German sportswear maker Adidas is undergoing operational reform to reduce cost on its products in India.
According to the sources, the company will be winding up non-performing stores. The world’s second-largest sportswear firm has also moved key verticals, including Originals, Football and Premium Running out of India to places like Dubai.
Adidas is also planning to go through organisational reshape through which heads of several functions, for instance, marketing or HR, may report directly to its headquarters in Dubai.
When contacted, an Adidas India spokesperson said, “Our commitment to India remains unchanged. We will continue to invest in creating exciting brand experiences for Indian consumers and to drive our global strategy of ‘Creating the New.”
Adidas Group, which owns Reebok, is India’s largest sportswear company and posted revenues of Rs. 1,513 crore with a net profit of Rs 113 crore in 2016-17. The move to streamline operations is a step towards increasing efficiency and reducing overall cost for the company, which is battling fierce competition from established players such as Puma and new entrants like Skechers— both of which thrive on selling relatively more affordable products. For instance, a premium jogger from Adidas costs around Rs. 22,000, while Skechers’ most expensive shoe sports a price tag of around Rs. 9,000.
Adidas said, “Indians are culturally different from people in developed markets, where people buy sports shoes for sports and not lifestyle. And when you wear a sports shoe to work, it could last you three-to-four years, which wouldn’t have been the case if you had used it for running. Hence, repeat purchases for high-end sports shoes are less here.”
The Adidas India spokesperson said the company has opened larger stores in international formats both company-owned and franchise-led and has beefed up its digital focus in India. Adidas’s arch rival Nike, known for its premium sportswear, also recently moved a major part of its operations to Singapore, after reducing store count in India.