This SECRET Brand is KILLING Nike and Adidas in India? | Decathlon Business Case Study

Summary

The script explores Decathlon's remarkable success in the Indian sports industry, outperforming giants like Nike and Adidas. It highlights the brand's strategic focus on the unorganized market, targeting hopeful and beginner athletes with budget-friendly, high-quality products. The immersive store design, knowledgeable staff, and innovative product offerings have contributed to Decathlon's triumph, emphasizing the importance of understanding market gaps, customer experience, and product innovation over celebrity endorsements and aggressive marketing.

Takeaways

• 📈 The Indian Sports industry is one of the fastest-growing globally, with a growth rate significantly higher than the global average in recent years.
• 🏃‍♂️ A common challenge for young athletes is the availability of sports equipment, especially for niche sports like badminton, horse riding, archery, and hiking.
• 🛍️ Decathlon, a mega sports store in Bangalore, offers a wide range of sports equipment and has become a prominent player in the Indian market.
• 🌟 Decathlon has outperformed major brands like Nike, Adidas, and Reebok in India without celebrity endorsements or TV ads, achieving higher revenue.
• 💡 The brand's success can be attributed to identifying and filling a gap in the crowded Indian sports market, focusing on providing affordable and accessible sports goods.
• 📊 Decathlon's revenue in India is significantly higher than that of Adidas, Nike, and Reebok combined, demonstrating its strong market presence.
• 🛒 Decathlon's store design encourages walk-by purchases with an immersive shopping experience and a wide range of sports gear available for trial.
• 🤝 The company's employees are sports enthusiasts who focus on educating customers and promoting the right product for their needs, building trust and customer loyalty.
• 💰 Decathlon's pricing strategy includes offering high-quality products at competitive prices, often 30-40% cheaper than competitors, by minimizing marketing costs and localizing production.
• 🛠️ Innovation is a key driver for Decathlon, with a range of products that offer small improvements to breakthrough innovations, enhancing user experience and product performance.
• 📚 The story of Decathlon teaches valuable business lessons, such as the potential of the unorganized market in India, the importance of the physical shopping experience, and the power of product innovation over marketing.

Q & A

What is the current state of the Indian Sports industry compared to the global sports industry?

The Indian Sports industry is one of the fastest-growing in the world, with a growth rate considerably higher than the 5% global growth seen in the sports industry over the last five years.

What is a common challenge faced by young athletes looking to participate in various sports?

A common challenge faced by young athletes is the problem of equipment and gear, such as finding where to buy a good baby badminton racket or gear for sports like horse riding, archery, or hiking.

What is the Decathlon mega store and how does it address the equipment problem for young athletes?

The Decathlon mega store in Bangalore is a large retail outlet that offers a wide range of sports equipment and gear, addressing the issue of availability and helping young athletes find the necessary equipment for various sports.

How does Decathlon compare to other sports brands like Nike, Adidas, and Reebok in terms of revenue in India?

Decathlon has outperformed these brands in India, with a revenue of 2936 crores, compared to Adidas at 1551 crores, Nike at 814 crores, and Reebok at 417 crores.

What is unique about Decathlon's marketing strategy in India?

Decathlon's marketing strategy in India is unique as it does not rely on celebrity endorsements or TV ads, yet it manages to generate more revenue than Nike, Adidas, and Reebok combined.

What was the state of the sports goods market in India in the early 2000s?

In the early 2000s, the sports goods market in India was largely unorganized, with a limited selection of products available at neighborhood shops or high-end branded stores that catered primarily to elites and casual enthusiasts.

How did Decathlon differentiate itself in the Indian market by targeting a specific customer segment?

Decathlon differentiated itself by targeting the large unorganized market of hopeful and beginner customers with tight budgets, offering them affordable and accessible sports goods.

What are the three key elements of Decathlon's store design that make it effective?

The three key elements of Decathlon's store design are an immersive experience with ample space to try products, knowledgeable staff who educate customers and encourage free use of products, and strategic product placement that promotes impulse buying and value for money.

How does Decathlon manage to offer high-quality products at low prices?

Decathlon offers high-quality products at low prices by renting store spaces, avoiding aggressive marketing, keeping stores simple, and manufacturing products in the same country they are sold, with plans to locally produce 85% of their products by 2026.

What are the four categories of products in Decathlon's Innovation quadrant?

