A late entrant into sports lifestyle retailing in India (having launched in 2006), Puma Sports India, a subsidiary of the German firm, Puma AG Rudolf Dassler Sport, is catching up. Speaking to Suvi Dogra, its CEO Rajiv Mehta, highlights his challenges and growth strategy. Excerpts:
The year 2008 was tough for retail. How difficult was it to cope with the pressure, given that Puma is a late entrant in the domestic sportswear market?
Going by the strong sales in the past, we had set a realistic target for 2008. However, the last three months proved to be tough, as sales came down by almost 30 per cent. But even so, we were able to sustain good growth.
Going by the pressure on margins, does the company plan to increase prices?
I think one should always increase prices during recession. Even if you are losing some customers, the ones still shopping don’t mind accommodating a marginal increase in prices, and for the company the business continues to grow. While we did not increase prices last season, for the summer season there may be a 5-10 per cent rise.
Does Puma plan to foray into the kidswear category in 2009, as announced earlier?
The kidswear plans have been pushed to 2010. This year, the aim is consolidation of existing business and cost-cutting. While the kidswear business may not be investment-heavy, it involves a great amount of risk, as it is price-sensitive. We are thinking of an approach to involve kidswear retailers, instead of having standalone stores.
Has your store expansion plan changed?
As of now, we have 36 Puma stores across the country. We are re-negotiating rentals and identifying locations that can allow us to have profitable stores and internalise sales. Though I would not like to put a number, we have healthy expansion plans for the year.
Puma refrained from being a part of IPL, and instead associated itself with the Volvo Ocean race. Will there be a change in strategy this year?
IPL changed the game of cricket. Since last year was the first season, we decided to watch, learn and then plan. This year, however, we are ready to partner teams and be an active participant. Volvo Ocean Race, niche as it may be, gave us an opportunity to launch our sailing collection in the country.Our team, branded Puma Ocean Racing, competes in sailing around the world.
However, cricket is something we will continue to look at, given the World Cup 2010. We will kick off campaigns this year as a build-up to the event. Our cricket line is already available in Puma outlets.
The company has been adding to its range of accessories but its perfumes are still not readily available. How does the product mix stand as of now?
We launched our sunglasses, watches and to our luggage collection in the second quarter last year, which have been received well. The aim is to introduce products from our global portfolio to cater to a wider range of consumers.
As far as perfumes are concerned, we are looking for distributors for possible tie-ups.
Puma seems to have cut down on mass media advertising. Is it a conscious strategy?
For our global campaigns, we will continue to advertise through TV commercials. Otherwise, the plan is to go niche. So you will see us advertise more with lifestyle magazines, besides leveraging other mediums to build upon the brand.
Puma has set up a JV with RGN Swamy-owned Knowledge Fire to sell its products. Why such a venture?
In India, Puma operates through cash and carry wholesale trading. The JV was planned keeping the FDI norms in mind. We are now waiting for the elections to get over and shall act if any changes will be made in the FDI regime.
