Puma chief talks about fakes, fast product cycles and a foray online
Puma is on a roll. Globally, sales are rising steadily despite intense competition in the sports and lifestyle apparel categories.
And Asia is no exception.
Global sales increase by 18 per cent €2.180 billion in the first half of this year, gross profit margin rose to 48.4 per cent and operating profit soared 50 per cent. In every geographical region in which Puma operates, sales growth reached double figures in the latest quarter.
The man responsible for driving growth in Southeast Asia is 55-year-old Philippe Le-Bretton, regional GM Southeast Asia, a 12-year veteran of Puma, a former tennis coach and a passionate participant in outdoor sports.
Nowhere in the world is the competition Puma is facing more intense than in Southeast Asia where established local sports retailers and brands are fighting newcomers like JD Sports and Foot Locker and brands themselves are getting increasingly sophisticated in their direct-to-consumer retail offers.
“We have more competition,” he tells Inside Retail Asia over lunch at The Shoppes at Marina Bay Sands, a stone’s-throw from where he has just opened the region’s first Puma Select store. “But as long as you have the right product and the right segmentation, it is good for everybody.”
Gone are the days where you can just stack product on shelves and wait for it to sell, he says. “You need to sell a story and you need to have clear segmentation of what you want to sell.”
And you need a team, which he has personally built up over four years in the Singapore regional head office.
“You can have fantastic ideas and the best product on earth, but without a team you are not going to succeed.”
Le-Bretton oversees 10 country markets in his role, with three distinct selling models: in Singapore, Malaysia and Indonesia, Puma sells through its own subsidiaries as well as in sports retail channels. In Thailand, the Philippines and Vietnam it works with distributors and in Laos, Myanmar, Brunei and Cambodia, directly with wholesale customers.
By his own admission, Puma was not in great shape as a business five or six years back.
“Puma has been up and down, as have many brands.” But he credits new CEO Bjorn Gulden coming on board in the German head office, better-than-ever product, improved attitudes in the business and an expansion into the popular athleisure category for the renaissance since.
“Bjorn really implemented a lot of good things: the mindset of our people, the product engine changed a lot. He understood that you can’t just produce sneakers, you need to put some technical features behind them and you need to explain to your customers what you’ve done.
“We are not purely lifestyle, we are not purely sports. It is true that a lot of business was coming from our lifestyle side, but everything was rooted in sport.”
Puma also understands that football shoes have become “a piece of art”, he says. “Each season when I see the new collection I think ‘wow, that’s the best I have ever seen’.
I think people no longer just want to buy a pair of sneakers. They are more demanding than they were 10 years ago.”
As well as highlighting the design features of shoes, brands are now beholden to explaining the technology behind them. “You need to communicate it – so [the shoes] are not just a nice piece of art sitting on the shelf. That starts with our marketing department, then it must continue in-store.”
Part of the reform was creating a clear distribution network. Le-Bretton says the product offer is moulded into six channels – there are ranges for specialist golf or football stores, ranges for multi-brand sports or footwear stores, ranges for department stores and another for more niche retail points of sale, such as the iconic Colette store in Paris which stocks only exclusive, bespoke collections. And the Puma Select concept, like the one recently opened in Singapore, which stocks only collaborations with “assets” as he calls them: sporting and other celebrities who partner with the brand as marketing ambassadors or even collaborating on product design. Those ranks currently include Formula One driver Lewis Hamilton, Canadian singer The Weeknd, Chinese model Liu Wen, and pop stars Rihanna and Selena Gomez. They, too, have played a significant role in re-energising the global appeal of Puma, as have sponsorships of football teams like Arsenal, Leicester, AC Milan and World Cup qualifiers Uruguay, Serbia, Switzerland and Senegal.
“Bjorn realised very early we need to have product which is a bit different to the competition. So we do six to eight collaborations every year. When we opened the Marina Bay Sands store, we flew [Californian skate-fashion creator] Nick Diamond and [New York-based, British visual artist] Shantell Martin in for the opening.”