The four categories are products with small improvements and innovations, products with technical innovations, products with extraordinary user experience innovations, and products with breakthrough innovations.

What are the key lessons that can be learned from Decathlon's success in India?

Key lessons include recognizing the potential of the unorganized market in India, the importance of the touch and feel factor in retail, and prioritizing product innovation over marketing innovation for sustainable business success.

Outlines

00:00

🚀 Growth of Indian Sports Industry and Decathlon's Impact

The Indian Sports industry is experiencing rapid growth, outpacing global averages, yet faces challenges such as equipment accessibility for budding athletes. Decathlon, a French sports retailer, has successfully entered the Indian market, offering a wide range of affordable sports gear and outperforming established brands like Nike, Adidas, and Reebok in revenue. The company's strategy focuses on catering to the needs of young athletes and the general public, filling a gap in the market for affordable and quality sports equipment. Decathlon's business model is highlighted as an example of success without celebrity endorsements or heavy marketing budgets, emphasizing the importance of identifying market gaps and effective business strategies.

05:02

🏪 Decathlon's Market Strategy and Store Design

Decathlon identified four types of customers in the Indian sports market: hopeful customers with limited budgets, beginners with occasional purchases, casual enthusiasts who value branded products for fashion, and elites who are professional players seeking performance enhancement. The brand strategically targeted the unorganized market, focusing on hopeful and beginner customers. Decathlon's store strategy involves creating an immersive shopping experience with ample space for customers to try out products, which triggers the 'endowment effect' and increases the likelihood of purchase. The store design is praised for its effectiveness in enticing walk-by customers to make purchases, with 37% of visitors ending up with an unplanned buy.

10:02

🛍️ Employee Training and Product Placement at Decathlon

Decathlon's employees are carefully selected for their passion for sports and are trained to educate customers rather than aggressively sell to them. This approach builds trust and ensures customers feel comfortable trying products without pressure. The store's product placement is strategic, with affordable items at the entrance to create a perception of value and frequently purchased items placed deeper inside to encourage exploration and impulse buying. Decathlon's commitment to offering quality products at reasonable prices, backed by long-lasting warranties, differentiates it from cheaper brands and contributes to its success in the market.

15:03

💡 Innovation and Differentiation in Decathlon's Product Range

Decathlon's product innovation strategy is categorized into four types: small improvements, technical innovations, user experience innovations, and breakthrough innovations. Examples include a rechargeable head torch with extended battery life and brightness, an automatic gearing system for bikes, lightweight trekking equipment, and a tent that can be pitched in two seconds. These innovations have made Decathlon's products stand out without the need for celebrity endorsements or expensive marketing campaigns. The company's focus on product innovation over marketing has been a key factor in its rise to prominence in the Indian and global sports retail market.

📈 Business Lessons from Decathlon's Success

The rise of Decathlon offers valuable lessons for entrepreneurs and businesses. It highlights the potential of the unorganized market in India, which has been largely untapped and offers significant growth opportunities. The importance of the touch and feel factor in retail, even in the era of e-commerce, is underscored by the success of Decathlon's physical stores. Lastly, product innovation is emphasized as a critical differentiator that can outperform marketing efforts, suggesting that creating high-quality products is fundamental to building a successful and enduring business.

Keywords

💡Indian Sports Industry

The Indian Sports Industry refers to the economic sector in India that encompasses the production, marketing, and governance of sports. It is highlighted in the video as one of the fastest-growing industries globally, albeit from a smaller base. The script emphasizes the rapid growth of this sector in the last five years, outpacing the global sports industry's growth rate.

💡Equipment and Gear

Equipment and gear pertain to the necessary tools and attire used in various sports. The script identifies the challenge of acquiring suitable sports equipment, such as baby badminton rackets or specialized gear for sports like horse riding or archery, as a significant barrier for young athletes, illustrating the gap in the market that Decathlon aims to fill.

💡Decathlon

Decathlon is a global retailer specializing in sporting goods. The script positions Decathlon as a brand that has successfully penetrated the Indian market, outperforming established brands like Nike, Adidas, and Reebok in terms of revenue. The company's strategy and business model are central to the video's narrative, showcasing how it became a dominant player without celebrity endorsements or high marketing budgets.

💡Revenue

Revenue in the context of the script refers to the income generated by a company from its business activities. The video uses revenue figures to demonstrate Decathlon's market success in India, comparing it to the earnings of Adidas, Nike, and Reebok, and highlighting how Decathlon's revenue surpasses the combined total of these competitors.

