StevensC_MKT 461_Decathlon Case Analysis

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Long Form Case Analysis on Decathlon Christopher Stevens Monte Ahuja Business College, Cleveland State University MKT 461: Global Marketing Strategy Donna Davisson March 26, 2023

1 Introduction Decathlon is a leading global company in the sports market. Analogous domestically to Dick’s Sporting Goods or Foot Locker, Decathlon has a much larger international footprint and employs regionalization in its marketing and production efforts. Decathlon’s product offerings also vary from country to country. The United States Decathlon site has far few offerings and is solely focused on its in-house brands and collaborations. In the United Kingdom for example, where other sports are more popular, like Rugby and Cricket, the United Kingdom website features more variety of sport-specific offerings. Decathlon was founded in Lille France in 1976 and has grown to over 1,747 stores in over 60 countries, with a worldwide presence online. Decathlon has over 300 retail stores in its native France, along with locations in Germany, the UK, Belgium, Mexico, and others. Decathlon has achieved this with a focus on creating and partnering to build in-house brands. Decathlon has three business lines spun from this focus, sports product design, production, and online and in-store distribution. Decathlon has a low- price strategy driven by an efficient lean manufacturing process and a highly streamlined supply chain all of which have led them to be at or near the top of sporting goods retailers worldwide (Decathlon, 2023). How has Decathlon forged an integrated global strategy? Decathlon has forged an integrated global strategy in several ways. While these methods vary they have focused on a few strategic key areas including market selection, adaption and localization, product development, supply chain management, and brand identity. This strategy is the result of years of expansion along with an organizational commitment to development, scientific research, and adapting strategies to the results of their research. Decathlon has adopted a strategic approach to market selection by targeting countries with high growth potential and a strong appetite for sports and fitness products. This has been evidenced in Decathlon’s desire to expand in the BRICS countries of Brazil, Russia, India, China, and South Africa. In these BRICS markets, Decathlon has focused on the strengths, appealing to consumers in these countries where the desire for sporting goods is particularly strong, like Brazil and India. Decathlon's focus on emerging markets has been particularly successful, combining logistics, wholly owned brands, and culturally sensitive marketing to deepen that marketing penetration. Decathlon has been so successful at this that since 2008 half of its revenue comes from outside its home market of France (Bailleul, 2016). Decathlon has also adopted an adaptive approach to its global strategy. By not deploying a uniform strategy from market to market, Decathlon tailors its products and services to local markets. This adaptive marketing can be best seen in the differences from country to country on its websites. Below are examples from three countries, the United States, Germany, and Brazil.

2 (Decathlon, 2023) The United States website focuses heavily on an outdoor lifestyle focused on camping. The home page only has camping-specific products, under its Spring Collection. Traditional American sports like baseball, football, and basketball are nowhere to be found. (Decathlon, 2023) Clicking on Sports brings up a list of sports, but there is no focus on more traditional American sports. Decathlon treats all sports equally on its American page. When selecting traditional American sports, there are only 3-5 products aside from shoes for basketball. Decathlon presents products for its brands and is specifically focused on outdoor sports. (Decathlon, 2023)

