Reebok In India - Introduction

Introduction In 2001, three companies Reebok, Adidas, Nike together sold sportswear worth $ 1.8 billion in India.

50% of market share.

Rs 950 million in India of the $3 billion fitness giant.

Vision- Instilling fitness consciousness in the Indian customer.

Reebok chose to be a Fitness brand rather than a sports brand.

However Fitness footwear and apparel were in its infant stage and had limited scope.

Reebok's India turnover touches Rs 1,400 crore in 2008.

With a 54 % market share.

Maintain its advertising and marketing spends at 10 % of its sales, even as its spends for the Indian Premier League.

The brand expanded furiously, growing from 100 stores in 2003 to 900-odd stores in 2012.

Adidas bought Reebok for $3.8 billion in 2005.

Reebok India had a turnover of about Rs 600 crore, while Adidas clocked a revenue of Rs 480 crore in 2011.

Adidas and Reebok account for about 70% share of the Rs 4,000 crore a-year Indian sportswear market, followed by Nike and Puma.

How Fit is Reebok's Fitness Platform?

How to promote Fitness in a country like India where the customer is not fitness conscious like in other parts of the world.

1. RIA Reebok Instructor Alliance Program --Training programs were organized for training trainers - 400 trainer trained in 3 years.

2. Set up Reebok fitness centers aerobic culture.

Introducing the Indian wear Kameez Rs. 399 -1299

The company frequently invites visitors from abroad, to share global perspectives on fitness and conduct the Reebok Resolution with the Indian fitness fraternity at large.

5. Reebok Cross Fit - New idea for a gym.

vfd5 Targeting The Kids

The kids apparel market was estimated to be Rs. 4.8 billion, and the kids footwear market was estimated to be Rs.10 billion.

In 2001, Reebok launched its new footwear range called 'Reebok Kids', targeted at school going kids.

Low margins but high sales volumes.

Boosted its Stratergy with promotional campaigns. Promo purchase worth Rs 1499 get chance to get entry in Cricket camp with Rahul Dravid.

Increased fitness awareness amongst kids.

Sponsored golf tournaments for young aspiring talent.

In October 1995, Reebok International Ltd. entered into a 80:20 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co.)

Reebok offered 65 varieties of shoes and clothing ranging from Rs 1300 for the lower segment to Rs 2490 for the middle segment.

Then 40 more varieties Rs 990- 1500

Some StrategiesOne aspect to Reebok's success has been its retail chain.

Its shoes have a broader forefoot, which suits the Indian consumer.

Distribution - Whenever a style would do well, the company would ensure that they were always well stocked with that style whereas competitors would try and push the entire range of products at the consumer.

The company increased its spends on promotions and roped in top sportspersons to push its brand.

The company uses Bawa shoes in Jalandhar and Moja in Sonepat to manufacture its low-priced shoes but imports most of its high-end shoes from around the world.

Reebok was the first among the big three that identified India as a huge emerging market and a sourcing base for global exports.

Launched Cricket shoes PRO.

Started its Concept store Planet Reebok.

Introduced Golf footwear.

Introduced high fashion Womens apparel and Women- only stores.

Entered into retail partnership with Bata for retailing Reebok and Rockport shoes.

Health equipment - Heart rate Monitor, Yoga mats Ankle weights dumbbells Tubings and Trampolnes.

Nike Entered Indian market in Mar 1996

Adidas Entered soon in Nov 1996

Both placed their products as Life style product

Competitors Stand

Launched in Mar 1996

Life style Product, Niche Market60 sport type shoes and accessoriesTennis and work out gears Free style apparels for sports Range accessories like Kitbags, Rucksacks Bandanas and Caps Eye wares watches Golf equipments School college education camps celebrity endorsement and Internet portal to promote product Nike Focus

JUST DO IT

Thing which went against themUniversity of North Carolina at Chapel Hill found workers were exposed to toxic isocyanates and other chemicals in footwear factories in Thailand. In addition to inhalation, dermal exposure was the biggest problem found. This could result in allergic reactions including asthmatic reactions.Targeting the Niche Segment in India initiallyLabor practices the company used in overseas markets to create the shoesReputation got tarnished because of managements bad decisions to not monitor their manufacturing factories overseas.

Good Cause

The campaign's mission is to prevent the transmission of the HIV virus from mother to child by 2015 (the campaign's byline is "Fighting For An AIDS Free Generation").

