Inside Decathlon: The Success Story Of A Brand Making Sports Accessible9 min read
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Companies often talk about being ‘customer-centric’, but Decathlon has gone a step further by putting their customers at the heart of their growth strategy. They have built the world’s largest sporting goods company by championing a consumer-centric approach through innovation, technology, and rapid expansion.
For instance, the retailer consciously decreases profit margins of its products year on year to pass on the benefits to its buyers.
Olivier Robinet, CEO of Decathlon Australia shared, “What I have in mind is to sell at the lowest price we can. A lot of companies think exactly the contrary, they want to sell at the highest price they can at the highest margin. We want to … sell at the lowest margin we can. Our margin decreases every year and that’s a big topic for us.”
It is a brand that wants to sell at the lowest possible profit margins, a brand that measures the effectiveness of their business objectives by looking at how happy its customers and employees are and yet, it has outpaced competitors (established brands) in the most complex and demanding markets.
Let’s attempt to demystify this success story.
The Game-Changer
Established by French billionaire Michel Leclercqin in 1976, the France-based sports retailer has over 1600 stores in more than 50 countries spread across 5 continents. 2019, particularly, has been a busy year for the company. Only 6 months in and they have already opened their first store in Japan & Vietnam, first superstore in the US, a retail park in Poland, and a megastore in Singapore.
For the first 25 years, the retailer focused on growing its business in the European market like Spain, Germany, Italy, and Portugal. As the world entered the 21st century, Decathlon decided to enter the Asian market by opening its first store in China (2003) and India (2009).
Decathlon has a unique business model – they design, test, manufacture, and retail their own brands. Their research and development team employs 700 people that work meticulously on new products and new designs of existing products. Every year, the retailer churns out about 2,800 products on an average.
At present, they have just under 30 private labels – each dedicated to one sport or physical activity. These passion brands have their own identity in the market. For example, Quechua is their hiking, camping, and outdoor gear brand. The Kalenji range is designed for running and Wed’Ze is for skiing enthusiasts.
While the company localizes its expansion strategy to suit the needs of the country they are setting their foot into, there are a few parameters that they don’t compromise on. The store space is one such factor.
When retail spaces are shrinking and the world is moving online, the sports retailer chooses to open outlets that are the size of a warehouse. Case in point: The size of the retailer’s flagship store in Emeryville, California is 47,000 square-feet!
The other parameters are to find a location where the terrain and the people would assist in building an active sports community to test the products. Emeryville, for instance, extends to the shore of San Francisco Bay area where all kinds of sports are practiced, be it cycling, hiking or water sports.
But before the latest innovations reach the product shelves, they undergo rigorous tests and alterations
Innovation At Heart
A key hub of innovation is their SportsLab where the products are tested by a team of professionals, athletes, and sports experts during the designing process. From a thermal team that studies the human body’s reaction to different climatic conditions to a science team that is entrusted with the responsibility to gauge how people feel, the two decades-old lab is the place where designs are either discarded or promoted to the next level.
The Decathlon Creation platform invites users to submit their product ideas in the suggestion box. If the idea catches the attention of the company, then the user gets the opportunity to meet the design team and collaborate.
The outcome of these creative initiatives is the range of unique products like Btwin Folding Bike, 2 Seconds Pop Up Tent, Scooter Child Carrier, and Kiprun LD Running Shoes – all made available at affordable prices. But the price tag isn’t the only thing that has helped the company to earn the trust of millions of global consumers.
Customer Experience Calls The Shots
Those who only credit the retailer’s frugal prices for its success are in deep denial.
The low prices, in fact, pose the biggest challenge for the company. Years of conditioning makes it difficult for consumers to see value in products that are available at low prices because they associate premium prices with premium quality and vice versa.
“The big thing we are learning is that we have to focus on explaining the value of the product,” admitted Ange Diaz, Decathlon USA’s chief financial officer.
Decathlon’s entry, exit, and re-entry in the US market easily debunk the myth that ‘price’ is calling the shots and is the only redeeming factor.
The Emeryville store is Decathlon’s first full scale store in the US, which was opened in May 2019. The store has ample space to conduct sports classes and build experiential centres for visitors to try the products. But this is not their first time in America.
