We are exploring 100% FDI in retail: Erick Haskell

Interview with Adidas India MD

Just a few months ago German footwear major Adidas had handpicked the soft spoken Erick Haskell, who has vast experience in China, to set the operations of its Reebok business in India in order.

The company has faced troubled times after its  top brass including its flamboyant former CEO MD Subhinder Singh Prem got  arrested due to an alleged financial fraud and the German company was forced to take a hit of Euro 153 million for its Indian operations.

Haskell the managing director of Adidas India who says that the “past is behind them” in an exclusive interview to Surajeet Das Gupta talks about the future of the group’s business.  

You went through a massive restructuring exercise, virtually bringing down the number of stores by half in Reebok. What was the focus of this?

The focus for us was viability of the business and ensures profitability for both our franchisees and for us. We looked at stores which were not viable and we decided to close them. Now we have a portfolio of successful stores and are now again on growth mode.

But this is a different type of a growth mode where focus is on profitability of the locations. That is why we do significant due diligence before a store is identified. For instance we closed down the store in Delhi’s South Extension (an upmarket location) because the location was not viable. We are now looking are a store around the same place which will be viable.

We are also going to Tier 2 and Tier 3 cities like upcountry Tamil Nadu where we did not have stores. We had 900 stores we now have 450 and we are adding 50 more this year.

Reebok has changed its earlier strategy of offering shoes at around Rest 1,000 and having continuous discounts. This helped in getting in the new users. Have you now abandoned this strategy completely? Your shoes are not affordable anymore.  

The current positioning of the brand is that of a premium fitness brand.  I think we give a lot of value to the customers at our price levels. Clearly it is not accessible to everyone. Our shoes start from Rs 2,500 but these are not available in the best locations. There it starts from Rs 3500 and goes up to 10,000 to 11,000 so we have huge range.

But you have nothing below Rs 2500?

Yes except sandals which I do not consider in this

Do you import most of your products and has the depreciation of the rupee forced you to increase prices?   

Nearly 80% of our footwear in terms of volumes is manufactured in India. Some of them are made completely in India, there are some in which components to make the shoes are imported and of course the top high end products are imported.

So far the depreciation has not lead us to increase our prices and that is because of the nature of our business as we sell in advance. But like everybody else we have to pass on the burden of depreciation to the consumers there is no question on that.

Has the slowdown impacted you?

We are in an industry where economic slowdown has not impacted us and that is to do with demographics. We have certain things going for us, we are in an industry segment where demand is increasing, and two as we see a population with increasing incomes, one of the things they want to spend is on fitness and  sportswear. This has been my experience in India as well as China. So no we have not been impacted by slowdown.

The government has now allowed 100% FDI in single brand retail. Is it an option which you will look at and build your own retail network?

It’s something we are exploring... It’s not a priority at the moment, our priority now is to put in exciting products and have exciting brand ambassadors. We are studying the regulation and at some point will see.  

As companies you are now are now focusing on women in a big way. Is it because today only 25% of the sports and fitness wear sold is for women and you want to change this?

We have appointed actress Nargis Fakri as the Reebok brand ambassador for the women’s range. This is going to help us really grow our women’s business in India on the Reebok side. Our Studio Line range will focus on dance, aerobics and yoga.

This comes within 3 weeks after we announced John Abraham as our brand ambassador. Both of them will be part of our plan to extend the Fit for Life concept.  



But why have you shifted from sportswear to now fitness?  

The decision to move from just sports is a global decision that the company has taken a couple of years back. There are a number of players.. Including Adidas who are focused on the sports. We saw an opportunity globally to go after the fitness market. And there is another reason.



The heritage of Reebok, especially if you go back to 1980s.it was a fitness brand. We wanted to go back to the heritage and reestablish ourselves as the fitness brand today.

How do you ensure consumers can differentiate between an Adidas brand and a Reebok?

In Adidas stores the segments are categorised as basketball or cricket amongst others. In Reebok they are categorised as training, yoga, aerobics, walking.

There are of course overlapping categories like running or training which are both in the premium category were the decision of the consumer would be based on his personnel interest and taste whether he has grown up with Adidas or Reebok.