‘Doing Things We Have Never Done Before’
German sports apparel brand Puma sees non-metro cities in India as key growth drivers and hence, is shifting focus to direct retailing, especially through its online platform. According to media reports, the brand has earmarked Rs 120 crore of investments for technology.
Puma India’s managing director Abhishek Ganguly tells Abid Hasan about Puma’s key focus areas in India, its expansion and investment plans and collaboration with cricketer Virat Kohli.
Edited excerpts:
Tell us about your journey so far in India.
We have completed more than a decade in India. We were one of the late entrants in the Indian market if you compare us with other players such as Nike, Adidas and Reebok. For us, the journey has been phenomenal. We had a lot of catching up to do, but we have grown from an unknown brand to gain market leadership in flat eight years.
We believe we did not do different things, but did things differently. In terms of brand engagement, communications and marketing, we did not come here and copy paste somebody’s else’s model, but we created our own.
Your profits are in a declining phase since the last three years. What went wrong? How are you planning to get it back on track?
If you compare us with any other brand, we have the maximum profit so far. We are on a consistent growth curve and making huge investments in technology. You will see things are shaping up; the growth in sales will prove it at the end of the year. Everything is on track and better than planned.
Puma has received licence for 100 per cent foreign direct investment in single brand retailing. How are you going to leverage it?
Puma does not believe in over expanding, that is the reason we have shut down eight stores till now in the Indian market. Currently, we have 353 stores across 120 cities. In the last one year, we have added 60 new stores, and have plans to add 35 to 38 new stores in the coming one year. All these stores will be in tier-1, 2 & 3 cities.
Currently, 293 Puma stores are operated by franchisees and 60 stores are owned and operated by the company. The upcoming stores will also be mixed bag between company and franchise.
Please elaborate on your investments on technology.
We are making huge investments in technology to change our approach towards the market. Primarily, the investments are on e-commerce and consumers. E-commerce is the future; brands who don’t do this will suffer.
Our aim is to consolidate our presence in the multi-channel and omni-channel environment. The idea is to deal with customers directly through our flagship platform Puma.com. The brand will also be present on all leading e-commerce platforms.
What changes we can see after your big investments in technology?
We are changing our entire mindset. Earlier, we were doing product management, offline retailing and merchandising. Now, we are set to wear another cap; to become a hardcore e-commerce player. This requires re-engineering the entire organisation, and technology is the starting point.
We will list our products directly from the warehouse to different e-commerce platforms including on Puma.com, and integrate the warehouse with real-time across all the e-commerce platforms. As an organisation, we are doing things that we have never done before. Why we are doing it? Because if we do not do it, we will not have a direct handle on the consumer.
What is your current online-offline sales ratio?
Currently, 25 per cent of our sales come from online. We are expecting to increase it to 38 per cent in the coming two years. The tier-2 and -3 towns are pushing sales for Puma India. In the year 2015-16, 12 per cent of orders came from these towns. Every year the demand is increasing since e-commerce makes small towns viable.
How has been the transmission of GST so far? Do you see any trouble in the coming days?
GST will have a very positive impact on the economy. It will bring lots of transparency. We had to do lots of changes in our IT systems, and so did our e-commerce and franchise partners. That was a difficult period for all of us. The business had downtime for five to seven days as we couldn’t ship.
I believe that GST is more of an operational problem than demand problem. Puma has taken the decision not to increase its prices. We are in the growth phase of the business and we would like to create more demand.
Puma is known for its unconventional marketing strategy. What led you to choose the non-traditional medium (such as brand activation and customer engagement) to promote your brand?
We don’t believe in traditional marketing as we feel there is a better way to reach out to consumers. We only associate with someone who we think our consumers can relate to or someone who represents the true spirit of our brand. And I think, Usain Bolt, Rihana and Virat Kohli are true examples.
Puma signed a deal with Virat Kohli worth Rs 110 crore. Do you think it was a bet worth taking?
First of all, neither Puma nor Virat has confirmed the amount of Rs 110 crore. It was all media reports. Yes, the duration of the deal is for eight years and we think it will be a game changer for the company.
