Decathlon

The final assignment for the course "Principles of Strategy"

Dr. Allèfre L. Hadida

Submitted by:
Daniel Benoliel Contente, Laurent Flaster, Michael Krasner
September 30, 2019

Table of context

1. Introduction 2
2. Decathlon’s Goals, Values and Performance 2
3. The international sport industry environment 2
4. Porter’s five forces 3
5. Key factor to success 4
5.1. International decision-making system 4
5.2. Fully integrated value chain 5
6. Challenges within E-commerce activities 6
7. Suggestions 9
8. Conclusion 9
9. References 10

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 1. Introduction
The trigger for writing this work was our personal customer experience from visiting Decathlon. Our
attention attracted the question: "How the company successfully combines wide range of high-level
sporting goods in relatively low price in the market?" Inspired with this question we focused our work on
analysis Decathlon’s strategies and key factors to success in mature, highly competitive sport equipment
global market.

2. Decathlon’s Goals, Values and Performance

Founded in 1976, the company uses as its main slogan "All sports under one roof", and its mission
statement is "to make sports accessible to as many people as we can". (Decathlon, 2017)
Both, Decathlon slogan and mission statement make clear Decathlons intention to be the main and most
complete sporting goods and equipment provider by covering the entire chain: research, development and
delivering the needs of people from all social levels.
Decathlon shares its culture all around the world, which is reinforced by two values: Vitality and
Responsibility. (Decathlon, 2017) .Vitality is also known as “get-up-and-go”.The co-workers are positive
and full of energy, they are enthusiastic with a passion for innovation and a love for creativity. They strive
relentlessly for progress and revolution: like all sportspeople, they love action. Responsibility for
Decathlon means taking decisions and acting for their implementation. Leading by the concept “Each
Decathlonian plays a role” high-level accountability to the company’s value expected from each one of
the teammates.
With a sales revenue of 11.3 billion euros in 2018 , including 56.60% realized outside of France, with a
net operating income of 497 million euros produced by its 1,511 stores located in 51 countries and more
than 80,000 employees on the payroll, the Decathlon Group is one of the important key players in retail
sports industry. (Decathlon, 2018)

3. The international sport industry environment

The sports industry has a great impact on economies around the world. In the EU, for example, it
contributes with €294 billion to the gross value added, while employs 4,500,000 people. The industry
creates value and jobs in a number of sectors, from manufacturing to services, and stimulates the
development and innovation.
The sales of sports items in Europe represents more than €65 billion every year, whereas its main markets
are the United Kingdom, France, Italy, Germany and Spain. (Eurostat, 2018)

Although the EU is a big consumer market of sporting goods, and the design is created there, the
production is mostly concentrated in Asia. However, the manufacturing of sporting goods remains an
important upstream activity for the EU with considerable positive impact on the textile, clothing, leather

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 and footwear. Worldwide, the sporting goods retail market CAGR4Y has been growing of 5%, and the
forecast is to remain growing until 2022, driven mainly by emerging markets, where there is place to
expand, while the US, for example, is a saturated market. (Capitalmind, 2019)

4. Porter’s five forces

To analyses competition within sports retailing industry and to determine its potential for profit we will
use widely known Porter’s five forces. These five forces of competition include three sources of
“horizontal” competition: competition from substitutes, competition from entrants, and
competition from established rivals; and two sources of “vertical” competition: the
power of suppliers and the power of buyers as shown in Figure 2

Fig. 1 - Porter’s five forces of competition framework (M.Grant, 2016)

The threat of entry of new competitors

The threat of the entry of new competitors is high, given that we are in a global market and that almost
any company can get into almost any market in any territory.
Decathlon controls the full product life cycle as the designers, manufacturer and distributor (Decathlon,
2019) and is currently the leading company in the sport industry. This competitive advantage gives
the company the confidence along with commercial and economic capacity to face any competitor that
enters the sports material industry.
Although the presence of new competitors is a threat to Decathlon, they may find important entry
barriers such as:

