Abstract
This report examines Decathlon’s operations in India with a specific focus on its market growth, demand and supply factors, pricing strategies, and competition within the sports goods market in the country. The report uses a combination of primary and secondary data sources. A questionnaire was used to obtain primary data, while secondary data was gathered from a wide range of reputable online sources such as company websites, news articles, and industry reports. The data obtained is used to analyze the company’s success in the country in the past years. Findings show that the company has experienced increased demand and supply over the years due to strategies such as competitive pricing, efficient utilization of technology, diversity, localized products, and marketing. The market analysis also reveals that the company has maintained a competitive edge, staying ahead of consumer preferences, technology, and cost management. The report also analyses the company’s opportunities and possible threats within the industry.
Analysis of Decathlon India
Decathlon is a renowned global sports retailer popular for its diversity of product offerings in different sports and activities. It is among the top-tier sports retailers competing with mega companies such as Nike and Adidas. The company was founded in France in 1976 and has expanded its operations across over 70 countries and over 1700 stores globally (Klasa & Alim, 2023). Its purpose and mission is to be helpful to people, aiming to make sporting goods available to everyone at affordable prices and with a specific focus on customer satisfaction. The company values include vitality, the willingness to take action and be bold and responsible, taking charge in value creation and stakeholder benefits, generosity, helping out from the heart, and authenticity and daring to be unique. The company also emphasizes explicitly facilitating creativity and innovation with its products and promoting environmental and community sustainability (Decathlon, 2023a). Its vision to become a world leader in the sports retail industry underscores these values.
The company set up operations in India in May 2009 at Sarjapur in Bangalore. Since then, the company has opened more than 100 stores nationwide. The company prides itself on over 40 years in the sports industry, providing its customers with quality and affordable sporting goods and equipment across various sports. The rapid growth in the Indian market has been heavily linked to the diverse sporting needs in India, which mark its diverse offerings in sports apparel, equipment, and accessories. Its operations also align with the country’s consumer preferences, shifting towards health and fitness.
Methodology
Data Collection
The data used in this report was collected from both primary and secondary sources. The primary source was a short survey where the questionnaire was distributed among employees at a local Decathlon store. The survey followed a structured approach where the questionnaires were administered during off-duty hours. The questionnaire was designed to provide raw data regarding the company relating to demand and supply, customer preferences, price determination, market conditions, and possible growth areas. The questionnaire followed a strictly closed-question format to allow the respondents to respond easily. The structure also allowed easy measurements and comparison between responses. The research also employed secondary data sources to gain insight into the company. The secondary sources used were high quality and reputable, such as the company’s website, industry reports, market analyses, and news articles from trusted news outlets. Integrating both primary and secondary sources allowed the research to be comprehensive and accurate in its analysis.
Limitations
While this study set out to analyze Decathlon’s operations in India in depth, there were several significant limitations. Firstly, the questionnaire data collection had limited responses due to company policies. Secondly, secondary data was gathered from publicly available company websites, news articles, and online reports. These sources may not accurately represent the actual situation within the company premises. Lastly, the report used historical data in its analysis, which may not be used to account for real-time developments in the sports goods market, which is characterized by volatility.
Findings
Demand
The data collected from the survey indicate that the company has experienced an increased demand for its products in India. Respondents ranging from a work experience of 3 months to more than three years with the company indicated that they had experienced an increase in demand during the period. The findings from the primary data are consistent with other secondary sources used in data collection. According to Malviya (2023) of the Indian Economic Times, Decathlon has experienced a 37% sales increase in the financial year 2023. Apparel Resources News-Desk (2023) also reports that the company sales for 2023 were Rs. 3,955 crore, up from Rs. 2,936 crore the previous financial year. According to Nair (2023), the company was valued at $414 billion as of 2022 in India, with an average growth rate of 10%. Figure 1. Below is the revenue growth from 2017 to 2023 and the projected growth up to 2027.
Figure 1.
