Budget Sports Wear Chain Decathalon to Enter Australia Hopefully Driving down Prices
The French juggernaut Decathalon, considered to be the ALDI of the sportswear world is about to give Rebel and Amart Sports a run for their money. Australia has a $1.3 billion sporting equipment market and Decathalon has set its sights on it.
If you weren’t already aware, the company launched its Australian website last month, but now it’s set to open two large-format physical stores. The locations are most likely going to be in the outer suburbs of Sydney and Melbourne. The company has been saving millions of people money by selling discounted private label items that make up 60% of the company’s sales. So could this be a breath of fresh air for the monopoly style, low competition industry currently reigned by Amart and Rebel Sport?
Decathlon has more than 1,000 stores in over 30 countries with a workforce that is 70,000 strong. Last year in 2015 the company turned over $14 billion (9.1 billion euros). The majority of the company’s international stores are based in China, followed closely by Spain and Italy. If you haven’t heard of them before then I bet you are asking yourself how they became so popular and what's their secret.
Very similar to ALDI, Decathalon focuses on selling private label brands plus it has 20 ‘passion brands’ that are designed and tested in-house by the company’s own team of researchers. A price survey between Amart and Decathalon found that Amart was cheaper generally in sporting equipment. However, Decathalon had much lower prices for private label apparel and general sportswear.
Decathalon also loves its discounts, with some of the private labels (i.e. their own brands) sitting between 50 – 70% less expensive compared to other department stores such as Kmart and Big W. Decathalon’s slow entrance with only two stores will unlikely cause huge problems early on for competitor. However, over time as the race heats up, we the customers are more likely to see great discounted deals as pricing competition heats up. For those of you not in Sydney or Melbourne, you should have great online bargains to enjoy too.
Rebel Sport currently claims a $254 million portion or 19% of the Australian sportswear market. A massive 68% or $583 million of the market is made up of numerous online stores and brick and mortar businesses, e.g. ALDI, Anaconda, Target, eBay and Deals Direct.
Decathalon aims to take control of a large proportion of this market and Super Retail Group (owner of Amart and Rebel sports) is in position to lose out the most once the French company gets a foot hold. Australians spend considerably more money on sporting apparel compared to sporting equipment, with roughly $2.5 billion being spent on sports shoes and $1.5 billion on sportswear, so the product offerings that Decathalon brings to the table are certainly a reason for concern.
The budget sportswear company and its entrance into the Australian market has sparked some excitement. Cheaper prices will hopefully become more readily available to customers and Craig Woolford, Citi retail analyst warned Super Retail that it stands to lose up to 4% of its revenue and 7% of its before-tax earning within the next 10 years.
No exact date has been pinpointed for the launch of Decathlon's physical stores yet. With all the information flowing around the industry in Australia currently, they are certainly poised to cause some disruption between Rebel Sports and Amart who have previously enjoyed very little competition from each other.
A little more about Decathalon
Decathalon is the worlds largest sporting goods retailer with 35% of its revenue generated from 300 stores in France. Decathalon is also the number one sports retailer in China where it has 158 stores. Spain is home to 133 retail stores and Italy has 103.
The company has built its brand around excellent customer service that it takes very seriously. Their customer service staff are called ‘customer happiness officers’ and all employees follow the company motto of “make the pleasure and benefits of sport accessible to all.”
Decathalon employs 550 engineers and 180 designers for its product development as well as creating 2,800 products per year and filing hundreds of patents across the world.