 Initial investments to establish themselves in the market

 A continual and constant differentiation of the products
 Low prices for high-quality products which Decathlon offers
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 The threat of entry of substitute goods.
Generally said, there are no sporting goods given that they are the only goods that can be used to
practice each particular sport. However, these very products can be continually developed
technologically up to a point where they are goods of higher quality, better design and lower priced.
In this context Decathlon has a strong market position and must bear in mind the necessities of the
market and both the innovations of the competitors in order to avoid possible and potential threats.
Bargaining power of suppliers
Decathlon only counts on its own suppliers, so, if more products were needed in diverse situations they
could not make them with the existing suppliers and this could become a potential threat, as the
company is wholly dependent on Decathlon’s production countries belonging to the company itself.
Bargaining power of buyers
The own-brands have a great advantage over leading brands like Nike or Adidas. Thanks to own-
brands, similar products with the same end-use can be offered at a lower price than that of their
competitors while maintaining the same quality level. Based on this competitive advantage Decathlon
can attract customers and even change consumers’ preconceived views on brand preference.

5. Key factor to success

Based on external and internal company analysis, we can turn to the main purpose of this work: to
determine Decathlon’s key factors to success in a global, mature and highly competitive sports equipment
market and to indicate their contribution in the company's ability to keep the leading position over more
than two decades.
5.1 International decision-making system
In the late 80-s Decathlon made the decision to take full control over the products life cycle by
designing, producing and manufacturing their own products. It was a starting point for creating
autonomic sub-brands, called “Passion - Brands”, each of which was dedicated to a separate sports
activity. Some of these are: Quechua for mountain sports, Kalenji for runners, Artengo for racquet
sports, Domyos for fitness, etc. (Decathlon, 2016)
The second milestone is switch from pyramidal structure to international decision-making system
as most suitable in terms of both the business and its teammates. Currently, this reorganized
international system comprised of 126 sustainable development leaders, including 25 country leaders,
64 Decathlon brand leaders, and 37 industrial process leaders. (Decathlon, 2018). The collaboration
between management unit and local leaders allow the company to formulate long term goals, ensure
the continued promotion of the company’s values of Vitality and Responsibility and preventing the
main risks that could endanger the future of the company.

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Fig.2 Decathlon’s international design-making system (Decathlon, 2018)

5.2 Fully integrated value chain

The main core of Decathlon business model is the low operating costs strategy. Decathlon is
recognized as one of the best retailers on the market within the performance/price ratio.
The main contributor to achieve such an outstanding performance is a fully integrated chain allowing
to control both manufacturing and distribution processes.
The value chain of the company includes five elements: R&D; Supply Chain; Distribution; Marketing
and Sales; Post-sales service (Porter, 1988). In the context of this work we will focus on four of them
as the most contributing to Decathlon's success in the market: Those are: R&D, Supply Chain,
Marketing and Selling

The first element of Decathlon’s value chain is R&D:

Each one of Decathlon’s brands conducts extensive research in order to develop the latest and most
Innovative designs in sportswear and to minimize operating costs.
The second is Supply Chain: As a mass-market sports retailer, Decathlon possesses a very large and
intricate supply chain management system. Decathlon’s intricate supply chain is what allows it to
organize and distribute its wide variety of products and maintain a cost leadership strategy in the
international sportswear industry. Decathlon sustainable looking for the opportunity to improve their
global operation establishing new industry partnerships with suppliers over the world. One of the
examples is their collaboration with DHL-the global market leader in the logistics industry. The
partnership covers Europe, Asia, North Africa and South America. Thanks to this collaboration

