The Business Of Sport

Low prices the key to long-term success: Decathlon Singapore CEO Bastien Grandgeorge

Bastien Grandgeorge, CEO of Decathlon Singapore, standing in his 21,500 sq ft City Square Mall outlet.
Bastien Grandgeorge, CEO of Decathlon Singapore, standing in his 21,500 sq ft City Square Mall outlet.PHOTO: ALICIA CHAN FOR THE STRAITS TIMES

Decathlon CEO aims to reinvent sports retail by making products affordable and accessible for all

One question Decathlon Singapore chief executive officer Bastien Grandgeorge gets asked a lot is: "When does your opening promotion end?"

After all, it is common to find low-priced items at the French sporting goods retailer's two mega stores. For example, customers can buy a running singlet for $4.90, or a basketball for $5.90.

For the record, there is no opening sale. The prices, as Grandgeorge proudly declared, are here to stay.

And what if customers find something of the same quality cheaper somewhere else?

"We decrease our price," said the gregarious Frenchman, 37.

"(Items) will be more and more affordable... That's the commitment I can make in front of Singaporeans - to be the most affordable."

A VOW TO BUYERS

(Items) will be more and more affordable... That's the commitment I can make in front of Singaporeans - to be the most affordable.

BASTIEN GRANDGEORGE, Decathlon CEO, on his company's competitive prices.

His confidence arises from the company's integrated business model. Decathlon designs and manufactures almost all its products, thereby allowing it to keep its costs and selling prices low.

Its stores carry products of its 22 in-house brands. Each brand covers a range of sports, such as Kipsta (team sports) and Tribord (water sports).

At every stage of the supply chain, Grandgeorge added, the company adopts a low-cost mentality so that savings are passed on to the customer.

This is why, despite having 1,056 stores worldwide and boasting a turnover of €9.1 billion (S$14 billion) last year, it does not engage sports stars to endorse its products, nor does it advertise at major competitions like the Fifa World Cup.

Low prices are how it intends to stand out from competitors like Nike, adidas, and Under Armour, all of whom are aiming for a bigger slice of the local retail industry, estimated to be worth $5.5 billion.

While its products are cheap, Grandgeorge said they go through stringent quality control. Television screens can be found on shelves at the store illustrating the testing process.

To demonstrate this point, he took a backpack off one shelf and tugged furiously at the straps, as two customers looked on curiously.

The $3.90 bag is one of thousands of items on display at the City Square mall. This colossal inventory - they aim to cover at least 50 sports in one store - is why Decathlon usually opt for big stores.

Its flagship store at Viva Business Park in Chai Chee spans 35,000 sq ft, its second outlet occupies 21,500 sq ft at City Square Mall. The Chai Chee outlet alone is stocked with more than 95,000 items.

First launched here as an online store in 2013, Decathlon aims to have around 20 stores in the next decade. Its long-term outlook can be seen from its long leases - the Chai Chee outlet's lease is for 15 years, while the City Square Mall's is 18 years.

The company has also started engaging the local sports fraternity. Last month, it partnered national fitness movement ActiveSG at the launch of its Basketball Academy. It is also the kit sponsor of S-League club Tampines Rovers.

Yet, Dr Seshan Ramaswami, associate professor of marketing education at Singapore Management University, said Decathlon's strategy to build its image as a value-for-money sports brand may need some time to gain traction in this region .

He said: "The low price point will help it penetrate quickly into some segments of the market. But for the serious sports enthusiast, it will not be the price alone that will be the drawing factor.

"These consumers want "performance" shoes and equipment and they may have to be convinced that Decathlon can match the quality of its higher-priced competitors."

He added that the Singapore sportswear market is likely close to saturation, but Decathlon can still make inroads in specific segments which are still growing.

These include activities like yoga, running and water sports. Children's sporting goods is also a key area, due to the "regular need to buy larger sizes".

Judging by Decathlon's wide selection of offerings for children, that market has indeed been earmarked by the company as one with great potential.

As Grandgeorge said: "Maybe today, a parent can start practising a new sport with their kids using our affordable equipment.

"Then by the time the kids are older, we would've created a Decathlon generation."

Grandgeorge, who joined the company in 2002 as a trainee, said: "Our target is to create long relationships with the users, not to make short-term profit.

"We want to reinvent sports (retail) in Singapore. We work every day to make sports accessible for all."

• The Business of Sport is a monthly series looking at the movers and shakers of Singapore's emerging sports business industry.

A version of this article appeared in the print edition of The Straits Times on June 10, 2016, with the headline 'Low prices the key to long-term success'. Print Edition | Subscribe