Confirming articles in Sport-guide.com, SportEco and other French media, Decathlon says it is going on with a process of replacing external brands with its own private brands, indicating that their number could rise in the next few years in order to cover all the sports activities, including the most innovative ones.
Decathlon also confirmed today a report in Sport-guide.com that Matthieu Leclercq decided not to extend his mandate as chairman of Decathlon's board of directors after it expired at the end of June. No reasons were given, but other French media cite a possible difference of views with the company's other shareholders. A successor has yet to be named. The 49-year-old took the place of his brother Olivier six years ago to represent the Leclercq family, which owns about 40 percent of Decathlon's shares. The balance is in the hands of the Mulliez family, owner of big retail chains such as Auchan, Kiabi or Leroy-Merlin.
Regarding its new private label policy, Decathlon said that its buyers will decide which products from external brands will be retained for each sport, rather than for each one of its own private labels, without necessarily covering 100 percent of the offer with private label items. The idea behind this new form of category management is to choose the best possible products for all the sports. Decathlon says it already offers products for more than 90 different sports.
There is speculation that the share of private label will grow at Decathlon stores to about 95 percent globally in the next two to three years. In the last few years, the ratio has risen from about 70 percent to about 80 percent in Europe. It is already closer to 100 percent in many stores in China and other markets outside Europe.
It doesn't look like Decathlon is going as far as offering its products to other retailers in China. The company has booked a space at the Ispo Shanghai show scheduled for July 5-7, but it says that this is only to promote its banner and its newest private brand of kayaks, Itiwit among the general public.
The new purchasing policy applies mainly to the European market, where consumers have been used to seeing some international brands featured in the shelves of Decathlon's stores. A few years ago, Decathlon stopped centralizing its buying functions at the global level and is now centralizing them by customs territories, including the European Union.
The replacement process has been gradual in recent years, in accordance with the strong improvement in the quality of Decathlon's products. The process will simply be accelerated now, according to well-informed sources, without reaching full vertical integration like at the Ikea, H&M or Zara retail chains.
European and international sales managers who represent major brands have confirmed to us that they have been told by Decathlon that their products will be gradually phased out from its stores. These products were generally positioned at the lower end of their assortment, and while they represented a certain portion of their revenues, the brands' managers expect them to find new channels of distribution for them. The customers may be guided to the closest location as they browse for the products over the internet.
A top executive of Adidas described the divorce from Decathlon as a mutual decision, noting that Adidas is determined to cooperate more closely and more deeply with selected retail partners, and Decathlon is not one of them. The going may be tougher for some smaller specialist sports brands, but it may help their image to be available only outside Decathlon stores, where the prices offered by the retailer for its comparable private label products tend to be much lower.
We feel that the new emphasis on private label may lead the world's largest sporting goods retailer to enter new partnerships with retailers that rely for the most part on the sale of established external brands sought by consumers, as it is doing with Kant in Russia (see the news brief on this company in this issue) or with Athleticum in Switzerland (SGI Europe, Vol. 29 N° 3+4 of Jan. 27, 2018). Several specialist retailers who work with external brands have chosen to set up their own stores close to a Decathlon store to offer an alternative to the customers who are attracted by Decathlon's special offerings.