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 Decathlon’s logistics team gain greater visibility and control to optimize operations and reduce costs
of complex logistics chains. (DHL, 2019)
The analysis of marketing strategies is widely accepted to provide by “4Ps framework (Product, Price,
Place, Promotion). Within this work we will focus only on the "Place", since Decathlon's stores are
unique in the sports retail industry in its size, assortments of goods and custom experience.
Decathlon’s Stores are mostly located outside towns in industrial zones to reduce costs and provide
enough space for the sales areas. Decathlon mostly focused on selling “in-house” goods produced by
“passion-brands”. Providing a wide range assortment of high-quality sport equipment for low price
and sustainable increasing specialization and customer segmentation of the products, the
company creating high attractiveness for consumers, and achieving their loyalty to the company.
In the context of the space area, Decathlon’s aspires to increase the average sales area, because the
stores have to accommodate a growing assortment of goods and growing number of services and areas
to try out products and to entertain customers. Decathlons stores are very big (average 4,000 square
meters), and not luxurious. The company keeps all its inventory in stores, which reduce inventory
costs. They eliminate packaging where it isn't necessary (i.e. no shoe boxes), adopted a cashless policy
to reduce our footprint, and strategically locate the warehouses within close proximity to stores for
more efficient shipping. (Decathlon, 2018). All those are only some examples for tactics that allow the
company to reduce its operating costs.
Talking about customer experience, first of all we want to note the ability to test products before
buying, so you can choose whether or not to purchase the product. Giving the customer a choice testing
products, Decathlon is separated cleanly from their competitors. The customer, therefore, is unsure
about purchasing can evaluate, through a personal test the product. This unique service creates a
significant competitive advantage as it leaves maximum freedom of choice to the customer and
prompts him to recommend products through the story of a personal experience.
To elevate the shopping and sporting experience, Decathlon introduces an innovative mix of physical
retail and digital touch points. From virtual reality to digital payments the intent is to create a fun,
unique and immersive user experience designed to engage and add value to them at every step of the
way while choosing their favorite sports gear. (Standard, 2018)
In addition, each stores store also offers a broad range of services to complement products sold,
including refunding, workshops, checking and maintenance equipment for bicycles, skis, diving etc.

6. Challenges within E-commerce activities

Decathlon is Omni-Channel retailer with a two-digit turnover growth for the past 8 years.
In the previous paragraph we can make sure that their off-line channel presenting very well performances.

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Especially we noted a customer experience inside the sore, as one of the main Decathlon's competitive
advantage. Now we want to focus on customer experience of on-line channel. For this purpose we decided
to analyze their online traffic and presence based on their UK website, YouTube, Facebook and Instagram
channels.

The UK website has over 2 million monthly visitors and a global ranking of 46th in the shopping/sports
category. The engagement is also reasonable with a 45% bounce rate and an average time on site of 4
minutes. What is striking here is the incoming traffic comes with almost 60% come from mobile!
Decathlons main acquisition channels are SEO, meaning they rely on a strong SEO strategy to be less
reliant on paid search channels, which harmonizes with their DNA. In fact, paid traffic accounts for only
6%. Following SEO is direct traffic, which is a good sign which means that their brand awareness is very
strong (SimilarWeb, 2019)
Following a breakdown of the acquisition channels:

Fig. 3: Decathlon Marketing Channels (SimilarWeb, 2019)

Decathlon’s website ranks for 453k keywords, out of them 13k being in position 1-2, resulting in a very
high volume of traffic. With almost 5 million (back) links pointing to their website, their backlink profile
is very strong, even if most of the links are from other versions of Decathlon websites like .fr or .be.
Having a strong SEO strategy includes also having a company blog which they have, many “how to”
articles can be found on their website but here we found the first issue: Most of the content is very short
(under 300 words) with few images and internal links.
The most engaging content had only 104 Facebook shares, very low compared to their French version
having a total of 16.8k shares (Buzzsumo, 2019)
Fig. 4 Comparative characteristics of most engaging or sharing contents (Kings, 2019)

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Nevertheless, both of them lack a coherent content distribution strategy, it’s a pity to create content
without distributing it.

Their Search Engine Advertising strategy is not focused on Google Adwords by choosing Bing/Yahoo as
alternatives. Out of a large number of keywords they’re bidding on, they are mainly focused on short to
middle tail keywords. For instance, “Riding boots” and “Running jacket” are the keywords that bring the
most traffic in terms of paid search.
Fig. 5 Comparison of Paid Search between Google & Bing/Yahoo (Kings, 2019)

Looking into Facebook advertising Decathlon is showcasing their products. The weak point here is that
the call to action redirects to the homepage instead of the product page. Just like their websites,
Decathlon has a unique Facebook page for each of their locations which reflects their offline marketing
strategy. With 166k followers Decathlon is using Facebook as a way to engage with their community.
Although they don’t post very often (around 1/week), they mix the type of content by including images
as well as native videos.
Another weak point: They take several hours to respond.