JUST DO ITLaunched in Nov 1996 Life style Product, Niche Market50 sport type shoes and accessoriesSoccer's Shoes3 Category type product rangeSport performance Sport Heritage Sport Life style Price Range 2499 3999Major sales came from accessories SalesAdidas Focus

Disadvantage compared to ReebokTargeting the Niche Segment as a Life style Product

Salomon Joined hand to sell through 12 Exclusive outlets making it a Fashionable brand

Major focus was on International Games FIFA and European leagues for the sales , the focus on Indian market penetration in India

Nike Product RangeMens Foot wear: Cross training / Fitness/ Running / walkingCortez1105Sustain1200Shox XT IV8900Course Air Tour TWL10035Shox R4 (+)7900Women's Foot wear: Outdoor (ACG)/ Running / walkingStrap Runner - II2800Wmns Cortez Plus900Shox R4 (+)7500ApparelPique Polo1035GolfDouble Happiness T shirts550AccessoriesNike Tour Light weight bag7745GolfPrecision Spin ( Golf Ball)500Arsenal Skills ( Football)585TimeswareCovert / reveal Collection4500Running/ Cross TrainingProduct Range AdidasSport Foot wearPrice (Rs)Adventure3999Basketball2799Cricket 1999Golf4999Indoor2799Running2499Tennis2899Soccer2299Workout2499Sort Apparel for men and womenAthletics320 - 499Basketball550Cricket 790Golf550 - 800Running499Soccer559Tennis499 - 559Training450 - 590Workout790Reebok's Product RangeProductPrice (Rs)Plain jogging Shoe1300Tennis Shoe4000Other mid range shoes2500Running shoes6500Sport Kameez399 - 1299Proton Walking Shoe1290School shoes690 - 890Inferno1490Trekmax3490Fury Millennium7990Fitness and Classic Line from Women's collection399 - 599Reebok Foster2490Run DMX4490MARKET SHARE - INDIA

THE FRAUD STORY How It Started?Adidas of Germany took over Roobok an US brandReebok India under Shubinder Singh was very aggressive and pioneered 'guaranteed dealer margins' to push salesThis practice was not favored by Adidas in view of its German conservative rootsThere was a stand off between new management and Shubinder right from the beginningThis led to an all out war

THE FRAUD STORY What Happened?Director Shubinder Singh Prem and COO Vishnu Bhagat of Reebok India, booked for a scam on May 21, 12 after Internal investigations by Company's director finance Shahin Padath. March 25, 2012 Shubhinder Singh Prem dismissed as Reebok India's MD. FIR filed in Guragaon Police station Shubhinder Singh files a defamation case against the company claiming Rs 15 cr as damages Charges by Adidas:1. Fudging company a/cs2. Operating secret warehouses3. Causing loss to the extent of Rs 870cr

THE FRAUD STORY What Was The Fraud?Over-invoicing to the tune of Rs 147 crore, products were allegedly invoiced but not delivered. Products were thus stolen by accused 1 and 2 (Prem and Bhagat) and the secret warehouses were used for storing some of such stolen products.Both accused ran an unauthorized franchise referral programme and money was collected on the pretext of opening stores. This was done despite instructions from Adidas headquarters to not expand the store base further. Almost no franchise stores were opened under the scheme despite collection of about Rs 114 crore from various investors.Maintaining four secret warehouses where company goods were diverted, all of which have been sealed and goods confiscated.Raising fake invoices of about Rs 98 crore to show higher sales and claim promotions, bonus and incentives.

THE FRAUD STORY What Was The Fraud?Both accused maintained parallel books of accounts known as regional outstanding reports (ROR).On December 31, 2011, the official accounts receivable of all customers was estimated at Rs 1,007 crore, compared to around Rs 476 crore in the ROR.In order to hide the fraud, the accused passed on extra margin to the customers on the invoice which were treated as credit note reduction, as issuing a credit note would have made it obvious that the balance reported in the books were not correct.The company has also accused them of raising invoices of Rs 86 crore on customers for products already invoiced and delivered in 2010-11, which is against the norm. This was done to claim bonus and incentives.

THE FRAUD STORY RepercussionsAdidas, German parent of Reebok, showed in its filings a near 200-million euros write off for India operations due to alleged commercial irregularities.This should be the Rs 850 crore scam being talked of. Adidas to shut about one third stores in India Adidas Chief Executive Herbert Hainer said the problems in India could lead to further charges of up to e70 million (approx 491 crore), on top of e125-million ( 870 crore) impact on global profits. Revenues can even be less than half in India as we want to take only customers where we can build a healthy sustainable business, Chief Executive Herbert Hainer When asked about allegations from a group of Reebok India's franchisees that they were not taken into confidence while deciding the future, the company said: "Infact, we are inviting our customers to engage with us and also working closely with some of our key franchise partners to discuss our future relationship with them. In July, nearly 80 franchisees from the national Capital expressed their insecurity in a letter addressed to Hainer. VRS Programme23GLOBAL POSITIONS Million $

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