The crisis at Reebok India seems to be continuing. The buzz
is that the new changes in the leadership team in India, is leading to major problems for the brand. It seems the entire supply chain for Reebok India has come to a halt, due to non-payment of dues from the company to franchisees and distributors and in return they are refusing to supply fresh stocks. The shadow of uncertainty is looming large over the future of the sportswear firm among channel partners.
Meanwhile, Adidas Group has called on the Indian authorities to launch a criminal probe into the commercial irregularities at Reebok India. “Based on the commercial irregularities we have uncovered at Reebok India, we have now filed a criminal complaint with the Indian law enforcement authorities in order to start the formal investigation,” the Adidas group said in a statement on Saturday. Adidas chief executive officer Herbert Hainer is currently in the country to take stock of the situation and take corrective measures.
To manage the crisis hampering day-to-day operations at the ground level, newly appointed group sales head for India, Frederic Serrant, is meeting the 34 distributors across the country. His mandate will be to soothe the nerves of the essential partners, while chalking out a plan to pay existing dues.
Adidas has also announced plans to close up to a third of the 1,000 franchise stores that Reebok has in the country, as a part of its restructuring plan. This will enable them to begin in 2013 with a clean sheet in the market. “The situation in India, although unfortunate, will allow us to now accelerate plans to improve a specific underperformance part of our business,” Hainer had said in a statement issued on April 30.