The company had tried to enter and failed, back in 2006. 13 years later, they are back.
While speaking about their decision to enter the US market once again, Decathlon USA’s COO Sophie O’Kelly de Gallagh asserted, “How can we claim our value proposition works, if it isn’t successful in the world’s biggest sports market? The United States retail market is the world’s most sophisticated and demanding, and with so many sports and general lifestyle trends starting in the U.S., we have to be here.”
In the Channel Mastery podcast, Gallagh along with Jennifer Tetrick, Director of Communications and PR shared how they opened a 7000 square feet lab store in San Francisco in December 2017. And they launched national ecommerce in August 2018. Their main goal was to test the products, get customers’ feedback, gauge the demand and curate the range of products before opening the Emeryville super store.
“The idea of the lab store was to make sure we could present our products to our customers here in the Bay area… in terms of experience, in terms of community, in terms of engagement, and in terms of building brand awareness,” Gallagh shared.
After analyzing the data of the lab store, Decathlon tailored its strategy to suit the need of American consumers. And, they managed to crack it this time.
Barring countries/store locations with space constraints, Decathlon reserves a considerable portion of the space for visitors to try their products. This includes those who want to enjoy a friendly match of tennis or a bike ride around the store. The focus is on providing exemplary customer experience.
When the company noticed that the lack of space could be an issue for customers and store assistants to pack and unpack camping tents in the store, they introduced Virtual Reality. This innovation that earned them an award for customer experience excellence, allowed customers to view the tent in real life conditions.
The smart cashless check out process and visual merchandising within the store are two other tech-powered innovations, which has helped Decathlon improve its customer experience metrics.
Promoting Sports Accessibility
The unique business model of Decathlon with its own private labels, R&D unit, supply chain, and sales channels has enabled the company to evade middlemen and distributors. The company also doesn’t believe in increasing marketing spends and pouring money into sponsorships.
This is Decathlon’s mantra to success and key to profitability. And competitors believe that this is the reason why the company has scaled the heights of success.
But once you start peeling away the layers, Decathlon’s real appeal and strength come to the surface.
The company focuses on beginners, unlike other premium brands who design their products for experts and price it accordingly. Decathlon has been moving from one country to another with an aim to make sports accessible and inclusive for all. Their main target group is the beginners; the ones that can be converted into lifetime customers.
Retail analyst Matt Powell explained this succinctly by stating, “I’ve been hammering the industry about this for some time. They keep making the products for the pinnacle consumer when the good-enough, everyday consumer is where the money is. Ignoring that market is unwise. Some people look down their noses, but family camping is a huge business, car camping is a huge business. Not everybody is interested in doing a three-week hike-in.”
Powell is right. American retail and outdoor recreation company, REI’s 2-3 person tent range starts from $99.95 and goes up to $650. On the other hand, Decathlon’s 2-3 person tent range starts from $29.99 and goes up to $99.99. Serious campers and backpackers might pick up REI’s tent but family campers or the ones just starting out would find Decathlon’s range an option with best value for money.
The sports retailer has also benefited from the changes in society. Athleisure is still a raging trend that is refusing to die down. There’s a renewed focus on fitness, physical and mental health. The last time ‘being healthy’ was this popular was the 1980s, courtesy Jane Fonda.
The company doesn’t view other brands as competitors and firmly believes that they can all co-exist because of its unique brand positioning that promotes inclusivity.
“Obviously, there are a lot of brands here in the US that have more brand recognition than Decathlon, at least at this point. But we really like to think that we are opening up new doors and creating a bigger audience in general. We have, like I said, bike products that start at $329 that can help you get down on the road. And we hope to create even more cyclists and even more people who want to get out there and play a sport to try something new and make that audience bigger. I think that benefits everyone in the industry…. We have created new cyclists in the market,” Tetrick averred.
By making sports gear affordable, Decathlon has effectively captured the attention of the newbies. No wonder, they sold more than a billion products in 2018 and clocked over $12 billion in sales. The brand is also in tune with new age consumers that support ‘green sustainable’ businesses. Accessible, inclusive and environmentally conscious, it ticks all the right boxes.
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