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Subhinder Singh Prem, MD, Reebok India, said the sports major is a leader in India because they constantly challenge the statuesque and are always looking at new ways for doing things.
Excerpts from CNBC-TV18’s exclusive interview with Subhinder Singh Prem:
Q: What have you got right here and why have you haven’t passed on that advice to your other colleagues elsewhere?
A: The Indian market is unique. You are getting a new India every three years. The market is changing and so are the people. The aspirations are changing and the market is constantly upgrading. I think it’s a mindset game, our team is of a different mindset. In spite of being a leader, we are always challenging the statusque, always looking at new ways of doing things. That’s why Reebok in India is so much ahead.
Q: For you to be a leader, you have to take a lot of risks. Some of them paid off, some of them didn’t like the salwar kameez one for instance, or even the wheels on school bags? What was the idea behind those products and why did it bomb?
A: The only thing I worry about in my company, is are we making enough mistakes. If you are not making enough mistakes, it means you are not trying hard enough. We tried the sports salwar kameez because we realized that women go for a walk in the morning but are normally wearing a loose husband’s t-shirt. We thought why don’t we do a knitted salwar kameez, but it backfired. Our consumers said they are looking at a more aggressive athletic wardrobe from a brand like Reebok. We take that very humbly, and go and improve ourselves. Similarly for school kids, we thought let’s put wheels on bags so that kids can drag it. While I was in the store one day, I had this young consumer who said, "I love the bag but can you remove the wheel."
Q: Did the product guy keep his job?
A: Yes, he did. If we learn from our mistakes and improve our selves, that is the whole essence of being better than what you were earlier
Q: What was the transition like for Reebok from being a company that really has sports goods, lifestyle and fitness products, to lifestyle products?
A: This transition is a reflection of a change in society. Earlier, sport and fashion were treated as two different businesses. For instance, Maria Sharapova wore a red cocktail dress with Sarwozki at Wimbledon,
Q: People watch Maria Sharapova or the match?
A: There is glamour in tennis but the fashion quotient is getting pretty much into sport. Today, when you indulge in a sporting activity, you want to look fashionable, wearing merchandised clothes and glares, sporting an iPod. On the other hand, it is also fashionable to say that you are into sport and business.
About five years ago, one out of every 10 persons used to say I do some fitness activity. Today, nine out of 10 people say they do some activity. By saying that you relate to the fitness world, you relate to the world of being young and energetic, and people would pay premium for that. They want to look fit, young, and fashionable. So, it’s a natural transition that fitness, sport, and fashion are coming together.
Q: How price sensitive is the shoe market here in India?
A: If you had asked me that question 10 years ago, maybe yes. India is changing very fast. It is a value seeking market. But the market exists in various tiers. So, there is a super luxury market that wants to buy a Manish Arora shoe at Rs 20,000.
Q: People buy shoes for Rs 20,000?
A: Yes. Good shoes with Swarovski on it and designed by Manish Arora are priced at Rs 20,000. Then there is a premium technology market, where people are buying shoes priced between Rs 6,000-10,000. We have our Pump Technology, or Premier Running which is our top running shoe, or Hex Ride which is our latest technology.
Q: What price category sells more?
A: The sweet spot now is constantly shifting and today it is at about Rs 2,500-3,000.
Q: Don’t you ever want to feel the need to try a strategy wherein you could target a wider base by bringing down prices across the board? For instance, your lowest priced shoe would be about Rs 1200, by bring it down to Rs 800 maybe there would be more takers.
A: As a brand, we are about empowering people to perform better to sort of outperform and challenge themselves. So, there is a level of technology beyond which we don’t want to go.
Q: You obviously have the menace of fakes, which is something that has bothered the industry for a while. When you look at all these ads of companies like yours, Nike, and Adidas, you almost feel as if these ads are in a sense going to create more market for you and for the fakes. What do you do to lock them? It is a problem across industries but one that affects yours quite a bit, isn’t it?
A: Since we have 600 stores all over India, today we are available in over 200 cities. So, the consumer knows when he is buying it from a Reebok store or a franchisee outlet, he knows what is a fake and what is not. The franchise outlets don’t sell fakes.
As far as a consumer who wants to simply wear a fake product and wants to show off that he is wearing a Reebok product, good luck to him.
Q: What is the percentage of such fakes?
A: It is not even 2-3%, because firstly a fake does show. You will know the difference between a fake and an original Reebok shoe. Secondly, because our showrooms space and the retail footprint that we have in India, it is not that big a menace for us.
Q: Let’s talk about celebrities. They in a sense drive your business, don’t they? It is so crucial to get the right kind of celebrities. How difficult is it for you to get the big names like a Yuvraj Singh, or MS Dhoni and to retain them because it is very competitive? You are not only competing with the other sports companies like an Adidas or a Nike but also with other FMCG companies?
A: I have been asked that question very often. What cola Yuvraj or Dhoni drink or what stuff they do one would never know. But with Reebok it is different because on the ground you see them actually batting in our gear. So, when Dhoni comes out to bat, you actually see an RBK bat with which he is playing. The message to the consumer is that if the product is so good for Dhoni, it is good for everybody else. The other aspect is about building a relationship with them. So, we have been with a lot of athletes like Dhoni, Yuvraj, Mohammed Kaif, and Irfan Pathan since they were playing for their under-19 teams. Today, in the under-19 World Cup that India has won, five out of the 11 players are with Reebok already.
Ishant Sharma has been with us since nobody knew him. Now, he is a big star after his Australia trip and people have noticed his pace. We are into relationship building. It is not about looking at somebody who is making it big and then running after him and signing hefty checks.
Q: You are the clothing sponsor for four teams in IPL, closely working with the Kolkata team as well. We all know the fanfare surrounding that because of Shahrukh Khan. Aren’t you going to be in a sense competing by sponsoring four teams, does it severe any objective?
A: For the IPL team it is really exciting times. We cannot even imagine what Shah Rukh Khan can do to the team or what business tycoon like Vijay Mallya can do to cricket. We have got a foot in the door. We have got four teams and are right up there.
Q: Don’t you fear that with IPL, all your celebrities could get extremely expensive and reach a level wherein they become unaffordable?
A: Definitely. The costs are going up. In one way that’s a challenge. The challenge is healthy as it sends a message to the brands that if you want to continue doing what you are doing, your sales have to multiple. Like Reebok, we have grown our sales six times in the last four years. The growth of your company, and stores has got to keep a pace with what's happening around you. If player endorsements are going to get expensive, retail is going to get expensive, and we have to do more business.
Q: What sells more, cricket or Bollywood?
A: That’s hard to tell. For a sports brand, our DNA is so much in sport. For men’s business, cricket is very big for us but if you look at the women’s business, there are not many sports icons in the women category that women get very excited about. Somebody like Bipasha, who is an icon, is probably one of the fittest Bollywood artist that we have. She has an amazing fitness level. If through her we can motivate our female consumers to take up fitness, get fitter, or aspire to get very fit then that’s what the objective is.
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