Decathlon India Revenue Growth and Projections
Note: From “Decathlon—a Sports Brand’s Playbook for India” by Nair, S. (2023a) Available at: https://bettermarketing.pub/decathlon-a-sports-brands-playbook-for-india-853c969d9571 (Accessed: 14 November 2023).
Factors for the increase in demand
Different factors are responsible for the success the company has experienced over the years in India. One of the factors that has induced the increase in demand for Decathlon products is its competitive and stable prices. According to data collected from the survey, the company has maintained relatively low and stable prices for a long time. Customers are ensured that they will not be overpriced anytime, regardless of the economic conditions. Price-conscious customers also prefer the brand over other international brands with relatively higher prices. This one factor has led to increased the quantity of products demanded from the company, represented by a movement downwards along the demand curve.
The increase in demand can also be represented by an outward shift in the demand curve due to the following factors. Firstly, the company has increased its online presence over the past years, focusing on creating convenience in purchasing its products. They have developed a scan and pay app for billing, allowing customers to access and purchase their products easily. The company has also taken advantage of technological advancements to create convenient self-checkout counters (Decathlon, 2023b). This is a result of a shift in customer preferences to more e-commerce apps, especially after the COVID-19 pandemic. Customers are now looking for the most convenient way to purchase products. In addition to the shift in preference for online purchases, Indians are also becoming more conscious about their health choices, such as exercise and sports. By taking advantage of this shift in consumer preference, the company has been able to affect its sales positively.
Secondly, the company has improved and increased its promotional and marketing strategies over the years. Their strong online presence has created an avenue to reach out to new customers across the country, further increasing the demand for their products. They also have various promotional initiatives, such as in-house game competitions that allow their customers to take part in sports competitions within their premises or are sponsored by the company (Nair, 2023). Such initiatives build a strong reputation and connection with the customers and increase customer engagement and loyalty.
Other factors responsible for the growth in demand include strategies such as localization. The company has opened more than 100 stores across the country, with each store serving a specific group of customers (Sood & Majumdar, 2023). The stores are localized such that they serve the particular needs of the people in the regions they operate. Another factor is the diverse range of products offered in the stores that target a wide range of customers in different sports. Additionally, the company stores have available experts ready to advise the customers regarding various products, which adds to the customer engagement strategy. These factors have collectively contributed to a positive shift in the demand curve and accelerated the company’s growth in the country.
Supply
There was limited data from the questionnaire that could point to the company’s supply performance. However, data from secondary sources show that the company has been experiencing rapid growth in both demand and supply in India over the years. The company has been operating in India since May 2009, creating more than 100 stores nationwide to meet the vast demand. According to Klasa and Alim (2023), the company has also increased its local manufacturing in India to 60% of total products sold in the country. It is also looking to expand this percentage to 85% by 2026. Figure 2. below shows the company’s sales and cost performance;
Figure 2.
Decathlon’s Sales and Cost Performance in India
NOTE: From “The Decathlon effect: How a French retailer is moving India beyond Cricket” by Sood & Majumdar (2023). https://economictimes.indiatimes.com/prime/consumer/the-decathlon-effect-how-a-french-retailer-is-moving-india-beyond-cricket-/immersivestories/101670887.cms?from=mdr
Factors for the Increase in Supply
One of the factors for the supply increase is the company’s supply chain management. The company’s well-managed supply chain allows it to consistently meet demand. It applies a combination of external sourcing of stock and in-house manufacturing and maintains tight control over production and distribution processes. This tight control ensures they meet customer demand in the country while adhering to laws and regulations, ethics, and sustainability. This control is made possible by its Social Charter, developed in 2003, which binds suppliers to specific requirements. Suppliers must produce at specific and declared sites, adhere to particular health and human resource standards, and adhere to the company’s code of conduct regarding human rights requirements (Decathlon, 2017).
Another factor for the increased supply in the country is the company’s local manufacturing scheme. According to Klasa and Alim (2023), the company is planning a $100 million investment in the expansion of manufacturing and logistics in India by 2028. The company reduces production and transportation costs by producing more in India since the market is closer to the factories. The supply growth can also be attributed to the country’s stable and enabling political environment. Additionally, the government is set to allow the company to sell products from local brands, further facilitating supply growth.
