Double-digit growth for Decathlon, driven by the BRICs

The world's largest integrated sporting goods retailer accelerated its growth in 2014, posting a sales increase of 10.6 percent to €8.2 billion. Much of the growth was generated by the opening of a record number of stores, especially in emerging markets, and the development of e-commerce. Decathlon was also able to book a 6 percent increase on a comparable store basis. In 2013, the group's sales had risen by 6.1 percent overall, with growth of 1.4 percent on a same-store basis.

Above-average growth was achieved in outdoor, running, bicycles and urban mobility, in which its private labels have a strong position.

As shown in the table below, Decathlon opened a total of 106 new stores last year, up from 70 in the previous year, taking the total door count up to 884 units. The strongest expansion took place in China, where the company now has more stores than in Italy, and in India, where the store network doubled. The number of stores in Taiwan increased from one to four.

The table released by Decathlon this year is not directly comparable with the one we published a year ago. It includes this time a handful of small, fashion-oriented Decat' stores, a similar number of Cabesto and Lots of Colors (LOCO) stores, all over which operate mainly in France and Spain. It also includes about 50 small Decathlon Easy stores in various European countries, formerly called Koodza. These and other retail formats were previously counted separately from the classic Decathlon big box stores.

While dropping the name Oxylane for its holding company, Decathlon is pulling out of all other retail formats, many of which were experimental, to concentrate on the Decathlon banner and its proven multi-sport business model. It is no longer financially involved in a joint venture, called Terres et Eaux, or another small French chain of three outdoor and mountain biking shops called Chullanka. It closed down last month its two remaining Ataos shops, which were selling used equipment, and it plans to shut down soon Au Vieux Plongeur, a scuba diving store in France.

Decathlon entered a new market last year by opening a 3,500-square-meter store last summer in Zagreb, the capital of Croatia. It is entering Slovakia with a store in Bratislava and may also move into Indonesia this year or in the next one. From its new Asian hub in Singapore, where it is conducting tests through a small cash-and-carry outlet, it is exploring other markets in the region such as Thailand and Malaysia.

In any case, the biggest expansion will probably take place this year in the four BRIC countries, where Decathlon had a total of 177 stores at the end of 2014. The company continued to open many stores even in Russia, taking advantage of the poor economic situation in the country by offering heavily discounted products.

In France, which represented 39.5 percent of global sales last year, Decathlon raised its sales by 4.33 percent, or 3.52 percent on a comparable store basis, in a market which increased by an estimated 3 percent. The number of transactions went up by 7 percent. These increases were achieved in part by lowering prices by at least 10 percent on a selection of 769 items, a policy which will also be pursued in 2015.

Reportedly, the second-largest player in the French market, Intersport France, performed a little better last year, with sales at its affiliated stores rising by 4 percent on a comparable basis. Reacting to Decathlon's low-price policy the voluntary group cut prices by 20 to 30 percent on some private label items.

In spite of discounts and heavy investments in product development, marketing and store expansion, Decathlon made an unspecified profit similar to that of 2013, company officials said.

Decathlon's website turned out to be the 15th most visited e-commerce site in France. After the introduction of a special new click & collect function at a few test stores, Decathlon plans to offer in-store fulfilment in all its stores in the country. More of them will be equipped with touch screens where consumers can view the whole product catalog and order items that are not available at the stores.

Customers can place orders online in all the 21 countries in which Decathlon operates, but company officials declined to provide a figure on the scope of its internet sales.

With 70 percent of the products sold in its stores developed under its own 20 private labels, Decathlon is frequently compared with Ikea, which is much bigger and has a presence in 27 countries. Decathlon says it employs 50 scientists, 530 engineers and 160 designers to develop 2,800 new products each year. It applied for 28 patents last year.

A moped for young children between the ages of 2 and 4 years, the B1, has been voted by Decathlon's staff as the most innovative product developed for this year. It is scheduled to be introduced at all the chain's stores in June under its private Oxelo label. Hopefully, it will not be sold out as quickly as the Tribord Easybreath snorkeling mask that got a similar prize last year.