Growing Indian demand for training and athleisure products is fueling increased sales in the country for some of the leading international brands, which are starting to deploy their own stores in the country.
The Adidas Group reportedly achieved the strongest gains as its sales reached 1,513 crore rupees (€195.8m-$231.8m) for the Adidas and Reebok brands in the fiscal year until the end of March, up by more than 20 percent compared with INR 1,253 crore in the previous year. Its profit for the year amounted to INR 113 crore (€14.6m-$17.3m), up from just INR 5.3 crore.
As reported by The Times of India, the Adidas brand alone saw its sales increase to INR 1,100 crore (€142.3m-$268.5m) for the fiscal year, up from INR 898 crore, and its profit more than doubled to INR 95 crore. By far the largest of the two brands in India just a few years ago, Reebok reported sales of INR 413 crore (€53.5m-$63.3m) for the latest fiscal year, up from INR 354 crore, and it managed a profit of nearly INR 18.9 crore.
The Adidas Group denied reports that it was preparing to downsize its staff in India, but it has been streamlining its retail business in recent years and has started to open its own stores. The Adidas Group said there are 465 Adidas stores and 220 Reebok stores around India, and the company is apparently continuing to reduce the number of franchisees with which it operates. While there were hundreds of them a few years ago, the numbers have declined to 64 for Adidas and 38 for Reebok.
The trend for the Adidas brand has been moving toward the opening of larger stores. The Hindu reported about one such site opened on more than 650 square meters at the Express Avenue Mall in Chennai, featuring a small football pitch, a treadmill to try out running and football shoes, and a jersey zone to personalize shirts. The Adidas brand also opened its first fully-owned store earlier this month in Delhi, and is preparing two more openings before the end of the year. The Reebok brand has yet to obtain a government permit to open fully-owned stores, but Silvia Tallon, senior marketing director for Reebok in India, was quoted as telling the Press Trust of India this week that the permit should be obtained in one or two months.
The Adidas brand appears to be slightly ahead of Puma. Its Indian turnover was reported at INR 921 crore (€119.2m-$141.1m) in 2016, and the company says that its Indian sales were up a double-digit rate in constant currencies last year..
Björn Gulden, the group's chief executive, predicted in an interview with The Times of India that the country could overtake Germany and France to become one of its five largest markets by 2020. He was quoted as saying that India was the group's eighth-largest market in 2016.
Puma operates 60 stores around India, while another 290 stores are run by franchisees. Puma's online store is another important part of its distribution, along with other online retailers such as Flipkart and Amazon.
The brand's marketing investments focus on international icons such as Usain Bolt and Rihanna, but it has added prominent Indian endorsees such as Virat Kohli. Puma reportedly spent INR 100 crore (€12.9m-$15.3m) to make sure that the captain of the Indian cricket team wears the wildcat.
On the other hand, Nike confirms that it has let go about 20 percent of its employees in India, as part of the restructuring measures announced by the Nike group in June to support investments in its digital and own retail strategy. It means a global staff reduction of about 2 percent as the group is shifting resources to focus on 12 key cities and growth markets.
The Times of India reports that Nike's sales declined to INR 764 crore (€98.9m-$117.0m) in the last reported fiscal year, down from INR 803 crore the previous year, and the company's loss widened to INR 170 crore (€22.0m-$26.0m), compared with 101 crore rupees. Nike said that its head office remains in Bangalore, with two other offices in Delhi and Mumbai, and it remains committed to the Indian market.
Asics opened its own business in India less than three years ago and has built up a network of 22 mono-brand stores run by retail partners, which make up about 40 percent of its Indian turnover. Yet another article in The Times of India reports that seven stores were opened in the first half of this year and that Asics intends to add another seven in the second half, with a similar number next year.
Rajet Khurana, managing director for Asics India, told the newspaper that the brand could not open its own stores for the time being because it does not comply with requirements dictating that 30 percent of the products should be sourced in India. Asics began sourcing some apparel and footwear from Indian manufacturers, but Khurana estimated that it would take three to four years to reach the 30 percent threshold.
At the same time, the company is pushing its online sales, which make up about 20 percent of its turnover. The remainder consists of business with multi-brand retailers such as Reliance Footwear, which help Asics to satisfy growing demand in smaller cities. The running specialist is expanding its offering in India by adding categories such as cricket, badminton, tennis and wrestling footwear.
