In the past one month, German shoemaker Adidas has announced two new brand ambassadors for Reebok in India: Bollywood actors John Abraham and Nargis Fakhri. The development comes a year after Reebok had filed an FIR alleging Rs 870-crore fraud by its former managing director, Subhinder Singh Prem, and chief operating officer, Vishnu Bhagat, for which investigation is still going on. The new brand ambassadors will be part of Adidas' three-year plan to revive the Reebok brand in India and leave behind the financial and goodwill losses it suffered as a result of the alleged commercial irregularities.
In December last year, Adidas took the first step in this direction. It brought to India Erick Haskell, who had played a key role in scripting the company's growth story in Greater China. Soon after relocating to India, Haskell had told Business Standard that the company needed a fresh start and a complete repositioning. Thus, a new campaign was launched in February this year.
Long-term view
"It takes time to recover. We target to revive Reebok's India business, wipe out losses and strengthen the brand's presence by 2015. Our focus is now on business. We remain committed about the Reebok brand in India," Haskell had said in a previous interview to Business Standard. Haskell decided to go for a three-year plan, keeping in mind that he needed long-term measures to ensure incidents like the alleged financial irregularity did not happen again. Besides, he also wanted to leave enough room to recoup the losses through future businesses. The stakes were high. India was the only country where Reebok led the sports shoes and apparel market. Elsewhere, it trails other brands like Adidas and Nike.
Adidas decided to first reposition Reebok as a fitness brand, rather than just another sports-shoemaker in India. Fitness consciousness is on the rise in India, and people are imbibing healthy habits in their lives with an objective to look better and more importantly, feel better, the company said in an emailed response to a questionnaire sent by Business Standard. "Reebok realises that consumers are looking for avenues to fulfill their fitness needs, which is what our new brand campaign seeks to do- inspire people to move, be active and bring about a lifestyle change. Understanding that all consumers have different fitness needs, Reebok is immersed in all categories of fitness including training, running, walking, dancing, aerobics and even yoga," the company said in the email.
Reebok has decided to take a three-pronged strategy to growth in India- continuous innovation through products, a strong marketing campaign wedded to the 'Live with Fire' theme, and a whole new retail environment where consumers will get experiential fulfillment of their fitness needs.
"As a brand, Reebok has always worked on providing the consumer with products that are technologically advanced, bringing the latest apparel and footwear technologies to the forefront. The new product push as part of 'Live with Fire' includes Reebok Studio Apparel which offers exciting, bright and colourful yoga and dance clothing, Delta Apparel (premier training and apparel offering) and Reebok One Series running shoes," the company said in the email.
Streamlining business
The focus for Reebok is viability of the business and ensuring profitability for both its franchisees and for the company. "We looked at stores which were not viable and we decided to close them down. At present, we have a portfolio of successful stores which are different from the earlier ones," says Haskell.
In the wake of the alleged misappropriation, Reebok had scaled down its retail presence to about 450 outlets from about 900 earlier. Now, the company is on expansion mode again. It is looking beyond the metros to Tier-II and Tier-III cities. Before stepping into a new city, the company carefully carries out a viability study. It's not a volume game anymore; it's about more sales at existing stores. So, the expansion is at a slower pace. While it had closed 450 stores, it will open just 50 new stores this year. And about 50 existing stores would be renovated.
"The retail front is being rejuvenated with an innovative retail concept - FitHub-that will feature high-end fitness merchandise and offer fitness consultations by certified staff members during certain hours of the week. With the objective of pushing the fitness message further, we have recently got Bollywood actors as brand ambassadors. There will be various ad campaigns around this theme; the main focus will be to tap into the digital space and utilise social media to spread our fitness messaging," said the email.
In the earlier interview to Business Standard, Haskell had said: "What happened in the past is behind us. We are now growth-focussed and we will start with our new retail format of FitHub' stores in India."
Globally, it has about 80 'FitHub' stores and about the same number of stores are planned for India by the end of this year, Haskell had said. Taking the concept further, the company plans to convert all its existing Reebok stores in India into 'FitHub' outlets over the next few years.
The first such store will come up in Gurgaon, followed by one in Faridabad, two in Chennai and one in Mumbai. Besides Abraham and Fakhri, Reebok is being endorsed by Indian cricket captain Mahendra Singh Dhoni and cricketer Gautam Gambhir in India. The two cricketers promote the company's sports range. Fakhri has been roped in as part of the company's strategy to boost its women's segment. The women's category currently accounts for about 25 per cent of the industry. "But, there's a big market and we are trying to explore that. Not just shoes, it includes accessories and equipment. Endorsement by Fakhri is going to help us really grow our women's business in India on the Reebok side," adds Haskell.
The company has also decided to focus on the premium segment. "We want to position Reebok as a premium fitness brand where prices will start from Rs 3,500 and go up to Rs 11,000," says Haskell.
To the company's credit, Reebok has never had to take a hit in terms of consumer perception. Adidas had carried out a consumer impact study after the Reebok case. The independent study by Tru Insight revealed that people's perception about Reebok had not been impacted by the alleged financial irregularities.
However, Reebok may not have a dream run in the fitness segment which is estimated at Rs 4,000 crore with compounded annual growth of 25 per cent. Its competitor-Puma-has been focusing on the fitness boom for some time now, especially in the metros and the mini metros. Its billboards carrying toned and lean bodies are hitting neighbourhood gyms and parks, urging people to get into shape. And, the message is not aimed at just the younger folk. Nike too has turned aggressive in the country. With its sales down 16 per cent in the March quarter, Reebok may have a lot of catching up to do.
