From a purely consumer point of view, I can affirm from first-hand experience that Redtape shoes are one of the best available in the market at prices that are affordable to the Indian middle class.
However, from an investment perspective, I see a few main issues with the organized footwear business as a whole.
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First is the lack of customer stickiness and our general obsession with price and discounts over quality. So there is very little pricing power in the hands of manufacturers if any at all.
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Second is the pervasive presence of unorganized players. The FY23 Annual Report of Redtape states that about 85% of the Indian footwear market resides in the hands of these unorganized players and perhaps more importantly the entry barrier is low for new players to enter.
However, this is completely my personal opinion and doesn’t make Redtape a bad investment whatsoever, especially with India slowly migrating towards becoming a middle-income economy. It is only that I feel there are better businesses available and I am open to contrarian views on this point.
Disclosure – Not invested
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