Price Determination
According to the primary and secondary sources used in this report, Decathlon India maintains relatively stable product prices. It is renowned for its competitive prices without an effect on quality. Price determination is a complex method that requires analysis of various factors such as production costs, market demand, competition, economic factors, and value perception. These factors are crucial in the company’s continuously maintaining competitive prices. One of the company’s strategies to determine prices is the inventory-based strategy. This strategy involves setting prices based on the stocks available. In this case, products with more stock will have relatively lower prices than the rare ones (Symson, n.d). This strategy ensures that prices remain affordable and allows the company to match market demand.
The company also determines prices based on the costs of production. High production costs would mean high prices, so the company has developed a strategy to significantly lower costs. This strategy involves in-house sourcing, manufacturing, and logistics, which allows them to maintain efficient production. This approach also allows the company to pool resources for research and development into their ‘passion brands, thus developing economies of scale and reducing costs. They also employ an integrated design approach to manufacturing, which involves sourcing the best quality raw materials and manufacturing products close to the areas where they are most in demand (Decathlon, 2023c). This approach is made possible by their frequent customer data and feedback collection and analysis, which enables them to understand market needs. These strategies facilitate efficient production, which lowers costs and, thus, reduces prices.
Market Analysis
Findings from the primary source indicate that the company is a strong competitor in the sports retail market in India. Its competitiveness is due to different strategies such as pricing, product, placement, and promotion. Decathlon’s products are popular for their quality and affordable prices. Their stores are well-placed in areas with sustainable demand and employ effective product promotion strategies. These strategies have enabled the company to compete effectively with mega-retailers such as Puma, Nike, Adidas, and local retailers. In 2018, the company was the market leader in revenue, as shown in Figure 3. Below;
Figure 3.
Leading Sports Brands in India
Note: “Leaving PUMA behind, Decathlon becomes number 1 sports gear retailing brand in India” by Sharma (2018). https://www.insidesport.in/leaving-puma-behind-decathlon-becomes-number-1-sports-gear-retailing-brand-in-india/
PESTEL Analysis
Political. Government policy in India is one of the most significant external factors that impact the company’s operations. The Indian government has created a conducive environment that allows sports goods retailers to compete and flourish, such as the relaxation of the FDI policies in 2013(Nair, 2023). The company has taken advantage of such policies to increase its operations nationwide. Political factors also involve stability, infrastructural development, taxes, and subsidies. All these factors encompass external political forces that may affect the sports retail industry and Decathlon in India.
Economic. One of the significant economic factors currently affecting the Global market is inflation. Inflation impacts consumer spending on non-necessities such as sports goods, thus affecting Decathlon’s performance negatively. On the other hand, an economy characterized by blooming economic growth and stable prices will affect the company’s performance positively. The country has been experiencing relatively steady economic growth, facilitating the company’s success. Labor is also a critical economic factor. India boasts one of the highest populations in the world, providing a vast pool of labor for Decathlon.
Social. Consumer preference is one of the significant social external factors affecting operations in India. The company has been able to match some changes in preferences in the past, such as preferences for e-commerce and convenient checkouts in stores. Additionally, the growing preference for more active and healthy lifestyles by Indians has facilitated the company’s growth over the years. Staying ahead of changes in customer preferences enables the company to attract more customers and increase its growth. Other social factors include social media marketing, demographics, and cultural considerations.
Technological. The Sports goods industry is reliant on technology during the different processes. For example, Decathlon depends on technology in the manufacturing and sale processes. Recently, the company took advantage of technological advancements in product checkout and introduced a system in their stores that allows customers to scan and pay without queuing (Decathlon, 2023b). Other technological advancements in specific areas, such as e-commerce and online payments, could disrupt the market.
