As Reebok falters, Nike ups the ante in India

With market leader Reebok India involved in an alleged Rs 870-crore fraud case and German sports-goods maker Adidas attempting to clean up the mess there, rival Nike, say market experts, is in a position to capitalise on the vacuum that is there in the Indian market.

The American sports-goods maker, the largest in the world, with 2011 revenues of nearly $21 billion, has trailed Adidas and Reebok in a market it identifies as a key one. Retail industry experts peg Reebok's market share in India at about 50 per cent to Adidas's 20 per cent and Nike's 15 per cent.
But, with Adidas recently announcing that it proposes to cut the number of Reebok stores by a third, Nike, say experts, is likely to seize the opportunity at hand.
Tarun Puri, managing director and general manager, Nike India, says the company, which operates out of Bangalore in India, would continue looking at retail expansion, a multi-channel distribution strategy and consumer-centric products.

Currently, Nike has some 300-400 exclusive stores, according to retail industry sources, in comparison to Adidas' over 650 and Reebok's nearly 900 stores. All Nike stores in India are franchisee outlets. Puri says there are no plans to have a company-owned model of outlets as is the case in many other parts of the world, where the sports-goods maker operates. "We continue to work with our partners and look at ways at how we can expand our footprint," he says.

As part of this strategy, Nike has also been talking to more number of multi-brand outlets (MBOs) of late. In the last few years, Nike has taken its total retail presence, that is, exclusive plus multi-brand outlets to 3,000 from 2,000. Experts say this has been largely driven by the American sports-goods maker's desire to ramp up presence in MBOs. This strategy, they say, is likely to continue as the sports-goods maker looks to drive penetration and reach in India.

The market for sports goods in India is pegged at Rs 3,500 crore growing at a rate of about 18-20 per cent. Most sports-goods makers are banking on greater awareness and health consciousness to drive this category. "If a few years ago, people were content buying any pair of sports shoes. Today, the accent is on specific requirements," says Puri.

Most international brands, especially Nike and Adidas, are focusing on meeting specific consumer needs, which is partly why they are priced at a premium, say industry experts. A Nike pair of shoes, for instance, starts from Rs 2,000 onwards in comparison to Reebok, which is more value-for-money. Reebok has had products priced as low as Rs 999 in its portfolio.

Puri says there are no plans to lower price-points any time soon.

In the last few years, Nike has also attempted to raise its profile on the brand-building front in India using a combination of star endorsements, grass roots-level activities and events besides high-profile advertising. Its popular Bleed Blue campaign, for instance, has helped Nike garner some 1.7 million fans on Facebook. Nike is also the official apparel sponsor for Board Of Control For Cricket In India (BCCI) tournaments. It promotes the Nike Cup in cricket, has associated with Manchester United in football and operates running clubs in Mumbai and Bangalore.

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