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Nike targets $1 billion sales over next 5 years

20-February-2007
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Nike targets $1 billion sales over next 5 years

Nike, the sports footwear and apparel major, is targeting sales of $1 billion in Indian for the next five years.

Speaking to investors on Nike’s financial performance, Nike executives said that sales in Indian had grown 40 per cent in 2006. At present, Nike brand trails rivals Reebok and Adidas in India.

They added that growth in the India business was seen largely as a result of its cricket-led initiatives. Matt Parker, CEO, said, “Nike will also invest aggressively in countries such as Russia, India and Brazil, each of which has the potential to become a new billion-dollar market,” said Parker.

He added, “By focusing on creating a premium consumer experience built on product innovation, brand leadership and elevated retail presence, Nike is targeting further geographic expansion and deeper market penetration in all regions.

Recently, Nike has increased its focus on localising its marketing and promotional strategy in India. After maintaining its international brand image in India for the last eight years, the major shift in strategy came when it bid Rs 196 crore for, and won, a five-year BCCI sponsorship contract for the Indian cricket team. The official team sponsor status for five years also gives Nike the rights to launch official cricket merchandise in India.

This includes team jerseys and T-shirts, backpacks and kit bags. In addition to the revenues from the licensed merchandise business, this is also a huge brand-building opportunity for Nike.

Market estimates peg the sports footwear and apparel market at Rs 1,100 crore in India where Reebok, with a 40 per cent share is a clear market leader. Adidas follows the next biggest with a 20 per cent share, followed by Nike with 15 per cent.

Other cricket-centric initiatives in India include launching special cricket footwear and partnering with cricket coaching academies. But the focus is not entirely on cricket. It is also working with tennis and football academies in India to tap the younger consumer base.

Internationally, the company has reorganised the Nike brand into six athletic divisions from the earlier footwear, apparel and equipment classification. These are running, basketball, soccer, women’s fitness, men’s training, and sport culture.

The company aims for a 53 per cent growth in revenue over the next five years, from $15 billion in 2006 to $23 billion in 2011. The Nike brand (it has affiliate brands such as Converse, Nike Bauer Hockey and Nike Golf among others) is expected to contribute 75 per cent of this.

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