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3 Decathlon’s German website, www.decathlon.de is regionalized both in layout and design for the German market. Urban sports are more prominent like roller skating and biking and it has a call to action of “Come out outside”. This is a focus on action and a call to escape the urban sprawl and be outside something that speaks to the German sense of adventure. Germany also has a focus on eco-friendly designs. Which when clicked leads to multiple pages of products that are environmentally friendly in either their design or manufacture (Cheng & Liew, 2022). (Decathlon, 2023) In Brazil, Decathlon again has a custom homepage with a focus on fitness, camping, tennis, and the growing sport of NBA Basketball, which is increasingly popular in Brazil. Brazil is now the NBA’s fourth largest country in viewership and growing, currently 16% growth in viewership year over year. Tying into the NBA’s success with a focus on the league, and the sport of basketball is smart and an enticement for shoppers. Another thing of note is that their delivery model is slightly different in Brazil. They offer the option to buy through WhatsApp and have it delivered, along with buying through the website and picking it up in-store. They also advertise having over 40 stores in Brazil making pick-up easy and offering different payment methods than we would see in the United States. The company has a decentralized organizational structure that allows it to respond quickly to local market needs and preferences. By empowering local markets to make decisions with a single siloed structure, the local leadership can make the correct decisions for the business overall and in that specific market. Decathlon's product range varies by market, with the company offering a mix of global and local products. The company's retail stores are also adapted to local markets, with store layouts and visual merchandising designed to appeal to local customers. Decathlon has a strong focus on product development, with a dedicated team of designers and engineers working to create innovative and high-quality products that meet the needs of customers. The company's products are designed with a focus on functionality, affordability, and sustainability. Decathlon's product development process is highly collaborative, with feedback from customers, employees, and suppliers used to inform product design and development. Decathlon also recognized the need for investment in innovative and diffuse manufacturing and distribution network. Investing in regional production and transportation hubs has allowed Decathlon to develop a highly efficient and flexible supply chain that allows it to meet the demands of the current and future markets that Decathlon wants to enter. The company has joint ventures and contracts with suppliers around the world, with a focus on building long-term relationships that benefit all involved. Decathlon's supply chain is designed to be environmentally sustainable. In countries with green initiatives and standards, Decathlon can meet or exceed those

4 standards. Decathlon incorporates this into its marketing in countries like Germany with a focus on reducing waste and minimizing the company's carbon footprint. A strong brand identity that is recognized around the world has created a legion of loyal customers who buy from Decathlon brands because of the recognized quality and success of Decathlon. Making sports available to everyone, with a focus on affordability, innovation, and sustainability is a core driver of Decathlon's marketing. Decathlon's brand identity is one of the most important things expressed through its marketing and communication strategies. Engaging customers through social media and other digital channels shows respect for cultural sensitivity and brings more brand champions into the fold. Decathlon's success in developing an international global strategy is evident in its continued expansion for forty years. By leveraging these factors, Decathlon has been able to compete effectively against well-known brands like Nike, Adidas, and others, establishing itself as a leader in sporting goods worldwide. How do you explain the success of Decathlon? Decathlon's success can be attributed to various factors, including its product range, pricing, marketing, and supply chain management. The following is an analysis of the key success factors of Decathlon using Porter's Diamond framework. Factor Conditions: This refers to the factors of production, such as labor, capital, and natural resources. France has a highly skilled workforce, which provides Decathlon with access to talented individuals at the home base level, but that expertise feeds hiring people globally. Furthermore, France has a tradition of producing high-quality products, which helps Decathlon in maintaining high product standards which sets the bar for international manufacturing. Demand Conditions: This refers to the size and nature of the domestic market. France has a large domestic market with a high demand for sporting goods, which allows Decathlon to benefit from economies of scale. Additionally, French consumers have a strong preference for value for money, which aligns with Decathlon's pricing strategy. Related and Supporting Industries: This refers to the presence of related industries, such as suppliers and service providers. France has a strong textile industry, which provides Decathlon with access to high-quality raw materials at a reasonable cost. Additionally, France has a well-developed logistics infrastructure, which supports Decathlon's supply chain operations. Firm Strategy, Structure, and Rivalry: This refers to the competitive environment in which firms operate. Decathlon has a unique strategy of offering high- quality sporting goods at affordable prices, which sets it apart from its competitors. The company has a decentralized organizational structure, which allows for quick decision-making and a focus on local customer needs. Furthermore, Decathlon's emphasis on innovation and customer feedback has helped the company stay ahead of its competitors (Cheng & Liew, 2022). Decathlon's product mix is a significant source of its competitive advantage. This enables Decathlon to sell to a much broader base, from beginners to professionals. The wide range of products also lets Decathlon cross sports in different countries. Not bound to any single sport means Decathlon can be a one-stop shop for all your sporting needs. Additionally, Decathlon's pricing strategy, which focuses on offering high-quality products at affordable prices due to its commitment to research and development contributes to its success. Decathlon can do this because of the many in-house brands they own, not paying middleman markups helps keep pricing down. Also contributing is Decathlon's supply chain management and logistics expertise. Decathlon can maintain efficient operations, ensuring timely delivery and reducing costs which also feeds its pricing strategy. Having elite manufacturing and supply chain activities also feeds an omnichannel strategy which is another success driver. In conclusion, Decathlon's success can be attributed to its innovative business strategy, which mixes research and development, provides high-quality products at affordable prices, and is supported by a strong supply chain and logistics infrastructure to deliver unbeatable value to its many brand loyalists. The company has also benefited from favorable factor conditions, demand conditions, related and supporting industries, and a unique firm structure and strategy. How does Decathlon maintain and increase its profitability compared to its competitors?

