German sportswear major Adidas is planning to open around 100 stores in Tier- II and III towns in the current calendar year and is expecting a growth of 30 per cent in its revenues in the financial year 2009-10. Raghavendra Kamath caught up with Adidas India Managing Director ANDREAS GELLNER to understand the company’s strategy and growth plans. Excerpts:
Why are you keen on expanding into Tier- II and III towns when there are concerns about decreasing consumption in these cities due to failure of monsoon and other economic factors?
We will still expand into these cities, as we believe that our consumers are relatively independent of factors like monsoon failure. We target the premium end of the market and they are still spending. Though it remains to be seen what kind of impact the monsoon failure will have, we should be relatively insulated from that.
What has been your same-store sales growth? Have you seen any decline in this compared to last fiscal?
We have seen a same-store growth of 14 per cent in the last eight months and it is higher than last year. The growth rate has accelerated. With the improvement in overall economic conditions, I feel we will be able to maintain these numbers in the rest of the year. The reason we could achieve these numbers is that we have put in a lot of effort in range selection, intellectual property rights, business plans, optimising supply chain and so on. We are reaping the benefits now.
What has been your pricing strategy so far? Will you change it, going forward?
We have increased our prices by 20 per cent in the last two and half years, step by step. I do not think we have to change our pricing strategy now. But with the introduction of a GST regime, we will certainly pass on the benefits or burden to our consumers.
There have been debates about multi-brand outlets versus exclusive stores. Which one has worked for you?
We have seen a majority of our growth coming from exclusive stores in terms of revenues and same-store growth. We are yet to see a multi-brand player who can make significant investments and provide a good platform.
Every now and then, we see the launch of a new international brand in the country. How fierce has the competition turned out to be in the last couple of years?
In our segment, all competition is already here. The new brands we have seen in the last three years are mostly lifestyle and casual brands. They are not necessarily successful, as they are doing the same thing as what they are doing abroad. India is a different market and it requires a different strategy.