💡Business Strategies

Business strategies are the methods and actions a company employs to achieve its goals and maintain a competitive edge. The script explores Decathlon's business strategies that allowed it to stand out in the Indian sports market, such as targeting the unorganized market segment, focusing on customer experience, and emphasizing product innovation.

💡Unorganized Market

The unorganized market sector consists of small-scale, informal businesses that often lack formal regulation or industry standards. The video describes how Decathlon capitalized on the large unorganized market in India by offering products to hopeful customers and beginners, who were underserved by existing high-end brands.

💡Store Design

Store design refers to the layout, appearance, and overall customer experience within a retail environment. The script highlights Decathlon's store design as a key factor in its success, creating an immersive shopping experience that encourages customers to interact with products and increases the likelihood of sales.

💡Product Innovation

Product innovation involves the development of new products or the improvement of existing ones to meet customer needs or gain a competitive advantage. The video emphasizes Decathlon's commitment to product innovation as a distinguishing factor, offering products with small improvements, technical advancements, and breakthrough innovations that enhance user experience and performance.

💡Customer Experience

Customer experience encompasses all interactions a customer has with a company, influencing their overall perception and satisfaction. The script discusses how Decathlon enhances customer experience through store events, workshops, and an environment that encourages product interaction, contributing to its high conversion rates and customer loyalty.

💡Price Strategy

Price strategy is the method by which a company sets the price of its products or services. The video outlines Decathlon's price strategy, offering high-quality products at affordable prices, which is a key reason for its appeal to budget-conscious customers and its ability to compete in the unorganized market.

💡Marketing Innovation

Marketing innovation refers to the creation of new marketing methods or approaches to promote products or services. The script contrasts Decathlon's focus on product innovation over marketing innovation, suggesting that the quality and innovation of its products speak for themselves and require less reliance on traditional marketing tactics.

Highlights

The Indian Sports industry is one of the fastest-growing in the world, with a growth rate considerably higher than the global average over the last five years.

A common challenge for young athletes is the difficulty in finding affordable and appropriate sports equipment for various sports.

Decathlon, a mega sports store in Bangalore, offers a wide range of sports equipment, making it a go-to destination for sports enthusiasts.

Decathlon has become larger than Nike, Adidas, and Reebok in India, despite not having celebrity endorsements or TV ads.

The brand's revenue in India surpasses that of Nike, Adidas, and Reebok combined, highlighting its success in the market.

Decathlon's business strategy focuses on identifying gaps in the market and targeting customers overlooked by competitors.

The sports market in India is categorized into hopeful customers, beginners, casual enthusiasts, and elites, each with different needs and budgets.

Decathlon entered the Indian market by targeting the large unorganized sector, offering products for hopeful and beginner customers.

The store's design encourages customers to try and interact with products, increasing the likelihood of purchase through the endowment effect.

Decathlon's employees are sports enthusiasts who prioritize educating customers and allowing them to freely use products in-store.

Product placement in Decathlon stores is strategic, with affordable items at the entrance and frequently bought products placed deeper inside to encourage exploration and impulse buying.

Decathlon offers high-quality products at lower prices by renting stores, minimizing marketing costs, and manufacturing locally.

The company's innovation strategy includes small improvements, technical innovations, extraordinary user experience, and breakthrough innovations.

Decathlon's success demonstrates the potential of the unorganized market in India and the importance of physical touch and feel in retail.

Product innovation is emphasized as a key differentiator, suggesting that great products can sell themselves without the need for extensive marketing.

Lessons from Decathlon's rise include the opportunities in the unorganized market, the value of the in-store experience, and the primacy of product innovation over marketing.

Transcripts

the Indian Sports industry is one of the

fastest growing in the world although on

a smaller base and this is considerably

higher than the five percent growth the

world is seeing in terms of the sports

industry in the last five years a big

roadblock with many young kids taking up

a variety of sports is generally the

problem of equipment and gear where to

buy a good baby badminton racket where

to find gear for sports like horse

riding or archery or even for hiking

well we've got the answer for you the

decathlon mega store in Bangalore

[Music]

so it isn't the toy store we're talking

about but a mega Sportsman

decathlon decathlon decathlon decathlon

is bigger than Nike Adidas and Reebok in

India

[Music]

