Decathlon: Affordable and Size-Inclusive
The French sportswear retail brand Decathlon first entered the Chinese market in 2003. The brand enjoyed its glorious days for close to two decades. With the growing emphasis on “Freedom of Dress“, female consumers began favoring brands that offer a wider range of sizes and prioritize flexibility and comfort. Decathlon offered a solution as an alternative to Brandy Melville where everything runs way too small and to Lululemon for its higher prices.
Decathlon China Increased Price After Marketing Strategy Shifts
The honeymoon Decathlon enjoyed with Chinese consumers didn’t last long. When they hired Flora (Xiaoyan) Zhang, former Brand Manager at Lululemon, as their Chief Marketing Officer for the Greater China Region, the public became concerned that Decathlon might copy and paste Lululemon’s marketing strategy, targeting affluent middle-class professional women with annual salaries exceeding $100,000.
This hiring decision suggested that Decathlon aimed to raise its prices to tap into the high-end sports market. Unfortunately, these concerns proved to be justified after Flora joined Decathlon China: A short-sleeved T-shirt doubled, selling for 39.9 RMB, a backpack increased by 40 RMB, and a pair of hiking shoes became 100 RMB more expensive.
Why Decathlon Took The “Pricey” Strategy
This is strongly related to Decathlon’s weak sales performance. In 2023, Decathlon’s revenue was 15.6B Euros (about 120B RMB), an increase of only 1.15% YoY; its net profit was 931B Euros, a slight increase of 0.9% YoY. In terms of profitability, it lags behind Nike and Adidas, with a net profit margin in single digits.
Shift Focus to Up-and Coming Sports Sectors
In March 2024, Decathlon announced the launch of its “North Star” Strategy. According to the company’s executives, Decathlon’s 80 brands were too dispersed, with significant product duplication. In the future, Decathlon will categorize products from different brands into nine major sports categories, including outdoor sports, water sports, and fitness.
Does Affordable Pricing Strategy Work For Brands?
Decathlon’s advantage in affordable pricing has been eroded by the rapid iteration and quick response of China’s domestic online e-commerce platforms and the rise of local brands. Consumers have diverse brands with better quality and more reasonable prices. The challenge Decathlon faced in China was their lack of balance between their pricey products and the professionalism presented by the brand – that’s why the customers walked away.
The Rise and Highlights of Decathlon
Besides the recent challenges, Decathlon did have its glory in China as it introduced many up and coming sports to Chinese consumers. In 2020, home fitness became popular. Decathlon’s hand grip ring sales increased by 1200% during the Chinese New Year.
In 2021, camping became a trend nationwide. Decathlon specifically targeted the pain points of young Chinese consumers, launching roof tents that are easy to install and compatible with various car models. That year, their camping product sales increased by more than 100%.
The Gap Between Decathlon’s Strategy and The Reality
The most pressing issue facing Decathlon is how to raise prices quietly, target the high-end market, and at the same time, maintain the loyalty of its existing fan base.
However, looking towards the future, Decathlon must delve deeper into professionalism to continue profiting from sports. It needs to enhance its expertise in specific sports fields.
The Future of Decathlon in China
Currently, the average annual expenditure on sports goods per capita in Chinese cities is approximately 400 RMB, over 10 times less than the 4400 RMB spent by Americans annually. Decathlon’s key challenge is to consider how to simultaneously enter the high-end brand market while maintaining its core business concept of accessible sports.
Let us know what you think about the affordable pricing strategy in outdoor and sportswear brands and if you would consider buying such brands.
