Geared for the great outdoors

Resembling a large warehouse, the Decathlon Sports India facility stocks gear for popular sports and fringe activity, like experiencing the outdoors. It could be a one-stop-shop for a family's sporting needs. Except for a catch — it is a cash-and-carry B2B facility and that means you have to be a reseller or one of several categories permitted under Indian law to shop at such places.

CEO Michel Aballea is tight-lipped on sales figures. But if you look around in the market you would concede this — since Decathlon India opened in 2009, its products have become an affordably priced range at several sports gear shops nationwide.

Identified with affordable sports equipment, Decathlon had a 2009 global turnover of €5.4 billion and is reputed to be Europe's biggest sports goods retailer. India is the only place where it has chosen a B2B presence. Aballea misses the retail ambience at the Sarjapur facility (in Bengaluru) but then B2B has worked, he claims, withholding sales figures all the same.

Despite sports being central to any population, Indians have had a tough time accessing good products save those for cricket. When access did open up, it was mainly for popular sports. In segments such as outdoor sports, sizable overseas but nascent here, gear continued to be limited. A handful of dedicated outdoor enthusiasts designed and made gear locally or imported it. They struggled for scale.

A perennial disincentive in Indian retailing was the price points. With nearly 1.2 billion people, the Indian market was attractive, especially given the predominance of youngsters. But the question was — how can you sell at Indian prices? Few of the foreign brands checking out the Indian market fashioned suitable strategy; in areas such as outdoor sports – none did. It was easier to postpone entry and continue with small shipments. The only one who responded was Decathlon and they could do it because they had expertise in selling value-for-money products. Expectedly, when Decathlon products rolled out at affordable prices, some local retailers quipped about the MNC having surplus stocks to play with and that a multi-billion euro company would have budgeted taking a hit to grow business.

Aballea maintained that his current product line in India is “ international range 2011''. The affordability should be credited to Decathlon's scale and philosophy — “play more, pay less.'' The market goes by actual experience. Mangesh Takarkhede, a Mumbai-based rock climber who also works in the outdoors, has used products by Quechua, a Decathlon brand. “It is value for money and at that price point, of decent quality,'' he said.

Family-owned Decathlon started operations in France in 1976. Later, it spawned a holding company called Oxylane, which organically and inorganically pieced together a clutch of brands, each identified with a particular type of sport. Alongside, it invested in technology, branding the specific technology and housing many product brands sporting the technology (they are called passion brands) in locations suited to R&D.

According to Aballea, the passion brands are engineered in their playing environment and the retail end offers a playing environment that encourages people to try out Decathlon products. Despite being B2B, at Sarjapur, Decathlon has sought to showcase its DNA with a modest playground on its premises; it also encourages customers to try things out before buying. Within the store you find customers riding bicycles, inspecting rucksacks and checking out tents. This is why Decathlon, an evolved retailer in Europe, hasn't abandoned retail plans for India. If policy permits, it would revisit the idea. It is also probably why some retailers distributing other brands and stocking Decathlon for variety, shy away from zestfully pushing Decathlon products. Why help potential competition?

According to two retailers, Decathlon increased some of its product prices in the last year or so. Price-conscious, their question is — if Decathlon Sports India expands, wouldn't it have to factor in those costs to its selling price? Aballea said real estate costs would be carefully handled; the same goes for communication costs. He can bank on Decathlon's sourcing scale and potential to localise production for cost control.

A little known fact is that Decathlon has used India as a sourcing base for almost two decades. To manufacture locally, it can look at old friends, new ones and maybe its own units. “We want to source 99 per cent of the products we sell in India, from India. My dream is to do that in 10 years,'' Aballea, who has been with Decathlon for the last 23 years, said. He thinks he can have a “passion brand'' sculpted in India around cricket gear. He would also like the company's products to be available in shops away from cities.

“For now, Decathlon products are definitely value for money,'' Jitesh Haria, Head (Purchase), OutdoorTravelGear.com, said. He felt more competition would help keep prices competitive overall. “It is a fast-growing market,'' he said.

That's where B2B's versatility kicks in. Aballea is open to adding non-Decathlon brands to the B2B pipeline so that customers do not feel limited. Overseas, Decathlon's retail outlets sell a host of non-Decathlon brands. A few of these brands belonging to other business groups have studied the market and tested Indian waters. They could come in with anybody and when they do, depending on the brand perception they desire and the price positioning they want, the Decathlon pipeline would be an option to check out. According to Aballea, going B2B in India (without partners) was less compelled by policy and more authored by speed of implementation and business model.

In a typical Decathlon facility, freely accessed playgrounds are an integral part. While this involves a combination of retail and land development, most potential real estate partners were averse to free access. For Decathlon, its interests are best served when people walk in freely and play. This model continues to be a mission with Aballea. He hopes Decathlon can interest the Government in this approach.

QUICK FACTS

Decathlon has 10 technology brands and 18 passion brands, which it sells through 550 stores in 17 countries. In 2009, 53 per cent of its revenue came from France, the rest from overseas. It takes a segmented approach to retail, with itself as motherretail brand targeting families and around 10 ten sub-brands, each showcasing a particular retail experience through focus on specific sport, price point or clientele.

(The writer is a freelance journalist based in Mumbai.)

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