5 With its unique business model, focus on customer satisfaction, and low pricing strategy, Decathlon has been able to outperform its competitors in several key areas. One of the reasons why Decathlon has been so successful is its innovative business model. Decathlon designs in-house and manufactures and distributes its products under its brand name. By cutting out the middleman, Decathlon can offer its products at lower prices than its competitors. Decathlon is also able to shift product strategy much quicker than it could otherwise. If Decathlon bought all its goods from other companies, it would have little insight into its research and development activities, but by focusing on developing its products Decathlon maintains agility in its offerings. Additionally, by controlling the entire supply chain, Decathlon can ensure that products meet their exacting quality standards and can be distributed where and when they are needed. Employing lean manufacturing, and developing cutting-edge inventory and retail technology Decathlon has maximized its profit margin. Decathlon has developed RFID robots to manage inventory in its warehouses and RFID checkout in its connect stores. This strategy allows a much leaner retail operation and nets them significant savings (Wright, 2022). Another aspect of Decathlon's business model is its commitment to customer satisfaction. Decathlon markets its products as part of a lifestyle, be it an urban lifestyle, an outdoor lifestyle, or organized sports. Decathlon isn’t selling goods, it's selling the brand, and the brand itself is the enabler of the desired lifestyle. To do this, brand champions are necessary, and beyond that, customers who want to come back for all of their sporting needs. The company offers a unique shopping experience, with interactive displays and knowledgeable staff to assist customers, along with the peace of mind through easy returns and multiple delivery channels. If you prefer an in-store experience, Decathlon has a store near you. If you prefer online shopping, there is a custom website for you tailored to your geolocation. If you aren’t happy with a purchase, you can return it in-store or online. Decathlon will even deliver it to you directly, supported by its strong supply chain management. This has resulted in high customer loyalty and repeat business based on their ability to grow with each customer and have the needed products for all customers (Retail Design Blog, 2016). Decathlon's marketing strategy is another key factor in its success. The company focuses on building relationships with customers through social media, events, and sponsorships. Decathlon also invests heavily in research and development to create innovative products that meet the needs of its customers. Furthermore, Decathlon has been able to successfully expand its business globally. The company operates in over 50 countries, and its products are tailored to meet the specific needs of each market. Decathlon has also established partnerships with local suppliers, which has helped the company to reduce costs and increase its profitability. Decathlon's supply chain management is another area where the company excels. The company has implemented several innovative strategies to streamline its supply chain and reduce costs. For example, Decathlon uses an automated warehouse system that can quickly and efficiently pick and pack products. The company also uses data analytics to optimize its inventory levels and reduce waste. By controlling the entire supply chain, Decathlon can offer high-quality products at lower prices than its competitors. Decathlon has established partnerships and joint ventures with local manufacturers and suppliers, which has helped the company to reduce its costs and increase its profitability. By deploying the correct strategy by market, Decathlon can source high-quality products at lower prices, while also supporting local businesses. Decathlon's success is a testament to its business model, marketing strategy, and supply chain management. Analyze Decathlon’s model of global expansion management by time period, country type, strategy, and objectives. Time Period Country Country Type Strategy Objectives 1976 France Mature Origin & Horizontal Integration Establish a foothold in the home market and create a basis for future expansion 1986 Germany Mature Joint Venture Initial market expansion with local partner, retail footprint expansion 1987 Belgium Mature Joint Venture Adjacent Market expansions, applying lessons from Germany, and testing new