Environmental. Environmental factors include pollution targets, ethical considerations, sustainability, and environmental regulations. The company has a strong emphasis on environmental sustainability. Some schemes, such as their 365-day return policy, allow customers to return products they no longer use for recycling. The company aims to reduce 20% of absolute carbon dioxide emissions by 2026. Additionally, the company is undertaking a plastic waste recycling program to manufacture some of its products (Decathlon, 2023a).
Legal. Legal factors involve adherence to business operations laws and regulations within a country. It includes things like paying taxes, licenses, and patents, among other requirements. The company must adhere to the legal requirements to avoid legal action that could damage its brand and performance.
SWOT Analysis
Strengths. One of the company’s major strengths is its cost leadership in the market, which enables it to price its products relatively lower than competitors. Strategies such as in-house manufacturing and vertical integration of processes facilitate cost reduction. Another major strength is the company’s sustained and popular brand associated with quality products. The company is also one of the biggest sports retailers in the world, giving it a competitive advantage over local companies due to its economies of scale. Another strength is the company’s focus on innovativeness coupled with its big size in revenue generation, enabling it to provide customers with innovative products (Sood & Majumdar, 2023). The company also has a wide product portfolio and over 70 sports categories. This allows the company to reach a wide customer base and maximize its returns. The company also has access to sophisticated technological advancements that provide customers with a seamless purchasing experience, such as the swap-and-go system that eliminates the need for queues in their stores. Additionally, the company has been able to increase customer engagement through its community engagement program. Through the program, customers indulge in sports activities and competitions sponsored by the company (Nair, 2023).
Weaknesses. Their massive size is one of their major strength but also one of their major weaknesses. Internal alignment becomes an issue when the company operates over 100 stores in India and hundreds of others worldwide. Their complex supply chain management, which involves vertical integration, is hard to maintain, especially as the company grows countrywide and worldwide. Another strength turned weakness is their massive stores. Although their sizes allow customers to try out products before purchasing, finding products within the stores is also tedious. The company’s focus on offering affordable sports goods may discourage customers from seeking high-end products like competitors.
Opportunities. The company has the opportunity to increase its coverage in India to match the increasing demand for sports goods and equipment. The country’s vast population and geography provide a big opportunity to attract more customers in different regions. The company also has the opportunity to increase its product offerings by selling products from local brands (Klasa & Alim,2023). There is also the opportunity for greater and more effective marketing strategies through social media. Companies are increasing their social media presence to reach more people and hopefully attract new customers. Social media presence will enable the company to engage with its customers through feedback generation on possible improvement areas. Additionally, the company can take advantage of the emerging e-commerce preference by refining its e-commerce platform.
Threats. One of the major threats facing the company in India is competition with mega brands such as Puma, Nike and Adidas. The company must constantly innovate new products and ways to reduce costs to continue offering high-quality products at affordable prices. The current rampaging inflation is also a major threat to the company’s performance (Boydens & Pintelon, 2022). High inflation means less preference for non-necessities such as sports goods as people shift their income to necessities such as food. Another major threat is environmental considerations, such as the role of plastic waste in global warming and climate change. The company must derive ways to facilitate sustainability through strategies such as recycling waste and using more efficient ways of production.
Porter’s 5 Forces Analysis
Threat ofNew Entrants. The sports goods retail market is open for the entry of new firms due to the vast market offered by the large Indian population. Other avenues, such as e-commerce and niche specialization, provide a level ground for smaller entrants. However, new entrants may not be able to match the company’s might in terms of its historical brand, cost leadership, and quality. Additionally, they may be unable to access supply, distribution, and logistics networks required to compete effectively with bigger firms. The threat is, therefore, relatively low.
Buyers’ Bargaining Power. The Indian market is saturated with local and international sports goods retailers, giving buyers vast options (Sharma, 2018). This implies a high consumer bargaining power since they can compare prices between stores. However, bigger companies offer higher quality products at relatively higher prices than smaller companies that have lower quality products. Customers have to, therefore, pay higher prices to get quality products, thus, a lower bargaining power. Therefore, the customer’s bargaining power ranges from moderate to high.
