Retailer Brand Policies: Decathlon Case Study (1/2)

International channel management and retailing

BearingPoint as the partner of the ESCP “Retailing 4.0" Chair is committed to contributing to building bridges between the academic world and companies. As part of this engagement, the BearingPoint Retail, Luxury and CPG team mentored the writing of a series of articles of ESCP MSc students and shared insights on major retail stakes. Enjoy your reading !

“Sport Must Be Accessible To All!”

The strength of Decathlon is its concept, which is still relevant today, namely "sport must be accessible to all"! Indeed, its founder, Michel Leclercq, was a forerunner when he launched his first store with his six friends in 1976!

The story begins with the first store open in Englos - in the suburbs of Lille - the first self-service sports goods department store.

Decathlon nowadays is present in 57 countries and nearly 1,000 cities with more than 1,600 stores worldwide. Decathlon today represents more than 90,000 employees who achieved a turnover of 11 billion euros (69% of the turnover is achieved internationally) in 2018 (Decathlon United, n.d.).

Decathlon & its 44 Years Of Brand Evolution

1976-1999: Decathlon – A Discount Sport Equipment Retailer

From 1976 to 1999 Decathlon was the only brand in the store. The policy of a single brand, Decathlon, is strongly emphasized in all its stores, together with its dominance of the national market (France). In 1986, Decathlon production was born, creating the Trocathlon. It was the first product designed by Decathlon, the challenger bike frame. In 1989, Decathlon began to internationalize its production, and became Decathlon Production International.

After this launch, Decathlon products were present on the beach, on the ski lift, while hiking in the forest as everyone was wearing Decathlon-branded products. In this growing monopolistic market, consumers had the impression of a lack of diversity in the products offered and also a lack of specialized products. In 1994, Decathlon's headquarters moved to Villeneuve-d'Ascq, called "le Campus", where R&D and testing are carried out (Notre histoire - Decathlon Recrutement, 2020).

1999-2018: Decathlon & Passion Brands

The single brand policy led to an unsuccessful era of Decathlon due to limiting demands for specialized products and a wider diversity of sports (Passion Brands - Decathlon, n.d.). After the lesson of one-brand policy before 1999 which was regarded as a productive and practical  brand, Decathlon has been reworking to fortify their leadership in sports equipment globally. According to Mr. Grandgeorge - Country Manager of Decathlon in Ireland, Decathlon now can & should be seen as a family of brands whose family name is “Decathlon” and there are 84 people representing 84 sports. 

By having this significant dedication and personalization to each type of users, Decathlon’s portfolio brand policy helps to satisfy all 84 different sports’ users, ranging from beginners to professional athletes. Decathlon has reinforced their local brands, with “Decathlon” as principal distributor and signatures of sports (passion brands) to reveal their highest level of dedication to research & development, quality, and satisfaction to users.

2018-2019: The Sport Retailer

In 2018, Decathlon has operated an important shift in its strategy. The French company decided to favorize its own products at the expense of international brands such as Nike, Adidas, Puma, etc.

Decathlon wanted to be identified as an ‘The Sport Retailer’ and decided to bet on their products, of good quality and less expensive. Producing and selling their own products also allow the company to have better margin and consequently increase their revenue. Despite this strategy, Decathlon continues to sell some international brands. The French retailer could not do without some products and needed the specific know-how of some providers. According to the level of technicity, Decathlon either sells their own product or continues to trust other companies (such as Michelin for tires, Wilson et Babolat for tennis rackets…).

Simultaneously, the company decided to invest massively in R&D to improve the portfolio of their products. They are pursuing a strategy of ‘passion brands’ by implementing an ultra-specialization of their products. The goal is to answer the needs of every type of client. The best example of this strategy is the launch of the snorkeling mask that needed years of research. The company was able to sell an innovative product at a relative low price.

2019-Now: Decathlon & Services Expansion

Decathlon’s growth and development have no borders, and “Decathlon Rent” is proof of it. The service has started to spread across Europe and gradually gained popularity. In France, customers are now able to discover and test the long-term rental service of any types of bikes (mountain bikes, road bikes and electric bikes). Currently this service is offered in 4 stores of Paris and 8 stores of Lyon and planned for further expansion. This strategy is best placed to take advantage of the current pandemic situation, where people are avoiding public transport (Decathlon Rent, 2020). In Italy, Decathlon customers can rent online skis, snowboards, watersport equipment, sledges etc., and collect in the nearest stores or at their partners in top seaside and mountain destinations. In Germany and Switzerland, the same rental service is available for 9 different sports (DECATHLON | Wo dein Sport anfängt | Über 100 Sportarten, n.d.).

