50 per cent of our products 'Made in India': Dave Thomas

At the launch, Dave Thomas, India head of the German sportswear giant adidas, which also own Reebok, spoke to Retailer Media on Reebok's innovative 'Fit Hub' stores.
Dave Thomas, MD, Adidas India

Practising combat training routine on the main street in GK M Block, tearing through the Reebok backdrop to launch the Reebok’s latest ‘Fit Hub’ store, selfie interviews and the theatrics of the enviably fit Reebok Brand ambassador, Nargis Fakhri, Reebok India put together a grand opening amid fans, fellow fitness enthusiasts and a long queue of journalists waiting in the sun.
At the launch, Dave Thomas, India head of the German sportswear giant adidas, which also own Reebok, spoke to Retailer Magazine on Reebok’s innovative ‘Fit Hub’ stores that have become popular amongst the consumer, adidas getting government nod to open 100 per cent brand owned stores in the country and the Group’s future plans.   

How do you evaluate Indian market for adidas and Reebok?
I don’t view India as one market. I look at it very differently. We have different strategies in different markets. If we have strength in one of group’s brands in City A, in City B we might have an opportunity. Things are moving fast here. From the group’s perspective, both brick-and-mortar and eCommerce is going through a rapid transformation.
In just over a year, things have moved fast. I am of the belief that physical stores will get better and so will the shopping experience. With International brands coming in, the race is on in the eCommerce space as well, which makes it challenging but exciting at the same time. Also, the consumer here is maturing fast. They are travelling outside of India and experiencing brands. Of course, with the Internet, they can do research and find a lot of information about brands, and that is changing the landscape of the retail industry.

Both adidas and Reebok have grown positively in the last quarter. What’s the percentage of growth you have witnessed?
We don’t share our figures on a country basis, and the last year has been about stabilising things. We are building a solid foundation for rapid future growth and we wouldn’t open up stores for the sake of it. Before that we’d make sure they are in the right place and of the right size. In the past, we have gone wrong in opening smaller stores and that hasn’t enabled us to represent the brands with an authority.
Now we are looking for bigger spaces, like recently, we have opened a 4,000 sqft space, which was unheard of before now. We have seen growth in key areas of our business, like ‘running’ (for adidas and Reebok), ‘football’ (with adidas), and ‘training’ with both brands. With adidas Originals, which is an untapped space right now, we have seen a large opportunity. Large parts of our business, if you compared it globally, are still underdone here, but we are trying to build them up.

How is adidas’ partnership with Manchester United, the Football club coming along?
The amount of products we sold in a short time is unprecedented. The Manchester United partnership is very successful. Obviously in the adidas brand, Football is very important. We just love the club’s culture, their ethics. We have some of the best teams and best players with us and we are very happy about that.

The focus for the brands has also shifted to the premium segment, and the Group has shown positive signs of growth in that segment. What’s the strategy?
Large parts of our business were from Rs 3,000 to Rs 5,000, which appealed a mass part of the market. We had never sold over Rs 10,000 in the way we are now with units such as ‘Z Pump Fusion’ in Reebok and ‘Boost’ and ‘Ultra Boost’ in adidas. We can’t keep up with the demand for these shoes in various channels and that’s exciting. This shows me that Indian customer is prepared to spend more on premium and quality sportswear. The 10 per cent of our premium business is soon to form 25 per cent of our business.

How would adidas source 30 per cent of their products locally, now that you have the government’s nod to open fully-owned stores under the single brand FDI policy?
It doesn’t change anything for us because we are there already, and that is one of the things that helped it go fast. Our sourcing from the country is well over 50 per cent. Often it is a global design, sourced and put together locally. Many people do not know that. There is also a large part of design element done here depending upon the category and brand. We have a large sourcing base. We do not manufacture ourselves but with Indian suppliers and manufacturers who make those products. We have some very good partners.

What would be the group’s future plans with adidas?
We are targeting to go in the end of 2016. We do not turn on the switch, of course, and set it up. We want to make sure that the structure, the know-how and the understanding is in place.

How do you see your brands’ Omni-channel strategy unfolding in the near future?
In India, we operate through a group leading strategy and a country (India) leading strategy. We have tried to tie together customer’s experience with physical stores and eCommerce. We have tablets in around 150 stores now, which will be 200 by year end and 400 by April 2016. We can really tie that loop together and people can not miss out on their size, their preferred product. We started a 5-store pilot some months ago and now we are 150. All the franchise partners are interested and want to get involved. You will see the changes in customer behaviour very soon.

Why are you not selling Reebok through company-owned stores? What was the reason behind choosing adidas to get the government’s nod?
We did it with adidas for several reasons. The 100 per cent FDI gives us an opportunity to tell our brand story with full authority. With great franchise partners, we have more stories to tell, we need a bigger footprint in adidas. It is not easy to get the big boxes opening. We should have more 4,000 sqft stores opening first. If you go around the world and see the stories we tell to our customers, especially in China, Russia, Europe and the US, you will know what I am saying. It cannot happen in smaller stores.
We want to tell those stories in India. We will bring them here and will enhance the premium shopping experience. We can have a wider range, have experiences in store we cannot right now with the sizes we have. For example, for installing treadmills and getting people to run on them and experiencing the product in store, one needs a bigger store.

With Reebok you are strengthening your position as a leading fitness player and are reinforcing your commitment to women of India. How do you see that growing?
With women we see a real movement in people here. Indians are exercising more, especially women. And they want to look good. Staying fit matters to them now. They also want to look good when they work out.
We see our business in Reebok from a woman’s point of view, which is growing fast. The products are getting better, more premium in nature, and the designs and colours are very women friendly. We are devoting more of our store space for them. In one of our stores, in Select CITYWALK, we have an all-female-staff, which is done because we try to change the way we sell to women. We try to give them that comfort and advice that really matters. In some stores, 40 per cent of our business comes from women, and overall in the business just under 30 per cent comes from them, which is still a significant number. 

Dave Thomas