Adidas seems to be going the Nano way, in that it is going the ultra-cheap route to woo India?s aspirational rural market. The German shoe company has announced that it plans to sell shoes for only $1 in the rural market. But that?s where the comparison with the Nano?the world?s cheapest car?ends. By all accounts, Nano sales have been far lower than expected, and the explanation doing the rounds for this is that the car was defeated by the very market it was aiming at. That is, those aspirational Indians who were supposed to move from two-wheelers to the Nano neatly leap-frogged it in favour of cars with a slightly more affluent image?like the Alto?even if they were second-hand. As far as Adidas?s shoes go, this is unlikely to be a problem. For one, at around R50, these shoes have no ready competitor in terms of price, and second, the image Adidas has is already one of affluence. So, if an aspirational villager can wear a fancy looking shoe for a fraction of its cost, then he?ll likely leap at the opportunity. Also, in rural areas, more than looks, durability is the key factor. And here, too, Adidas has a good reputation. In any case, at such a low price, it won?t really pinch to replace the shoes after a while. Although, at such a low price, the shoes are likely to be made of cheaper materials; they cannot possibly be of the same quality as the premium shoes Adidas sells at around 20 times the cost of these shoes.
What really clinches it for Adidas is that it tried a similar experiment in Bangladesh. It failed there, because import duties and high taxes made it just too costly for the company, but since they?re moving the experiment to India, the assumption is that they must have worked out a feasible model for India?s markets.