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6 concepts 1993 Italy Mature Greenfield Investment Establish own production facility and control supply chain to speed delivery and localization 1992 Spain Major Emerging Power Vertical Integration Establish own production facility and control supply chain to protect and grow market share 1999 UK Mature Acquisition Market share grab through competition acquisition, and expansion into western markets 2001 Brazil Key Emerging Market Greenfield Investments Developing a regional distribution point to sustain growth and penetrate another BRICS country 2003 China Rapidly Developing Greenfield Investments and Joint Ventures Rapid expansion through partnerships with local manufacturers and companies with government ties 2010 Turkey Rapidly Developing Joint Ventures Expansion into the Middle Eastern market through joint ventures and partnerships. 2017 Tunisia Rapid Developing E-commerce Use of e-commerce and delivery to prep for physical store openings and delivery- only trials. Maintaining an edge in technology 2018 Australia Mature E-commerce Investment into innovative products and concepts to defend market share, along with expanded web presences for countries with geographic challenges 2019 Canada Mature E-commerce Penetration into North America after the failure of the United States market. Heavy investment in web presence and self- owned brands to bridge the cultural gap From 1976-1992, Decathlon focused on establishing itself in mature markets in Europe by opening company-owned stores. The objective was to build brand recognition and a loyal customer base in these established markets. In the span encompassing 1992-2010, Decathlon began to expand into major emerging power countries such as China and India. During this period, Decathlon continued to open company-owned stores but also started to franchise stores in some markets. The objective was to enter new markets with a mix of company-owned and franchised stores to reduce risk and cost, while still maintaining control over the brand and customer experience. They also employed Greenfield Investment as a strategy, establishing subsidiaries on foreign soil as part of their global expansion strategy. In the modern period of 2010-Present, Decathlon has shifted its focus to rapidly developing markets, such as Africa and South America. Instead of relying solely on company-owned or franchised stores, Decathlon has started partnering with local companies to establish a presence in these new markets. Decathlon has also invested heavily in e-commerce, allowing it to reach customers in remote areas and further expand its global footprint. The objective is to continue expanding into new markets while reducing the risk and cost of entry and establishing a stronger online presence. Overall, Decathlon's approach to global expansion has been to carefully assess each market and tailor its approach accordingly. Decathlon has used a combination of company- owned stores, franchised stores, and partnerships to enter new markets while minimizing risk and cost. By focusing on building brand recognition and establishing a loyal customer base, Decathlon has been able to successfully expand its global presence over the years. Decathlon’s approach to its product choices, market choices, and modes of entry