The Four Periods Of Decathlon Emphasize

A Strong Strategy For Its Brand Policy

After nearly 25 years of “store brand policy” which made customers feel questionable regarding choices of brands, Decathlon learnt from the mistake to initiate changes. They implemented a new strategic policy towards a portfolio of brands, created more diversity and better segmentation (Kapferer, 2012). Since then, Decathlon has witnessed an impressive growth rate and expansion not only in the home country but also on a global scale, via serving 84 different sports with passion brands. Those “passion brands” of Decathlon are “autonomous, decentralized business units, with dedicated teams” (Kapferer, 2012). With generous investment in ingredient brands to offer bargains with credibility, product innovation, high quality and reasonable prices, Decathlon have possibly found the keys to success.

Before 1999, all the products of Decathlon were seen as “hedonistic” to focus on the feeling of comfort and safety for users. We believe that the pre-1999 era represented the foundations of Maslow to meet the needs of Safety for customers (psychological needs do not apply in this). However, after realizing that customers are being limited to only one brand, Decathlon were potentially convinced that changes were necessary to keep up with the trends.

From 1999 to 2018, according to a former manager of Decathlon, creating universes dedicated to a sport or an area of sports is a way to better serve customers, to have better segmentations and to personalize any type of users’ demands. In fact, when we step into a typical Decathlon store, it is recognizable of the size of the store, which is often huge and there are abundant products and brands to select. Product portfolio includes equipment, accessories, clothing, footwear and many more, ranging over 84 different types of sports. Moreover, Decathlon dedicates greatly to delivery of product quality over money. Decathlon’s Research & Development pays off well, as in fact, customers agree with the statement that Decathlon brand has good quality (Heider et al., 2016), in accordance with Mr. Grandgeorge’s acknowledgement of Decathlon’s dedication to quality.

Recently, the product strategy has been shifting to a more comprehensive one of product-centricity and halo-centricity, to include the after sales services and other value-added benefits to customers. The Country Manager of Decathlon in Ireland said that a new halo-centricity strategy would create a platform to provide the best services and sports experiences. Decathlon has already upgraded their value with serviceability by providing repair services. Hence, this strategy will establish confidence by consumers and empowerment of brands’ reliability (Heider et al., 2016).

Since the early days of Decathlon, their slogan has been simply making sports accessible to everyone. It has been the core of their price strategy and remained the same since 1976. Decathlon is different to Nike or Adidas. The quality may be similar but there is a huge price gap between Decathlon and others. Decathlon’s price suits not only people with low budgets with sports habits but also professional athletes. For Decathlon, quality is considered as important as price, meaning there will be lots of investment in R&D to guarantee the quality. But the key difference between Decathlon and other sport brands, is the margin. “Keeping the price low does not mean cheap, but rather the best value for money” has been the mindset of Decathlon. According to Mr. Grandgeorge, Decathlon uses a scale of price to ensure best possible value at each price level. The former manager of Decathlon stated that the low cost of logistics and of production contributes to efficient cost reduction. The low-price strategy of Decathlon also relies on the Cost Leadership orientation with a massive scale of +1600 stores and +1.2 billion sold products globally to save lots of money and to balance between smaller scale stores and bigger ones.

 

Decathlon has put themselves in marketing strategy with large-scale retailing stores of two clear zones: indoor sports and outdoor sports. There are some adjustments to adapt local preferences and flagship gigantic-size stores as well. If we reflect by ourselves, the image of Decathlon stores in our mind is nearly the same for everybody. The store is located in big shopping malls with favorable positions and the eye-catching big-white-letter-blue-background billboard “DECATHLON”. Inside the stores, there are tens of thousands of products and numerous people experiencing and kids enjoying the sports and the products.

