Nikhil Deshpande is a huge football fan and even plays seven-a-side matches every week. But that didn’t prepare him for what a sportswear store did to sweep him off his feet a few years ago.
Looking to buy football boots in 2014, the chartered accountant strolled into a showroom in Thane, Maharashtra, and picked a pair falling within his budget. But then he was faced with a situation that is so common in India.
“They didn’t have my size…The salesperson recommended an advanced variant, but it was out of my budget,” said Deshpande, now 31 years old. Usually, in such circumstances, the salesperson checks with other branches or suggests visiting the store’s website. The customer then walks out with that “so near, yet so far” feeling.
But then, this was a Decathlon showroom.
Instead of letting him walk out disappointed, the executive did something unheard of in Indian retail. “They offered me the more expensive pair at the same price of the one I had picked,” Deshpande told Quartz. “The difference must have been at least Rs500. No strings attached.”
Needless to say, Deshpande has remained a Decathlon fan ever since, even after moving abroad to pursue an MBA.
This extreme version of customer orientation is just one of the many reasons why Decathlon Sports India is, today, reportedly India’s second-largest single-brand retailer, behind Chinese electronics major Xiaomi. In fact, it made more revenue in financial year 2018 than Adidas, Nike, and Puma, according to the Economic Times newspaper.
The figures cited in the report, however, need to be viewed with caution, according to Rajiv Mehta, founder and director of D:FY, an Indian sportswear brand. The former managing director of Puma (south Asia) said a company that operates a franchise model cannot be compared to one that does its own retail.
“If Nike is selling a pair of shoes for Rs 4,000, they will book revenue of only Rs2,000 because that’s the price they sell it to their franchises,” he said. “It’s typically a 35% margin plus 15% to 18% GST. Decathlon, who do their own retail, will sell for Rs4,000 and book revenue of Rs4,000.”
While Mehta may have a point, the fact remains that Decathlon beat industry giants in financial year 2018. For a company that has been around in India only for 10 years—it was allowed to sell directly to consumers only in 2013—this is remarkable. At the heart of the French company’s success is a unique business model, at least in Indian sports retail.
Volume and range
Decathlon stores are unlike any other sportswear and equipment shops in India. For one, they are massive, measuring anywhere between 5,382 square feet to 129,167 square feet. That’s anywhere between the area of two tennis courts and two football grounds.
“I take my family to Decathlon twice every month just to have fun,” said Karthik Srinivasan, a communications professional from Bengaluru. “It’s quite a unique experience—kids have complete freedom to just run around and play with stuff, and their staff is non-intrusive. We don’t go there with the intention of buying anything, but we always end up buying something.”
With over 5,000 products from 80 different sports to choose from, it’s hard to imagine anyone walking out of a Decathlon store without buying anything. The company has 24 of its own in-house brands such as B’Twin (cycling), FLX (cricket), Kalenji (running), and Quechua (hiking and camping).
“They’ve got something for everyone,” said Abhishek Parameswaran, a sales and marketing professional from Mumbai and an avid trekker. “Whether you’re an amateur going for a weekend trek, or a professional climbing a 6,000-metre peak, they’ve got you covered.”
In price-conscious India, what sets Decathlon apart is their positioning as a brand that caters to the needs of the beginner- and intermediate-level sports enthusiasts.
While a professional athlete might not consider Decathlon, she is not really in the company’s target audience. “In India, it is our aim to do our best to help Indians play more by paying less for their sports equipment,” the company website says.
“If you are an extremely conscious runner and you wouldn’t mind spending Rs10,000 on a pair of running shoes, that’s the audience of Puma, Adidas, and Nike,” said Srinivasan. “For everybody else—and that’s a very huge market—Decathlon works perfectly.”
Mehta of D:FY, however, does not think premium brands have much to worry about. “Puma, Adidas, and Nike are Decathlon’s competitors, but in a way they aren’t,” he said. “There is a difference between a BMW and a Maruti, right? Both are good cars, but they serve different purposes.”
Qualified and fit personnel
Decathlon may not be the BMW in Mehta’s analogy, but they make up for it with their quality of customer service. The company knows it is pointless trying to sell 5,000 different products if your salesperson can’t help customers figure out the best fit.
Decathlon hires people who have a balance of education and a background in sports, said Mithil Jaysen, a sports management professional previously with the company as a customer service executive. “If a customer wants to know which grip to buy for their tennis racquet, you need to be able to give the right answer.”
To work at Decathlon, you also need to be fit. “It’s quite physically demanding, whether you are working at stores, or the warehouse, or the head office,” said Rahul Nanda, a long-distance runner who has worked in inventory and sales management at Decathlon.
The company organises a recruitment day where candidates undergo physical tests such as the yo-yo test and play team sports like football, Nanda revealed. They also have a policy that all their employees should be equipped to be at the warehouse, at the point of sale, and on the floor. “That’s how every employee at a Decathlon store is very clear of the product knowledge, right down to the cashiers,” he said.
And because they have that range of products and skilled staff who talk from experience, they get more and more people to enjoy the experience of being at a Decathlon store, according to Parameswaran.
Nanda and Jaysen also mentioned another interesting thing—Decathlon has a decentralised structure, which means each store has its own autonomy.
“Every store manager had the liberty to set prices,” said Nanda. “There were annual, monthly, and departmental targets that had to be met. But if somebody thought a particular product was doing pretty well in their store, they could set the price accordingly and call in additional inventory. The store manager was the business head, in some sense.”
Jaysen remembers the time when a Decathlon store in Noida offered a lifetime warranty on their products. “Their reasoning was—even if somebody comes and exchanges a product on a monthly or half-yearly basis, you still know they are reusing your product at the end of the day.”
The most surprising bit is the fact that they have managed to reach where they are with minimal advertising or marketing, at least compared to Adidas, Nike, and Puma. Their strategy is old-school, relying on word-of-mouth publicity over conventional forms of advertising.
“It has obviously worked really well for them,” said Srinivasan. “They are letting the quality of their products and their in-store experience speak for itself.” Jaysen, however, thinks Decathlon can make themselves more prominent in the market by associating with athletes or teams. “Decathlon’s dominance would probably be larger if they did sponsorships, but I think they have a different strategy,” he said.
While Decathlon officially chose not to comment for this report, the answer was in the FAQ section of their website: “Our strategy is simple—we believe every rupee we save on marketing, advertising or sponsorship helps us reduce the price of our products—which in turn helps us make sport accessible to the many.”