 "Puma")
The falling rupee might have spoilt the party for many an international brand in India, but not all is gloom and doom. The German sportswear brand Puma's Indian arm, Puma Sports India (Puma), has found a way around it even with a high number of imports. It has, for example, decided to bring in one of its international concepts, the Puma Social, to make use of excess space in one of its flagship stores. Now, the store has a food and beverages section, on the lines of a pub, meant to showcase cultural events on art and music for patrons, but more importantly, after-parties of the sports events it ties up with. It is also increasingly looking at domestic sourcing.
Despite decreasing sale in Europe and China, Puma continues its growth streak in India. Puma is targeting a sales growth of 20 per cent this fiscal, slower than its previous year's rate of 30 per cent, but still faster than its global counterpart.
"No doubt, demand in India is more encouraging. We aim to grow our sales at 20 per cent in the next year as we continue our focus on performance products. However, with the way the dollar is going, the focus will be on profitability," says Rajiv Mehta, Puma's India managing director.
Puma, which makes 55 per cent of revenue from its footwear business, imports 80 per cent of its offering in the segment, which makes it vulnerable to the rupee's fortune. A slowdown in consumer spending, too, has put a strain on its profits. "We cannot pass everything to the consumer because we do not know where the dollar is going to stop. Also, in a category like ours, an increase in prices beyond a certain point makes people stop buying. So, we are doing our best to visit our operations and try to cut costs wherever possible," says Mehta.
Puma is turning to more products made at home for its apparels and accessories. It earns 35 per cent from apparels and 10 per cent from accessories.To give its local products more room to play, it is contemplating the launch of separate accessories stores, which will be a first for Puma across the globe.
"We are exploring that option and are in talks with Puma International to give us permission. There is a huge market for accessories in India - retailers in other categories have sold accessories in separate stores and have been successful. There is potential if you cater to the right segment at the right time," says Mehta.
Puma operates the front-end retail through a joint venture in India - Puma India Retail - with an undisclosed India partner. It owns and operates about 30 store.
While Puma already has an accessories line - bags, watches, armbands, socks and water bottles, among others - the retailer faced space constraint in existing stores. The company believes opening separate outlets for accessories will not only increase its merchandise but also work better in a largely unorganised accessories market.
With supply of new malls shrinking, Puma is facing a challenge in expanding. But it is trying out different forms of marketing to net the urban youth. Its Puma Social Club in Bangalore is one of the ways as is its partnering running events such the Urban Stampede and Spirit of Wipro Run. Puma is also looking at going upcountry with the Kaveri Trail Marathon - a 5-10-km run along the Kaveri river.
It has outrun the other three sportswear majors in launching the first exclusive e-commerce portal, managed by a franchisee. The company says it has begun to contribute to 1 per cent to the brand's overall sales.
The sportswear retail market in the cricket-crazy nation is estimated at Rs 36,580 crore and is expected to grow at 33 per cent until 2014, estimates EY. However, the country's sportswear segment is unorganised too, with brands constituting only about 30 per cent of the market, according to EY. Brands such as Puma, Nike, Reebok and Adidas are now left with higher costs from duties and imports, and tough local competition in urban markets.
As Ankur Bisen, vice-president - retail and consumer products, at Technopak Advisors says, "Puma has invested a lot in its exclusive branded outlets and like the others, exploited the multi-branded outlets to increase penetration. The next wave of growth in this industry will be seen in the tier II and III markets where brands have achieved significant awareness but limited availability." Puma recently opened a store in Ahmedabad, adding to its presence in about 80 towns in that region
"While growth in tier I towns has slowed to about 10 per cent, we are seeing tier II and III grow at about 20 per cent. We are working on opening new stores, rather than depend on franchisees, wherever the market is promising. But the focus is clearly on growing those markets," Mehta agrees.
