Reebok India is best known for exporting managerial talent to its parent company's worldwide operations. To begin, Muktesh Pant, the first managing director of Reebok India, was appointed chief marketing officer of Reebok (he quit recently to start his own fitness business) and was posted at its headquarters at Boston. Last year, Siddhartha Verma, Pant's successor, was made in-charge of marketing for Reebok's European operations spread across Austria, Belgium, Denmark, France, Germany, Italy, Ireland, the Netherlands, Norway, Portugal, Spain, Sweden and the UK. Then there were others like Harpreet Singh Thind, Dhruv Parashar and Johnny John who were handpicked from India for plum international assignments.
The reason for Indian executives being in demand within Reebok is not far to seek "" India is the only country where Reebok is ahead of arch rivals Nike and Adidas. It is also the market where Reebok is growing the fastest. Last November, Reebok India also bagged the best subsidiary award from its parent.
The challenge before Subhinder Singh Prem, managing director, Reebok India, is to keep the momentum going. Prem, a graduate from IMT Ghaziabad, spoke to Business Standard on his roadmap for growth.
Excerpts:
How soon are you expecting an overseas assignment like your predecessors?
I am not going to leave in a hurry. My target is to double our turnover to Rs 500 crore in the next two years. We have been growing at 50 per cent and this year, too, we hope to maintain the growth. In the Rs 1,000-and-above category of sports footwear, we are the undisputed leader with a 43 per cent share of the market.
What will fuel growth for Reebok in India?
Growth for Reebok in the next two years will come from trying out new formats and concepts. About a month back, we soft-launched a women's store at a Gurgaon mall. It is doing quite well.
We are now exploring the possibility of opening a similar store in Chandigarh, with a floor area of 2,000 sq ft. After the US, India is the only country where Reebok has a women's store.
We are also in a unique position in that we get the best of the Reebok productline from Europe and west and south east Asia.
FMCG companies say that the market is showing signs of downtrading, with consumers spending more on consumer electronics and lifestyle products like mobile handsets. Won't that impact Reebok's growth in India?
On the contrary, we have seen a definite upscaling in our customers in the past few years. Especially in the metros, people now come to buy more expensive shoes. Some shoes in our range go up to Rs 6,000 and above, but customers still buy them.
In fact, we are noticing a huge demand for these shoes in India. Our global offerings carry the same price tag in India as anywhere else in the world. This clearly proves that there is no downtrading.
What is the price range at which you sell the most?
It is between Rs 1,500 and Rs 2,500.
How much of your footwear is procured locally and how much is imported?
About 35 per cent is imported and the remaining is outsourced from three factories in Sonepat, Ludhiana and Faridabad. Since our entry in the Indian market, we have had a threshold of Rs 1,000 for our lowest-priced footwear. Local producers help us get this threshold price.
But this is not to say that we do not make high-end footwear in India. In fact, Reebok's high-end cricket footwear is made right here in India. We work closely with our suppliers. Reebok, as you know, is only a marketing company and does not own factories anywhere in the world.
Don't you have plans to break the Rs 1,000-mark? Or do you have in mind a dual brand strategy, with a new offering at the low-end of the market?
We have considered coming out with products that cost less than Rs 1,000. The issue is whether the right quality can be delivered at these price points. We have to keep in mind the brand equity of Reebok.
How big is your retail presence in India? Would you like to leverage it to get into new product categories?
We have 105 franchisee stores in India, which is among the strongest in the world. The US has about 200, and South Korea has more or less the same number of stores as India. We are present in every mall here. As far as leveraging it is concerned, we will stick to sports footwear and apparel, the core of the Reebok brand.
But you do have a presence in accessories with Reebok watches. There was talk of Timex launching Reebok watches in India...
Yes, we do stock Reebok watches in our stores. But we can't get into formal wear because that doesn't fit in with the brand image of Reebok. You can't expect a man to go running in formal trousers.
The Indian customer is well-informed about what Reebok stands for. The awareness amongst Indians towards fitness is high. And that's what Reebok is all about. We are a young company and the average age is 29. We have trained over 600 fitness instructors and 90 per cent of them are women.
What is the share of apparel in your turnover? What is the global trend?
About 40 per cent of our turnover comes from apparel. Globally, it is below 30 per cent.
Hasn't Reebok somehow missed out on the great football opportunity in its communication strategy?
That is deliberate, although we do have an association with Liverpool. And that is not an inexpensive property. In the US, fashion trends are being set by African-Americans. And the two areas where these people have left an imprint are music and basketball.
Thus, we have decided to focus on basketball. Reebok has signed up with all the 52 NBA teams, which wear Reebok gear. We have also tied up with the Asian basketball sensation, Yao Ming.
This has worked to our advantage in India, too. India is fast emerging as a huge market for Reebok's sports merchandise like NBA jerseys, for which the company holds the rights, and signature footwear collections named after the game's superstars like Alan Iverson. In fact, replica jerseys are more in demand than normal jerseys in India.
Apart from that, we have signed up with six cricketers in India. That, too, is an excellent property.
Reebok is known to have had issues with its local partner, Ajay Kalsi of Phoenix, for a while. How does the relationship stand today?
It is smooth. Phoenix holds 7 per cent in the company and there is no proposal to buy it out.
What are the opportunities that Reebok has identified for outsourcing from India?
Reebok will definitely step up its sourcing of sports apparel from India in the days to come. At present, it sources the Greg Norman range of golf apparel and NFL apparel worth around $ 75 to $ 80 million from Indian manufacturers.
In fact, almost half of its Greg Norman range comes from India. Globally, Reebok wants to reduce the number of factories it sources from.
As all Indian suppliers are "human rights approved", they are likely to benefit from such a move. The removal of the quota from 2005 will help Indian suppliers further.
