The Adidas Group has obtained approval from the Indian government to open fully owned Adidas-branded stores in the country. Dave Thomas, managing director of the Adidas Group in India, said in a statement that the company intends to start opening larger stores under full ownership in the second half of next year.
Thomas said that the company would continue to work with franchise partners, who currently run 760 stores for the Adidas and Reebok brands in India. The group wants to increase that number to 1,000 by 2020, although it will continue to focus on profitable stores. While the Adidas brand is expanding in running, training and football, Reebok will continue to focus on fitness. The company hasn't applied for a license to open own stores for Reebok.
The Adidas group adds that it wants to invest more in its omnichannel retail approach in India. About 150 stores have been equipped with tablets that can be used to buy products online, which are then delivered to the consumer's home or can be picked up from the stores. The number of stores equipped for omnichannel retailing is to be increased to 200 by the end of the year and 400 by April.
The Indian government adopted reforms for direct foreign investment in retailing three years ago, allowing full ownership of mono-brand stores and majority ownership of multi-brand retailers, under certain conditions and with a requirement to source at least 30 percent of the products in the country. These reforms have already helped Decathlon to open new stores in the market.
Company filings reportedly put Adidas sales in India at 805 crore rupees (€112.8m-$121.2m) for the year until March 2015, more than twice the size of the Reebok brand the previous year. Until a few years ago Reebok was larger than the Adidas brand in India, but many Reebok stores have been shut in the last few years. The pre-tax profit wasn't available for the Adidas brand for this period, but it reached 116.1 crore rupees (€1.64m-$1.74m) the previous year, on sales of 719.9 crore rupees.
Björn Gulden, chief executive at Puma, boasted in the conference call around the company's quarterly results earlier this month that it had actually become the largest sports brand in India. Based on filings to the Registrar of Companies, Puma's sales were reported at 766.7 crore rupees (€107.3m-$115.4m) in the year ended in December 2014. Puma's profit before tax for the period was reported at nearly 29.1 crore rupees (€0.41m-$0.44m).
Gulden said he had just returned from a trip to India and was most impressed with the advances seen in retailing, as well as the buoyancy of online retailing through e-commerce operators like Myntra and Flipkart. Asked about retail plans, Puma said that recent developments provided an opportunity to lead retailing and wholesaling operations through the same entity and that it was exploring ways to open stores under this arrangement.
Nike declined to provide details on its plans for Indian retailing. Its turnover in India was reported at 624.2 crore rupees (€8.8m-$9.3m) for the year until March 2014, generating a pre-tax loss of 47.2 crore rupees.