7 Decathlon approaches its choices differently than retailers like the United States-based Dick’s Sporting Goods. These choices have been critical to the company's success. Decathlon offers a wide range of sporting goods and equipment, covering over 80 sports categories. While there are many categories covered, the sports displayed are regionalized from country to country. I used to play competitive rugby and was interested in the rugby-specific offerings available in the American website store, however, there were only two choices, both of which were air pumps. Decathlon in the UK had many different choices due to the regionalization and availability of the product. Disappointing to an American rugby player, but very beneficial in those countries where the sport is popular. The company designs and manufactures most of its products in-house, enabling it to maintain tight control over quality and costs. This also allows freedom in many aspects of product marketing, not being beholden to multi-lateral marketing agreements like Under Armor or Converse would require. Decathlon's product strategy is focused on meeting the specific needs of each sport and providing high- quality, affordable products from its brands. Decathlon also invests heavily in research and development to create innovative products that meet the evolving needs of its customers. The company's approach to product development involves working closely with athletes and sports enthusiasts to identify emerging trends and opportunities. This has enabled Decathlon to introduce new products and product lines that resonate with its target customers. This is in direct contrast to the largest domestic sporting goods retailer in the United States, Dick’s Sporting Goods. Dick’s partners with over 230 brands in-store and online. Dick’s is a true retailer in that sense, they buy the product from leaders like Nike, Under Armour, and ’47, and sell them in their retail stores. This contrasted with Decathlon whose focus is on research, development, and creating their brands to sell in-store alongside other brands online. Decathlon has moved beyond reselling and has immense in-house generative data labs, creating technology for asset management, inventory, retail stores, apps, and software. At its Data Lab in Singapore, Decathlon is investing heavily in developing its products and services to have total control of that ecosystem instead of relying on outside companies and selling their products. Decathlon operates in over 50 countries, and its market choices are guided by its focus on meeting the specific needs of each market. Decathlon's entry into new markets is often preceded by extensive research and analysis to ensure that it understands the local sports culture and consumer preferences. In India and the UK for example, cricket is a prominent feature sport and all the equipment needed to play cricket is available either online or in-store. Decathlon also tailors its product offerings to meet the needs of each market. For example, the company offers a different range of products in the United States than it does in Europe or Asia. Sometimes these products are the same, and in some cases, they are under different brands and feature different designs. This approach has helped Decathlon to establish a strong presence in each market and build a loyal customer base. Decathlon uses a different approach in its marketing by region as well. The targeted message for its marketing changes from region to region. In Canada, the focus is on wide open spaces and the grandeur of nature, contrasted in France marketing is focused on effort and individual performance. The variety in its marketing messaging is helping its regionalization efforts. Like product strategy and market choices, Decathlon employs different modes of entry as the situation calls for. In some markets, the company has established wholly owned subsidiaries, while in others, it has formed joint ventures with local partners. The production and distribution model also determines the mode of entry. In Brazil Decathlon utilized Greenfield Investment. Brazil needed to support distribution as it was farther out of the supply chain than Decathlon found preferable. The supply chain management helped formulate the strategy and lead to significant growth in that country. In Australia, digital expansion has bridged the great geographic gaps that the country has. Decathlon has also entered some markets through acquisitions of local sports retailers. Decathlon's mode of entry is determined by other factors too, including market conditions, regulatory environment, and local business culture. In China, the government controls many of the top businesses or has significant fingers in the pie, as it were. The approach used in the UK would not be applicable there. Investing in manufacturing was the key to entry into China. The company's approach to entering new markets is always guided by its commitment to building strong partnerships with local suppliers and distributors. In Germany, Decathlon encountered a more mature market, and its early efforts were less than successful, however by the end of 2019 the total number of stores had grown to 80. Starting with just two stores opened in the first 6 years beginning in 1996, Decathlon embraced the urban areas with innovative retail concepts and new digital store designs. Finding the right solution is something Decathlon has become very good at over time, through experimentation and diversity in approaches.

8 Decathlon's approach to product choices, market choices, and modes of entry has been critical to the company's success. Decathlon's product strategy is focused on meeting the specific needs of each sport and providing high-quality, affordable products while understanding what sports are prevalent in each market. India and the United Kingdom have a strong focus on Cricket, Canada focused on outdoor sports and camping, Spain and France lean heavily into Football, or what we call Soccer in America. The company tailors its product offerings to meet the needs of each market and uses a range of modes of entry to expand its global footprint. Decathlon's focus on innovation, customer satisfaction, and strong partnerships with local suppliers and distributors has enabled it to establish a strong presence in each market it operates. Overall, Decathlon's approach serves as a model for other companies looking to expand their global reach and achieve sustainable growth. Even though the pandemic, Decathlon has shown steady growth, exceeding pre-pandemic net revenue in 2021 (Decathlon Group's 2022 performance 2023). 2012 2013 2014 2015 2016 2017 2019 2020 2021 € 0.0 € 2.0 € 4.0 € 6.0 € 8.0 € 10.0 € 12.0 € 14.0 € 16.0 Decathlon's Net Revenue 2012 - 2021 Revenue in Billions of Euros (Decathlon: Turnover 2021 2023) Conclusion Decathlon has proven that through time that it can enter multiple international markets, using different strategies and marketing approaches. Decathlon has evolved with the times, moving to an omnichannel retail strategy, employing retail stores and country-specific websites to sell the right product mix in each country. A review of the various international websites shows the differences from country to country. Decathlon has experimented with different store concepts as well, not shifting from its core retail strategy. In Germany, small- footprint express-type stores in urban areas and city centers are called connect stores. Bringing a small-scale Decathlon experience to areas previously thought too small to penetrate. Decathlon has also embraced digital technologies in its store concepts, bringing immersive experiences into the equation through virtual reality set inside the smaller store. Bringing essential sporting goods from its in-house brands and supplementing with the full catalog in the virtual environment, Decathlon embraces change and new frontiers.