Their second social media channel is Youtube, although we were quite surprised to see only 4k
subscribers, which is very small for such a brand. It appears that they are not taking any active measures
to increase it. Their content is well organized with strategic tags that include events (Christmas) and sports
categories. This is good both for SEO and for users who can then choose the most relevant content to
them.

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 Instagram is clearly not Decathlon’s strongest social media channel. The problem here is a lack of
engagement from their followers! With an average of ~100 likes and 2 comments per post, their average
engagement rate only reaches less than 1%. Here again, they haven’t put any effort into leveraging the
power of this channel. The Instagram channel isn’t promoted on their website like Facebook or Twitter
and most of their posts are quite generic. Instagram offers real and significant opportunity for driving
sales which isn’t.

7. Suggestions
Decathlon’s website has no newsletter section (or at least not an obvious one), no facebook pixel set-up
and they in fact rely mainly on one social media channel (Facebook).
We suggest here that they create high buyer intent articles and add products to their blog post.

Following platform centric suggestions:

Search Engine Advertising: They should consider using long tail keywords for your PPC strategy.

Facebook: Link the Call to Action to a product page. Try to test more placements, creatives or maybe
video-ads. Have faster response times.

YouTube: Decathlon could actually make further use of their most viewed videos by turning them into
articles for their blog.

Instagram: Go for user-generated content! When looking at their tagged gallery, we can see that people
take high-quality pictures while doing sports. Those are real people ready to promote your products for
free because they’re proud of what they’ve done! If Decathlon recognized the potential of such an
opportunity, they could increase their brand awareness, user engagement, and sales at the same time.

8. Conclusion
There is a clear reason for Decathlon’s growth, it all comes back to one thing: having a great product!
Adopting a local focus, developing their own brands and creating innovative products based on customer
feedback.
These are the key elements that have led to the success of Decathlon.
But, although they have mastered the offline strategy, there remains a lot of opportunities to substantially
increase revenue through their e-commerce business online.

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References
Buzzsumo, 2019. Decathlon. [Online]
Available at: https://app.buzzsumo.com/content/web?q=Decathlon
[Accessed 29 9 2019].

Capitalmind, 2019. Capitalmind. [Online]

Available at: https://capitalmind.com/sporting-goods-retail-sector-and-ma-report/

Decathlon, 2016. Chapter 1: From foundations to creation. In: Decathlon a 40-Year saga. s.l.:Decathlon, pp. 1-16.

Decathlon, 2017. Vitality and Responsibility. 2017 Sustainable Development Report, s.l.: Decathlon.

Decathlon, 2018. Vitality and Responsibility. Decathlon of extra-financial performance 2018, s.l.: Decathlon.

Decathlon, 2019. Decathlon. Sustainable Approaches Powering Regional Growth, s.l.: Decathlon in association with
TNG.

Decathlon, Y. c., 2016. Decthlon's Youtube channel. [Online]

Available at: https://www.youtube.com/watch?v=6OafxpkaXN4
[Accessed 24 10 2016].

DHL, 2019. PARTNERS FOR GROWTH: DHL GLOBAL FORWARDING SUPPORTS DECATHLON’S INTERNATIONAL SUPPLY
CHAIN. [Online]
Available at: https://www.logistics.dhl/global-en/home/press/press-archive/2019/partners-for-growth-dhl-global-
forwarding-supports-decathlons-international-supply-chain.html
[Accessed 26 8 2019].

Eurostat, 2018. Sport statistics, Luxembourg: Publications Office of the European Union.

Kings, M., 2019. We Reviewed Decathlon’s €140 Million Growth Marketing Strategy [Case Study]. [Online]
Available at: http://share.zest.is/zst.5ce7424dec57c
[Accessed 22 8 2019].

M.Grant, R., 2016. Contemporary strategy analysis. Ninth ed. s.l.:Wiley.

Porter, M. E., 1988. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.

SimilarWeb, 2019. Decathlon.co.uk. [Online]

Available at: https://www.similarweb.com/website/decathlon.co.uk
[Accessed 26 8 2019].

Standard, B., 2018. Decathlon introduces 'Phygital' Experiential Store at Bangalore's Eva Mall. [Online]
Available at: Decathlon introduces 'Phygital' Experiential Store at Bangalore's Eva Mall
[Accessed 8 6 2018].

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