Strategy

Running to stay ahead
Reebok set a blistering pace in the Indian sports good market, far outpacing its formidable rivals, Adidas and Nike. Then, last August, Adidas ‘combined’ with Reebok globally. What has enabled Reebok to best the competition in India? Anu Saraf reports on Reebok's strategies
ver since it established a presence in India in 1995, Reebok has dominated the Indian sports wear market. While its major competitors Adidas and Nike have not been as successful in the Indian market, Reebok claims it will end 2005 with total sales exceeding $91 million. Sales in 2004 were $59 million. In contrast, according to market sources, Adidas India’s sales revenues are about $22 million. Says Prakash Vaswani, a Reebok distributor in south India, “Reebok's main advantage has been that it understood the Indian consumer very well and has made an effort to grow alongside him. For instance, when the company came to India, all that the consumers wanted was an international brand of footwear and Reebok gave them that at an affordable price.” Today, with sports becoming fashionable, the bulk of the sales comes from the $45 to $90 segment compared to two years ago when most of the sales would come from the $20 to $45 segment. One aspect to Reebok's success has been its ubiquitous retail chain. By the end of 2005, the company was retailing from 182 franchised stores. It also retails from

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two thousand multi-brand outlets. While Reebok has been adding a store a week in 2004, for the next year the company has lined up even more ambitious plans to open a store every 72 hours. Subhinder Singh Prem, managing director Reebok India Company, says, “Our biggest investment has been in the field of marketing infrastructure, creating an international and uniform retail ambience in all our exclusive stores.” A functional issue that was arguably instrumental in aiding the company establish itself early in the country was the fact that its shoes have a broader forefoot, which suits the Indian consumer. In contrast, the shoes of international rivals have narrower forefeet. It has made efforts to vibe with the customer for its apparel range as well, that contributes 45 per cent to the company's turnover. This year the company has come up with its NBA-NFL range of T-shirts that are flying-off shelves in retail stores due to the customer demand for the Americana look. “What worries me the most is that we haven't made enough mistakes, which implies that we haven't taken enough risks. Most of our initiatives have been extremely successful,” says Prem. “The only product line to bomb has been the

salwar kameez (traditional Indian women's dress) in knit fabric that we brought out for the early morning women joggers.” In 2004 the company started treating the womens' business initiative as if it were launching a new brand. It started promoting the category by opening women's-only stores, the first outside the US, that would meet the special needs of women customers. Adds a distributor, “Whenever a style would do well, the company would ensure that we were always well stocked with that style whereas competitors would try and push the entire range of products at the consumer.” On the promotions front as well the company has increased its spends and is roping in top sportspersons to push its brand. Reebok has tied-up with cricketers like Rahul Dravid, Mohamed Kaif, Yuvraj Singh, Irfan Pathan, Dhoni and Harbhajan Singh. In tennis, it sponsors the Davis Cup and backs Prakash Amritraj. In the up coming field of motor racing it is sponsoring the fastest Indian Narain Kartikeyan. Says Prem, “We are proud of our association with Kartikeyan as he is the second Asian in Formula 1 races.” Reebok came to India in the mid-90s mainly to develop the middle segment of

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SELLING A RANGE THAT HAS BEEN FASHIONED FOR THE INDIAN PHYSIOMETRY: The Reebok sales team at a New Delhi outlet

the footwear market in Africa, the Middle East, and Central and South Asia, and as a fallback in the event of an interruption in Chinese supplies. The annual threats of adverse action against Chinese imports into the United States, prior to the admission of China to the World Trade Organisation in 2001, were noted in each Reebok annual report as having a potentially negative financial impact. Reebok was the first among the big three that identified India as a huge emerg-

ing market and a sourcing base for global exports. Today the company uses Bawa Shoes in Jalandhar and Moja in Sonepat to manufacture its low-priced shoes but imports most of its high-end shoes from around the world. Reebok India has performed so well that it received the prestigious Subsidiary of the Year award for two consecutive years 2003 and 2004, beating competition from countries like China and Japan to claim the credit. It currently has a market share of 47

per cent in sports footwear and apparel category. The company is also expanding its presence in Pakistan and Sri Lanka. “We will add two more stores in Lahore in addition to the one store which we opened in February 2004. The legendary pace bowler Wasim Akram is our only franchisee in Pakistan. In Sri Lanka, we have had our presence for some time and we will add 35 stores in the next year,” says Prem. In order to combine the popularity of its soccer and athletic brand with the popular-

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PICTURES: SHEKHAR GHOSH

STRATEGY

REEBOK INDIA'S MARATHON MAN
fashionable today in India. In our target segment, seven out of ten people now indulge in some kind of physical activity compared to just one in ten in 1995. Price sensitivity has also declined considerably. Today consumers want value for money products and are willing to shell out more for the product they want. How would you look back over the years … It's been ten years now. The first three years were very difficult creating and laying the foundation for the organisation, and in trying to figure out the right marketing mix. We were one of the first MNCs that came in post liberalisation to have posted a profit — and that was in 1999. And we have been making profits ever since. Considering you want to be eventually seen as a serious player in the sports/training shoes segment, what are you doing to grow the market in terms of promoting fitness/sports consciousness among consumers in the country? When we launched in India, fitness was a very nascent industry and people bought our products more for the American brand image, fashion and comfort. Over the years while we have retained our position as a fashionable brand, a sizeable portion of our consumer base buys the products for indulging in some form of fitness activity. The fitness industry is constantly evolving and is widely researched. New methods of calisthenics are fast attaining popularity. The company frequently invites visitors from abroad, to share global perspectives on fitness and conduct the Reebok Resolution with the Indian fitness fraternity at large. Reebok has not only been instrumental in redefining the attitude of fitness in India but also increasingly made it a career choice for women instructors and maintained global leadership in training across the board. What is your vision for the Reebok brand in India? Brands are here to stay. Investment in building a strong brand is a means of securing your sales and business for the future. As products get more and more commoditised and consumer choices soar, branding will provide the key differentiation to break through the clutter. Fitness will be the key driver in lifestyles, and Reebok is undoubtedly the fitness enabler in the country. To inspire Indians at large to lead a fit lifestyle is our goal and vision. The sales of our products will follow on their own, as we focus on our goal.

FITNESS AS A LIFESTYLE: Subhinder Singh Prem of Reebok India

THIRTY SEVEN year-old Subhinder Singh Prem who has been with Reebok India Company since it set shop in the year 1995, and who recently participated in the Delhi half-marathon run, talks about his vision for the company with Anu Saraf. Prem became managing director in 2003 and since then, the chain has grown from 65 stores to 180-plus. And its turnover has increased from $36 million to over $91 million. Subhinder Singh Prem spoke to Anu Saraf about Reebok. What have been the paradigm shifts in marketing sports shoes and apparel to Indian consumers since the time Reebok came into the market? The most noticeable shift has been that sports itself has become

ity of football and basketball enjoyed by Reebok, Adidas-Salomon bid $3.8 billion in early August 2004 to acquire the latter. This deal has created a $11 billion sportsOn the Web Reebok: www.reebok.com

wear giant and poses a formidable threat to arch rival Nike. Post its acquisition by Adidas, nothing has really changed for the company in India as far as its strategy is concerned. Insists Prem,”The acquisition process that is scheduled to start in the month of March 2006 will first be heralded in its American

and European offices. I believe that we shall be integrated with the company after that process is over.” Whatever happens to the combine's overseas operations, given Reebok's marketing success in India, it is doubtful if the new major will deviate sharply from strategies that have trod well along the path of success.

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