 "Dave Thomas")
This article has been modified. Please see clarification at the end.
Adidas is targeting to double its business in the country by 2020. The German multinational group got government permission to open fully owned stores in India recently. The application for subsidiary company, Reebok India, to roll out own outlets is expected to be submitted in 2016, too. Reebok India was hit by a financial fraud in 2012. While this is a market that holds promise, Adidas India Managing Director Dave Thomas tells Nivedita Mookerji in an interview that the country's share in the global pie is far behind others such as the US, China and Russia. Edited excerpts:
How has the Indian journey been for you?
Personally, it's been lovely. I came here first in 2001 as a backpacker and fell in love with the place. I came in 2010 for my honeymoon, but without a backpack. Professionally, there's a lot happening - our application for fully owned stores got approval, we put Reebok back on track...
What's next?
We are looking at 800 stores by the middle of next year, possibly more. While continuing with strong franchise partners, there's an opportunity to bring larger and premium stores and concepts into India.
What is the cost difference between setting up a premium concept store and the current format in India?
It will be two to three times more.
What are your plans like?
We will open bigger stores in cities such as Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata and Pune either in successful malls or high street. There are hundreds of new malls but many of them are not successful. It's a gamble at times. As for fully-owned stores, the first one is expected by early 2017. We are likely to start with Delhi, but Mumbai and Bengaluru are not ruled out. We are looking at eight to 10 fully owned stores in 2017.
There was no mention of Reebok in your proposal to the Indian government for fully owned stores. What's the plan there?
The first priority was Adidas. It took us a long time to get this. We plan to apply for Reebok in the next few months. That should be much faster.
How big is your largest store here?
Adidas' largest store in India is 5,000 sq ft… In China and the US, it's five times larger.
By when will India have the size of stores that China has?
The group has to see India the way it sees China to get to that size. Those signs must come from the Indian market. My ambition is to double the size from 5,000 sq ft.
How far is India from China in retail?
A long way off. China is well over 20 times that of India. The gap has become wider in the past five years. As middle class grows, potential of retail will go up. But in terms of quality retail space, China is much more reliable.
Adidas has been silent on investment in its application. How much will it invest?
We can't share the number. But we have given commitment for 30 per cent sourcing. We are already sourcing 70 per cent plus. Our investment is also in partners, people, jobs and infrastructure.
What's the business outlook?
The next five years will be transition years. We will double our business by 2020. I'm talking of revenue as well as profitability. We will bring premium concepts, products, experiences. We want to be clear that ours is not a budget brand, as we bring our "Originals" and other global range.
How are you responding to the Make in India campaign?
We have nine to 10 partners across India. We will ramp up capacity.
India makes up for around five per cent of your global business. What's the target of growth?
It all depends on how quickly we grow in other markets. China, Russia and the US are very big. India is nowhere there… But India occupies a lot of mind-space, lot of importance at the headquarters in Germany. Conversation around India is much more than five per cent… India is a potential country, but it has been so for 10 years. It has to translate into reality.
What's your market share in India in the sports category and what's the goal?
We have between 42 and 45 per cent share of the sports market. We are looking to grow past 50 per cent.
CLARIFICATION
This version corrects earlier one that misstated Adidads was looking at 400 stores by mid-next year. The actual number is 800. The change has been incorporatd and error regretted.