hi everybody if you want to learn how to

build a legendary business in a hyper

competitive market this episode is for

you if you're someone who wants to learn

how to spot a gap in a crowded Market

this episode is for you because the

story that I'm about to tell you today

is the story of a brand that has beaten

giants like Nike and Adidas in their own

game in India while its competitors have

star-studded celebrity endorsements this

brand doesn't have any celebrity

endorsing them doesn't have any TV ad

running and yet it does more Revenue in

India than Nike Adidas and Reebok

combined this brand that I'm talking

about is none other than decathlon and

you will be stunned to know that while

Adidas earned a revenue of 1551 crores

Nike stood at 814 crores Reebok stood at

417 crores whereas decathlon alone

earned a revenue of

2936 crores the question is without a

big fat marketing budget without a

celebrity endorsement how on Earth did

decathlon crack the Indian market what

are the business strategies that held

them stand out in the crowded Indian

Sports market and what are the business

lessons that we need to learn from the

iconic rise of decathlon in India this

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[Music]

to understand the genius behind

decathlon let me take you back to the

nostalgic 1990s and early 2000s Market

of India

[Music]

most is the secret of my energy

[Music]

[Music]

drinks big boys

active this was a time when you and I

were just super energetic children who

spent all our summers playing Cricket

under the scorching heat of the Sun and

during that time if you remember buying

a tennis ball was a big big deal this

was because it required equal

contribution from all 10 children and

after a lot of fighting and struggle the

moment we started playing Five balls

down the line there always used to be

that one kid who hit the ball into a

cranky uncle's house and that was it

game over after that we had no other

option but to go home and drink rasna

good old days isn't it now you tell me

when we bought those tennis balls did we

buy them from a branded store not at all

right we used to visit that one old

neighborhood shop where our Chacha would

sell sports goods and the collection

that he had was always limited to mrf

bats locally produced footballs cycles

and at best a cricket kit this was the

story of every middle class household in

India

at the same time for affluent people

they were high-end Brands like Nike

Reebok and Adidas at the mall

but even in those branded stores they

only sold shoes and April that's it

but if you look at the sports Market of

India objectively it was Way Beyond

cricket and football and it was Way

Beyond just Gully Cricket this Market

had four categories of people the first

type of customers were hopeful customers

these were people like you and me who

had good skills with the game but always

had a tight budget in simple words given

a choice between English Willow and

Kashmir below we would always buy a

Kashmir Willow because it was cheap the

second type of customers were beginners

these were people who had less skill

plus a smaller budget and these were

people who would occasionally purchase

sports goods just to try out a sport and

surprisingly there are beginners in all

sports in India starting from tennis to

badminton to even squash but somehow

back then the gear for these ports were

not easily available

the third type of customer were casual

enthusiasts these people are not skilled

but they are rich enough to buy great

products for example we always had this

one kid who never scored Beyond 10 runs

but always wore a Nike shoe and always

played with an SG bat among adults these

are rich people who buy branded products

even for a trip to Goa so for them

branded items are primarily fashion

choices and finally there are Elites

these are individuals who possess both

Superior skills and financial

flexibility they would buy products not

for a hobby but to improve their

performance basically professional

players this is a broad categorization

of the sports Market of India

now if we look at the brands for these

different types of customers we will see

that Nike Adidas and Sketchers always

catered and still cater to the elites

and Casual enthusiasts in the market

but back in the early 2000s there was a

huge Market of hopefuls and beginners

that bought products only from

neighborhood shops as in the unorganized

Market to put that into perspective in

2012-13 while the sports goods Market of

India was worth 2 billion dollars 75

percent of this Market was unorganized

and only 25 percent was organized so

three out of four Indians were buying

products from the neighborhood Chacha

rather than Nike and atilas so when

decathlon entered the Indian market in

2009 instead of competing in the small

Market with big players they decided to

compete with the smaller players in the

big unorganized Market

so instead of making products for the

elites and Casual enthusiasts they made

products for hopefuls and the beginners

with tight pockets in India

this is where we saw the rise of

decathlon stores all across the country

there are 1 600 stores in almost 60

countries across the world we are now on

a fast acceleration from one store in

2009 to four stores into

to all to the half century mark today in

India we provide over 50 Sports ranging

from badminton to inline skates each

decathlon store offers an amazing user

experience through the store events and

workshops now this brings us to the

Second Step which is their store

strategy now if you have ever been into

a decathlon store you know that it's

nothing short of a Sportsman's paradise

and there is something very special that

makes you just want to buy everything if

