Adidas AG named Erick Haskell managing director of its Indian operations on Thursday. This is the second top management change in less than a year at the Indian unit of the German sportswear company that also owns Reebok.
Haskell takes over from Claus Heckerott, who was appointed to manage the India business in March 2012, amid reports of financial irregularities at Reebok India leading to the exit of the unit’s Indian managing director Subhinder Singh Prem. Haskell spoke in an interview about the impact on the brand. Edited excerpts:
Claus Heckerott was managing director of Adidas India for less than a year.
Claus (Heckerott) did come in to do the restructuring; he’s done a great job. It’s been extremely successful. He will be staying here in India for some time just to wrap things up and to support the transition as I come in. In due course, his new position will be announced. He will continue to be with the Adidas Group in a different role.
Regarding the financial irregularities that surfaced in the company’s Indian operations, Adidas has said the head office was unaware of what was going on.
I can definitely confirm that the headquarters was not involved in the activities that took place here; it was very much a local management issue. But I can tell you that the headquarters is very much involved in making sure it doesn’t happen again. I come from a subsidiary in China which is considered within our group to have extraordinarily superb control standards. So, a lot of what I developed in China, I’ll be transferring here. We are going to build a very robust control environment for our India business and I’m doing this in conjunction with the folks in the headquarters.
What is the current status of investigations at Reebok by government agencies?
There is nothing new on that front. We continue to cooperate where necessary. I think it’s very much in the hands of the authorities at this point.
Your company’s annual general meeting is pivotal for the Serious Fraud Investigation Office to complete investigations and submit its report. When is the meeting scheduled?
I don’t have a precise date at this moment but the meeting is imminent and it’s going to happen very shortly.
How badly has the Reebok India controversy affected the brand?
First and foremost, for me this is largely behind us. I’m here to look at the future, to grow the business, to continue to build on the success that this brand has had.
We went out and did a lot of consumer panels to ask precisely the question that you just asked: what is the impact on the brand. The results that came back were very encouraging. The vast majority of people made no link between the brand and the issues that we have. The very few people who did make an association said that this was a business issue and not a brand issue. It was one of the big questions I asked when I came and the results were very clear—there has really been no damage to the brand. Consumers continue to love the brand.
What are your targets for Reebok India in the new phase?
Reebok is going to be driven very much on the fitness front. The direction we are going to take in India is very consistent with the direction globally, which is to continue the reputation of Reebok as a fitness brand. We are going to get more category-specific within fitness. So, everything from running, toning, dance, yoga is going to be the focus.
We will continue with CrossFit, we have two gyms—one in Mumbai and one in Gurgaon, we will continue to expand. We’ve also got a new retail format called Fit Hub. The first version of this is going to be launched in India in February in Select City Mall in Delhi. This is something that opened on Fifth Avenue in New York. I think it’s going to work very well in India and we’ll test it in mid-February.
What are the key learnings from your China experience?
The India business model is very similar to that in China in terms of stand-alone, mono-brand shops, unlike in, say, the US or Europe. I think a lot of experience that I’ve had in China is very transferable to India, specifically on the brands.
Adidas is extremely strong in the market right now. We had a fantastic year in 2012 and we’re just going to build on that in 2013. We’ve got some fantastic new products coming out that you’ll be hearing about shortly. For Reebok, we will have an exciting new campaign in mid-February to essentially re-launch the brand. All in all, I’m extremely optimistic. I feel very fortunate to have taken on such a great business, not to mention the opportunity that is available in this country.
The key thing that we learnt in China, and a main contributor to the enormous success in the business there, was choosing great partners to do business with. We grew with them over time and built them into very successful, large and profitable businesses. I think this is very critical in this mono-brand retail environment. In the China business, we are opening over a thousand stores a year.