NEW DELHI: As it battles investor criticism and poor sales performance across the world, Adidas, the world's second largest sports-goods maker after Nike, is betting on India for a turnaround.
Roland Auschel, head of global sales and member of executive board at Adidas, said India could be among the German company's top five markets by 2020, up from number eight at present. "India and China are our two biggest growth markets," said Auschel. "A large chunk of 1.5 billion euros marketing investment may flow into India."
And, Adidas is depending heavily on its performance in key growth markets like India and China, as its position has been slipping for some time in the developed markets. In the US, which accounts for nearly half of global sportswear sales, the company was uprooted from the second spot last year by Under Armour, a sportswear brand from Maryland.
TaylorMade, Adidas's golf division, and Reebok, the British sports brand acquired by it in 2006 for around $3.4 billion, have also proven to be burdens. While investors have been baying for his resignation, Adidas's long-serving CEO Herbert Hainer announced a five-year strategy in March to bring the company back on track by raising net profit by 15% each year till 2020. And Auschel, who is tipped to pick up the reins after Hainer, thinks India could play a big role in the company's growth in the next five years.
"The corruption that happened in Reebok India is unfortunate. It cost us a lot of money. But, we are setting things right," said Auschel, who removed Reebok's then India MD Subhinder Singh Prem in 2012 on alleged charges of commercial irregularities. There are 140 Reebok stores in India, which is 20% of the brand's global fleet.
Auschel wants to move fast. "I am here before China. It shows the faith we have in this market." Adidas will increase the number of its stores from 750 to 1,000 in the next two years (including Reebok stores). It is rolling out its omni-channel strategy in 200 cities. "We are repositioning Reebok as a fitness brand and fine-tuning Adidas's image as a sports brand. Top cities in India, including Mumbai, Bangalore, Chennai and Hyderabad, will be our focus. This is part of our strategy to invest in marketing in metropolitan areas across the world, such as Shanghai, Paris, London and Tokyo. That's where key creators (trend-setters) live," he said.
However, Adidas fans here may have to wait for its high-impact flagship stores that measure around 5,000 square metres. For India, smaller stores of 100-500 square metres are on the cards.
Auschel is bullish on India's scorching e-commerce growth. "Around 4% of our global sales occur online and it will increase to 10% by 2020. But here, online sales growth will happen faster — from 10% at present to 20% in a shorter time period. Globally, India can show the way to the world in e-commerce."
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