Why Is Decathlon Able To Sell Its Products At A Cheaper Cost Compared To Its Competitors In Singapore?

Any Singaporean who is into fitness will probably find that Decathlon’s sports gear more affordable than most other sporting brands. What is less known is how the company reached this level of industry dominance without clashing with its more well-known counterparts like Adidas or Nike. Its rise as an affordable quality sportswear retailer is tied to business model innovation and its ability to create popular sports merchandise at low cost.

Decathlon’s Journey To Make Sportswear Universally Affordable

Decathlon is a French retailer of sports merchandise. It started in 1976 as a wholesaler before creating its own sportswear brands and acquiring competitors. The company differs from competitors in that its goal is to offer the best sports products to everyone. To achieve this goal, Decathlon offers high quality products at low prices, often 20% lower than the least priced alternative.

With over 1600 stores in nearly 1000 cities across the world, this strategy appears to be working. In Singapore, Decathlon has around 11 stores and it has stealthily claimed more market share against major sports brands like Adidas and Nike.

An Early Foray Into Online Retail, Translated Into First Mover’s Advantage

Decathlon first arrived on Singapore’s shores in 2013 as an online store. It launched its first physical outlet at Viva Business Park in Chai Chee three years later. Part of its success in penetrating the local market was its ability to translate online demand into physical retail prowess, incorporating technology into everyday experiences for shoppers. For example, shoppers can don a virtual reality headset and experience tents through a variety of weather conditions, allowing them to experience their purchase even before they walk out of the store.

Going online also allowed Decathlon to save significantly on rental costs in the early days and to maintain an online presence that is well-differentiated compared to other brick-and-mortar distributors like Royal Sporting House and Sportslink.

Here’s a brief look at some of Decathlon’s most popular low-priced products.

Beginner Trial Kits

Decathlon offers various trial kits for beginners who wouldn’t want to invest much into a sport they aren’t sure they’ll stick to. There are kits for popular sports like running and swimming to more leisurely activities like fishing. These kits aim to be an all-you-need solution to try out a new activity without having to do a lot of prior research and get all that gear together. Just buy and go, convenience at your fingertips.

Fitness Gear

Decathlon’s fitness apparel is breathable, durable, and, most importantly, moisture-wicking (moving moisture away from your skin). Considering that it’s usually priced around $20 or less, it is hardly surprising that this brand is gaining popularity among sports enthusiasts.

Compact Accessories

The retailer’s compact items will fit right in the palm of your hand, and they are well suited for a wide variety of users. From professionals in the CBD who want to drop by the gym before or after working hours to Grab delivery cyclists who want to have a utility belt to help them with the intensity of cycling in the tropics, the retailer has a buffet of low-cost sporting accessories for you to choose from. They include belt bags, micro towels, and ultra-compact mountain trekking caps.

Snorkeling Gear

Decathlon’s snorkeling gear is renowned for its outstanding quality and affordable price. Their snorkeling kits are more affordable than most other alternatives, so they appeal to a vast community of beginners or learners.

Diversified Product Portfolio

One of the most significant reasons for Decathlon’s low prices is its diversified portfolio. The retailer has specific offerings for over 86 sports in its international portfolio, 70 in France (its home country), and 60 in Singapore. This level of diversification allows the retailer to profit even when it sells products at small margins. Unlike competitors like Nike and Adidas, the company doesn’t significantly mark up individual products’ costs.

Integrated Business Model

Decathlon has a fully integrated business model. The company controls its entire supply chain and forms exclusive partnerships when entering new markets. This enables them to further reduce the cost of goods to the final buyer.

Integration gives Decathlon a significant degree of control over its products. Raw materials are usually expensive and hard to find, so they dramatically affect the final cost. But, since the company is fully integrated, there is less risk of uncertainty. This gives them strategic independence and the ability to set competitive prices.

An interesting example of Decathlon’s exclusive partnerships is its recent agreement with the National Basketball Association (NBA). Per the terms of the deal, Decathlon is now the NBA’s official licensee across Asia, Africa, Europe, and Latin America. The partnership covers a broad range of NBA team and league-branded accessories, base layers, and accessories. The deal allows Decathlon to deliver products at an affordable price.

Lean Logistics And Speedy Delivery

Lean logistics comprises the strategies enacted to identify and remove wasteful/unnecessary activities from the supply chain to improve product flow and speed. It involves activities such as limiting excess inventory and improving freight transport efficiency.

With efficiency driving its supply chain, the company is then able to increase the speed of delivery by reducing delays in shipping and distribution. This reductive process helped the company delight their customers by delivering orders under 2 hours. That’s almost as fast as ordering a pizza.

Decathlon achieves these through various policies that include:

– Limited packaging: The company eliminates packaging wherever it isn’t needed. Its shoes, for example, aren’t sold in shoeboxes.

– Cashless payments: Decathlon uses a complex system that combines RFID, QR code technology, and iPhone payments to enable shoppers to check out their purchases anywhere in the store using smartphones, apple watches, gift cards, and the more conventional debit and credit cards.  This policy enables them to reduce their carbon footprint and the amount of time wasted at point-of-sale terminals.

– Strategic warehousing: Decathlon puts its warehouses close to the stores to increase logistical efficiency. Also, the company has adopted automation to enhance productivity. Many of Decathlon’s storage facilities now employ Goods-to-Person robots that enable human workers to process over 140 customer orders every hour. This approach minimises human error and the costs of manual labor.

Strategic Cost-cutting

Decathlon actively seeks out smart costs – areas where they can save so they can cut prices further. Unlike its competitors, the retailer does not hire influencers or run lavish advertising campaigns. Its stores don’t get much in the way of decoration either. These strategies amount to significant cost cuts.

Integrated Design

Designing products for the mass-market considerably lower the company’s operating cost. Decathlon’s design teams have extensive knowledge of each sporting activity’s specifications, along with effective quality control over the manufacturing process.

The company also optimizes materials, components, assemblies, and shapes to develop quality products efficiently and cost-effectively. The teams also frequently search for innovative strategies to simplify design without affecting the final product’s quality.

Decathlon’s design philosophy also includes:

– Efficient Manufacturing

The company forms long-term alliances with the best industrial suppliers, whom it frequently audits to ensure safe working conditions. By carefully choosing its partners, the company can ensure productivity without abandoning its core values, such as improved risk management and improved times to market.

– Research and development

Decathlon is home to several growing passion brands (brands focused entirely on performance and innovation that cover a specific sports industry or segment). Bringing all these unique startups together enables the company to pool research and development resources and innovative capacity. This increases development efficiency, which facilitates price cuts.

Affordable Sports Gear For Every Occasion

Decathlon’s strategy combines innovation, brand design, and customer service to give customers incredible value at an unbeatable price. The brand’s mission is to make the best products available to everyone covering a wide range of sporting activities. You can find out more about Decathlon’s product catalogue here.

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