Product is key
Product is, of course, vital to Puma’s success – not just the quality, design and purpose, but having the right range in the right stores. Each year, Puma flies vital team members from around the world into Germany to show them as many as 25,000 different SKUs to choose from.
Customers will see only about 10 per cent of that offer on sale in Southeast Asian stores.
The reasons for that is simple, as Le-Bretton explains: “We are in a region where we don’t have any winter, so half of the collection doesn’t need to be here. Then there is an issue with Asian sizes being different to European sizes. And a store of 100sqm to 150sqm can only take so much stock.”
That still leaves 2500 SKUs for stores – still too many for even the largest footprint. So in Southeast Asia, product is chosen for different stores in the network.
“At Puma Select, we only offer collaboration and premium products – you won’t find any motorsport or football wear there, or any running gear. If you go to stores in Suntec City or Bugis+, you’ll find football gear and leisure wear, because we are trying to achieve a balance there.
“In some stores, we sell only football boots. If you go to Royal Sporting House, we are selling mostly running and training fitness goods. We try to balance performance and lifestyle. Our own stores may be more driven to lifestyle, and our wholesalers are focused on golf or football, so we only supply product from those categories.”
And of course, the new Puma Kids store at United Square stocks only children’s products.
Online foray – at last
Soon, another significant channel will launch in Southeast Asia for Puma: a dedicated online store.
“Next year we will launch our e-commerce platform and we will include partners in marketplaces – like Zalora or Lazada. We are potentially Puma’s last region in Asia to implement it: China, Korea, Japan, Australia and New Zealand – they are all online now.”
Le-Bretton says his goal is to offer the full range online. “If I can, I will sell it all. It should be seen as a retail store. If it is not 100 per cent of our range, then 90 per cent of our product will be there.”
With his team still developing the e-commerce store, he does not want to reveal too much detail for now. It will launch in Singapore and Malaysia with other countries to follow and there are two warehouses currently planned: one in Malaysia and one in Singapore.
Puma Southeast Asia’s product mix is currently balanced at 50 per cent footwear, 40 per cent apparel and 10 per cent accessories, including bags and the biggest seller of the category: socks.
Puma also licenses products with about 25 partners, sunglasses from Kering, backpacks (once made by Samsonite) and a watch range soon to be announced.
The flattery of fakes
Apparel and fashion retailing in Southeast Asia always comes with the challenge of fighting fake products. Puma is not immune to this, whether it be its own t-shirts copied and being sold in street markets, or teamwear bearing the logo of Arsenal or AC Milan.
Le-Bretton takes all this in his stride. “I’m confident it doesn’t necessarily hurt the business. I think it is a kind of flattery when you are copied – it means you’re popular. I don’t think the consumer is stupid enough not to differentiate. You will always have a certain number of people who say I want this t-shirt because I support Arsenal, and I can pay $20 instead of regular price, so why not. But the real fans will look for the real product, the real t-shirt. The majority of customers are like this.
“You will never completely stop the fake product, because there are people making money out of it and they know where to sell it and how to. The more you become premium as a brand, the more you can be copied, but at the same time, [your customers] are becoming more and more educated.”
A lot of people who buy copied fan-wear products can’t afford to buy the real thing. But Le-Bretton adds a fresh take on the problem: After Puma sells a range in its main stores, then it discounts that product at the end of the season in a store sale, then it ships any unsold product to a factory outlet store, the price of a genuine Puma product is not a lot different to that of fakes being sold in markets.
“If you really want something from a brand, would you buy something fake for $20 or wait and go to our factory outlet to pay $25 or $28? Where you are sure it is a real product. If you have all these channels of distribution from the primary concept through to … factory outlets, the difference between the fake product and the discounted original product is not that big and I think customers know that.”
Furthermore, copying manufacturers has become harder for the fake trade as fashion cycles shrink. “The universe is going so fast they don’t have time to copy.”
In years past, he says, copiers had time to take a design and produce 10,000 of them and then ship them to stores around the region. “Now we have new launches in our stores almost every week. We sell out then we move on to something else. Because that is what the customers are waiting for – they want newness all the time. And the fake industry, they can’t follow that.”