Suppliers’ Bargaining Power. Decathlon has established relationships with multiple suppliers both countrywide and worldwide. Therefore, their suppliers have little say on prices since the company can compare prices between different suppliers. Therefore, suppliers’ bargaining power is low.
Threat of Substitutes. The company offers a comprehensive range of high-quality sports products that are hard to substitute. There is a moderate threat of local Indian brands offering substitutes for some specific products (Sharma, 2018). Local firms may also provide better e-commerce platforms or take advantage of emerging technologies that suit customers more. The threat of substitutes is, therefore, relatively moderate.
Competitive Rivalry. There is a moderate to high threat of competitive rivalry in India for Decathlon. The market is saturated with local sports goods firms and dominated by bigger international firms, all fighting for market share. The company has to innovate new ways to remain competitive continuously.
Conclusion
Decathlon’s success in the country has been a result of a combination of different strategies to meet changing consumer demand. The company is built on values that emphasis its customers, focusing on providing top-tier quality at affordable prices. The company is also committed to continuously innovating their product offerings to always match prevailing customer preferences. Such strategies, coupled with a complex and integrated supply chain, have facilitated the robust growth of the country since its entrance into the Indian market in 2009. However, as this report shows, the Indian market is dynamic and characterized by constant changes in economic, social, political, technological, and other external forces that require the company to remain agile and effective. The company must intensify competition by utilizing technological improvements more effectively, fortifying its cost leadership, and timely responding to customer preferences.
References
Apparel Resources News-Desk, & News-Desk, A. R. (2023, October 26). Decathlon India’s sales increase, losses too: Retail News India. Apparel Resources. https://apparelresources.com/business-news/retail/decathlon-indias-sales-increase-losses/
Boydens, A., & Pintelon, M. (2022). Conducting a market research and price analysis to assess consumer preferences and the willingness to pay for a subscription to re-use sports equipment.
Decathlon (2023a). https://sustainability.decathlon.com/about-decathlon
Decathlon(2023b). https://www.decathlon.in/
Decathlon. (2017). Supply Chain Disclosure. https://www.decathlon.com/pages/supply-chain-disclosure
Decathlon. (2023c). How Do We Make Our Prices so Affordable? https://www.decathlon.com/blogs/inside-decathlon/how-do-we-make-our-prices-so-affordable
Klasa, A., & Alim, A. N. (2023, March 31). Decathlon invests in India push. Financial Times. https://www.ft.com/content/5089a8fe-d46d-44c0-8be6-9e4022e1ce67
Malviya, S. (2023). Decathlon FY23 sales shoot up 37% in India. The Economic Times. https://economictimes.indiatimes.com/industry/services/retail/decathlon-fy23-sales-shoot-up-37-in-india/articleshow/104707656.cms
Nair, S. (2023, February 11). Decathlon - A sports brand’s Playbook for India. Medium. https://bettermarketing.pub/decathlon-a-sports-brands-playbook-for-india-853c969d9571
Sharma, H. (2018). Leaving PUMA behind, Decathlon has become India’s number 1 sports gear retailing brand. Inside Sport India. https://www.insidesport.in/leaving-puma-behind-decathlon-becomes-number-1-sports-gear-retailing-brand-in-india/
Sood, A. K., & Majumdar, D. (2023). The Decathlon effect: How a French retailer moves India beyond cricket – The Economic Times. The Economic Times. https://economictimes.indiatimes.com/prime/consumer/the-decathlon-effect-how-a-french-retailer-is-moving-india-beyond-cricket-/immersivestories/101670887.cms?from=mdr
Symson. (n.d.). Stock-Based Pricing Strategy And How Decathlon Uses It. Hyperlearn with Dynamic Pricing – Optimise your Margin. https://www.symson.com/blog/decathlons-stock-based-pricing-strategy#:~:text=Price%20Adjustments:%20When%20a%20product,short%20supply,%20the%20price%20increases.
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