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9 Further Reading Bailleul, A. (2016, February 2). 9,1 milliards d'euros de Chiffre d'affaires pour decathlon en 2015 dont 65% à l'international . SportBuzzBusiness.fr. Retrieved April 1, 2023, from https://www.sportbuzzbusiness.fr/decathlon-chiffre-affaires-2015-business-sport-67174.html Cheng, Z., & Liew, C. (2022, July 8). Decathlon data lab - launching decathlon's people-first digital innovation nexus . The Tech Revolutionist. Retrieved March 31, 2023, from https://thetechrevolutionist.com/2022/07/decathlon-data-lab-launching-decathlons-people-first-digital- innovation-nexus.html Czinkota, M. R., Ronkainen, I. A., & Cui, P. (2023). International Marketing . Brytewave eReader (11th ed.). Cengage Learning. Retrieved February 28, 2023, from https://platform.virdocs.com/r/s/0/doc/2101811/sp/265329844/mi/768733003?menu=table-of-contents. DECATHLON Germany SE & Co. KG. (2023, March 28). What is different about DECATHLON's Ecodesign products? Decathlon. Retrieved March 31, 2023, from https://einblicke.decathlon.de/nachhaltigkeit/ecodesign/index.html Decathlon United Media. (2017). Decathlon annual sustainable development reports . Decathlon sustainability. Retrieved March 31, 2023, from https://sustainability.decathlon.com/decathlon-annual-sustainable- development-reports Decathlon United Media. (2023, March 31). Decathlon Group's 2022 performance . Decathlon United Media. Retrieved March 31, 2023, from https://www.decathlon-united.media/2022performance Decathlon. (2023). Decathlon Brazil Website [Screenshot] . DECATHLON. Retrieved April 1, 2023, from https://www.decathlon.com.br/ Decathlon. (2023). Decathlon Germany Website [Screenshot] . DECATHLON. Retrieved April 1, 2023, from https://www.decathlon.de/ Decathlon. (2023). Decathlon United States Website [Screenshot] . DECATHLON. Retrieved April 1, 2023, from https://www.decathlon.com/ Decathlon. (2023, April 1). Affordable Sporting Gear since 1976 - our story . Decathlon. Retrieved April 1, 2023, from https://www.decathlon.com/pages/our-story Finch, J. (2020, November 6). French Sporting Goods Behemoth 'decathlon' expanding in-store tech amid global expansion . Retail Insider. Retrieved March 31, 2023, from https://retail-insider.com/retail-insider/2019/12/french-sporting-goods-behemoth-decathlon-expanding-in- store-tech-amid-global-expansion/ Retail Design Blog. (2016, March 14). Decathlon Connect store by kplus Konzept, Munich – Germany . Retail Design Blog. Retrieved March 28, 2023, from https://retaildesignblog.net/2016/03/14/decathlon-connect- store-by-kplus-konzept-munich-germany/ Reuters. (2022, February 4). Brazil is NBA's fourth country in viewership outside the US . LABS English. Retrieved March 31, 2023, from https://labsnews.com/en/news/business/brazil-nba-viewership/

10 Statista. (2023, March 10). Decathlon: Turnover 2021 . Statista. Retrieved March 31, 2023, from https://www.statista.com/statistics/1167982/value-french-company-decathlon-sales/ Ting, L. (2022, December 29). Decathlon: Building a green industrial chain . China Today. Retrieved March 31, 2023, from http://www.chinatoday.com.cn/ctenglish/2018/et/202212/t20221229_800317089.html Wright, J. (2022, May 26). Case study: Decathlon: Getting smart with RFID tags . Internet Retailing. Retrieved April 1, 2023, from https://internetretailing.net/magazine-article/case-study-decathlon-getting-smart-with- rfid-tags/

StevensC_MKT 461_Decathlon Case Analysis

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