INR 1010 crores by 2013 & INR 2600 crores by 2022! The future looks bright for the footwear giant as there is a massive opportunity for Relaxo in the country. Nearly 65% of the Indian footwear industry is still unorganized & there is room for big brands to be created in the space. Furthermore, India’s per capita footwear use is just 1.9, compared to 7 in the US and the UK. In short, Indians do not buy as many pairs of footwear as those in the Western markets, and there is still a lot of scope in the “under-penetrated” Indian footwear market. Relaxo has been able to maintain its quality while keeping the prices low keeping in mind the price conscious nature of Indian customers, which is likely to propel the brand further in the future!