How can Decathlon supply all different sales points and via e-commerce at the same time but still low prices for consumers? The answer is the massive scaling of production and optimization of logistics, which results in cost minimization. Decathlon’s products are produced mainly in Asia, with a vast majority from China. But if we deep dive into each equipment then the origin of production is different. For example, bike components are produced mostly in Taiwan, shoes are produced mainly in Vietnam (in the same factories as Nike’s). By having an integration of production, supply chain and logistics, Decathlon manages to operate smoothly on a global scale and quickly penetrate different markets. It is notable to mention the collaboration of store-in-store sales between Decathlon with other retailers like Franprix, Auchan to serve their mission of making sports accessible to everyone, everywhere.

Apparently before 1999, Decathlon was perceived as a discount sports retailer, because the products are unpopular and inexpensive. We believe that selling products at low prices back then indirectly made customers feel unsure of the quality of the products, and this was the reason why Decathlon spent so much time, effort and finance to re-brand and promote themselves better as quality dedicating brands. It means spending on products and services is better than on advertising or commercial films.

The supply chain of Decathlon plays an important role in promoting Decathlon outstanding from others. The supply chain strategies in different regions are applied similarly in accordance with the global strategy to ensure smooth operations and deliveries. Procurement is an essential component of making sport accessible to the mass. Local teams working in different manufacturing nations are in charge of sourcing, directing and governing the producers of Decathlon products. After manufacturing, the final products are transported directly to the warehouses, then delivered to physical stores or supplied straight to the customers and end-users if they order online (Smith, 2019). By having this vertical structure of operation from manufacturing to delivery, Decathlon can enjoy their competitive advantage of “go-to-market” exceptional swiftness and flexibility in operations. This is one of the reasons why Decathlon can deliver so fast to the customers, restock & reshelf so quickly once new seasons come and keep their price so low to ensure the mission of making sports accessible to everyone.

Both of our interviewees acknowledge that Decathlon does not spend much money on promotion, instead Decathlon believes, if their products and services excel and satisfy the users, those users will be the ones helping to promote Decathlon and the brands. While competitors are spending millions on marketing campaigns and advertisements, Decathlon focuses on promoting the product quality and user experiences, which eventually generate the most inexpensive marketing strategy of word-of-mouth and community’s trust. As time goes on and demands for everything increase, we believe that Decathlon will extend and develop the promotion with focus on better quality, better services and better trademarks, proven by their loyal users.

References

Kapferer, J., 2012. The New Strategic Brand Management. 5th ed. London: Kogan Page, pp.106-108.

Heider, B., Martins, D., Cizmar, I., Loures, M. and Barakat, R., 2016. Brand Management: Measuring The Brand Equity Of Decathlon In Portugal. MSc. Católica Lisbon School of Business & Economics.

Mira, N., 2018. Decathlon Continues To Segment And Specialise Own Brands. [online] FashionNetwork.com. Available at: <https://ww.fashionnetwork.com/news/decathlon-continues-to-segment-and-specialise-own-brands,945577.html> [Accessed 24 June 2020].

Decathlon Presse et Media. 2020. Decathlon Rent. [online] Available at: <https://www.decathlon.media/fr_FR/dossiers-communiques/decathlon-rent> [Accessed 24 June 2020].

Decathlon. n.d. Decathlon United. [online] Available at: <https://www.decathlon-united.com/en/about> [Accessed 24 June 2020].

Decathlon Recrutement. 2020. Notre Histoire - Decathlon Recrutement. [online] Available at: <https://recrutement.decathlon.fr/lentreprise/historique/#> [Accessed 24 June 2020].

Decathlon.co.id. n.d. Passion Brands - Decathlon. [online] Available at: <https://www.decathlon.co.id/en/content/15-passion-brands> [Accessed 24 June 2020].

Decathlon.de. n.d. DECATHLON | Wo Dein Sport Anfängt | Über 100 Sportarten. [online] Available at: <https://www.decathlon.de/browse/c0-services/c1-servicepoint/_/N-18vpg0> [Accessed 24 June 2020].

Smith, W., 2019. Decathlon: Sustainable Approaches Powering Regional Growth. [online] Supplychaindigital.com. Available at: <https://www.supplychaindigital.com/company/decathlon-sustainable-approaches-powering-regional-growth> [Accessed 27 June 2020].

 

 

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Authors: Julie Lartigue, Xavier de Verdalle, Sanjana Bharambe, Alexandre Depont, Pauline Handkan, Tetiana Savchenko, Khue Vu