Adidas has become the first sportswear brand in India to cross the Rs 1,000-cr revenue mark
How Adidas India is making a style statement Originals, which now contributes over 10% to its revenues.
Thomas, 46, has made Adidas the first sportswear brand in India to cross the Rs 1,000-crore revenue mark. The company, which posted Rs 61.9-crore profit for March ended fiscal last year and has seen its profit tumble from Rs 116 crore in 2014 fiscal, is likely to see profits jump at least twice when it publishes its audited numbers in a month or so.
The Adidas veteran has spent over two decades with the German company and had been to India a couple of times before taking up the official assignment. But what makes him stand out from his predecessors is not just pushing the revenue of Adidas but pulling out its sub-brand Originals from the confines of obscurity and making it a blockbuster success. From a paltry under 3% contribution to revenue in 2014, Originals now makes for over 10% of the company's top line.
"I see it (Originals'contribution to Adidas) going up towards 20% by 2020," says Thomas, who is enamoured by the spicy food, diverse culture and massive business opportunity that India presents. Originals, he contends, is the fastest growing category in Adidas' armoury. "It's growing at an amazing rate," he says, adding that the price range of Originals footwear starts from Rs 7,000 and goes up to Rs 26,000. Apparel doesn't come cheap either: from Rs 1,500 to Rs 20,000. "Originals was not moving much and suddenly it's doubling and doubling and doubling," he says. It's about hitting the right nerve or the right chord and things are really possible here, he adds.
Things, however, were impossible to begin with when Thomas joined in 2014. There were no takers for Originals.
"In the beginning, we could not even get a store on the ground floor of any mall," recalls Thomas. Malls didn't understand the brand as they perceived it to be another sports brand, and space on the first floor was what was on the table.
Dave Thomas did his best to make reluctant retailers understand that though Originals has its heritage in sport, it's a lifestyle brand. "Stan Smith was a tennis player, Kareem Abdul-Jabbar was a basketball player, but Originals is much more than a sports brand," was the oft-repeated line that fell on the deaf ears.
If convincing outsiders was a tough task, then the biggest challenge was yet to come: getting Indian employees to back Originals. "When I came here,
I had a team saying Originals will not be successful," he recounts. Nobody wants to wear white shoes in India was the common reason dished out.
"India is a dirty, dusty market. White doesn't stand a chance," was another lame excuse. Thomas, however, was not convinced and decided to go with his gut.
"Thank God. It paid off," he says, sounding vindicated. A couple of years back in Japan, Thomas had paid the price of not following his instinct. Compression wear, his Japanese team told him, won't work in the country. Thomas went by his local team's inputs, and after two years, the Japanese market was flooded with compression wear. "It became the trend, other brands took it and we missed out," he rues. But in India he has found salvation. "Now I look at the sea of white shoes here," he grins.
There's another myth that Thomas busted: you can't sell a shoe at a premium without loading it with technology in India. 'People won't pay for a Stan Smith' was another cliché. Thomas yet again proved naysayers wrong. Stan Smith, a global blockbuster sneaker for Adidas, is the second-largest selling Originals' brand in India.India happens to be the country fuelling the Stan Smith rage globally as the Chennai factory supplies over 40%-45% of the world's supply. "It's a great story. Narendra Modi's Make in India is something we buy into," he says.
Originals' resurgence doesn't surprise marketing experts. The Adidas premiumisation story, they reckon, goes hand in hand with the India brand premiumisation story. The brand has stepped on the gas, and so have Indian consumers in terms of meeting lifestyle aspirations, says brand strategist Harish Bijoor.
In the beginning, Indians entered the branded shoe market rather tentatively. The early pickings were brands such as Adidas, Reebok and Lotto. However, they were brand picks and not product picks. The Indian at large flaunted the brand on his feet for a start, without bothering too much about product. "Today, as the consumer has taken large strides in income and aspiration, she is looking for both product and premium," avers Bijoor, adding that the challenge for the brand can come from not any rival but the mother brand itself. When mother brand Adidas starts looking jaded, it's wise to distance it from the fashion statement and intent of the Originals, he reckons.
Thomas, for his part, is aware of the need to be on one's toes. "We have to reinvent, we have to innovate and not just rely on a back catalogue," he says. But for the time being, his biggest challenge is learning more Hindi from his daughter. How about Bahubali?