you've ever felt this you are not the

only one turns out decathlon's story

design is so amazing that according to a

Study 37 percent of the people who came

into a decathlon store ended up with a

walk by purchase as in they were just

walking by and they just decided to buy

something from decathlon the question is

what is so extraordinary about their

store design

well there are three elements that make

geek Athlon stores super effective

firstly if you've ever been to a

decathlon store you would realize that

it offers an immersive experience and

inside the store each section has a

complete set of gears for every single

Sport and each section gives you enough

space to play and use the products

freely this is what temps you to buy the

product in the retail business it's

called the endowment effect so when

customers touch or hold a product they

begin to feel a sense of ownership over

it and this feeling can make the product

seem more valuable to them which

eventually increases the probability of

sale in terms of statistics research

says that Shoppers who touch the

products are willing to pay more for

them than the Shoppers who only look at

the products in fact in an experiment

participants who could touch a mug were

willing to pay 60 more for the mug than

the participants who could only see the

mug another study published in a journal

stated that the longer a shopper holds

an item the more likely the there to buy

it so the study found that Shoppers who

held an item for 30 seconds were more

likely to buy it as compared to the

Shoppers who held the item for 10

seconds so do you see what decathlon

stores do they make you touch and feel

the product so well that automatically

the endowment effect kicks in and makes

you want to buy the product the second

element of the store has to do with

their wonderful employees did you know

decathlon chooses only those people who

are sports enthusiasts as their

Executives and they deliberately choose

only those people who are actively

playing the sport on top of that during

their training period they are given

three instructions never sell to the

customer always educate the customers

and most importantly always allow the

customers to freely use the products

without disturbing them for example if

you are a beginner looking for tennis

shoes and you see three shoes costing

two thousand three thousand five

thousand ideally if you have the budget

the staff must convince you to buy the

5000 rupee product

but even then a decathlon staff would

insist you to buy the 2000 rupee product

only because it would be good enough for

you and not just that because she is a

sports player herself she will also

explain why that product is best for you

and these interactions cultivate such an

amazing Speed Of Trust that you can walk

into a decathlon store without being

scared of upsells or forced sales and

finally the product placement of

decathlon is what we found very very

interesting we saw that decathlon offers

products from just 100 rupees all the

way to 1 lakh rupees and very smartly

they Place their cheapest products at

the entrance so that they can create an

impression of affordable prices secondly

just like Walmart keeps the milk packets

way inside the store even decathlon

places the frequently bought products

way inside so that while you walk inside

you can see other products and hence

increasing the probability of impulse

buying according to a study 84 percent

of customers spent more than 30 minutes

at the DC Athlon store and like we saw

before the more time they spend the

products the more likely are they to buy

them and lastly to ensure recurring

customers decathlon ensured that it

always offered value for money by

offering great quality products at

reasonable prices their products are

sturdy they offer long lasting

warranties like a two year warranty on

shoelaces and finally they offer a price

that's 30 to 40 percent cheaper than the

competition but the question over here

is how on Earth are they able to sell

products of such good quality at such

low prices

well there are three straightforward

reasons for that number one just like

dmart the R stores are rented secondly

they do not spend aggressively on

marketing and they do not spend on

making their stores fancy and most

importantly they manufacture their

products in the same country they sell

for example in India they currently have

eight partner factories where they

manufacture their products and by 2026

their aim is to locally produce 85

percent of their products

now this begs the question if only cost

was their USB then how did decathlon

differentiate itself from other cheap

Brands and how did they stand out in the

unorganized Market of India

well this is where their Innovation

quadrant comes into play this coordinate

has four categories of products the

first category of products are products

with small improvements and Innovations

for example in the unorganized Market

the basic head torch was available with

a 20 hour battery and a 30 Lumen

brightness light but decathlon worked on

it and they optimized the product in

such a way that they made a rechargeable

head torch with a brightness of 200

Lumen with a 30 hour battery life and

with multiple lighting modes so by

default the product stands out merely

because of the specification and this

brings us to the second category where

there are products which have Technical

Innovations Incorporated in them for

example back then when you took normal

bikes to a hilly terrain you needed to

manually change the gears this is when

decathlon came up with a long distance

920e connected Bike by between this bike

offered an automatic gearing system that

would automatically change the gears

according to the terrain this made

idling way smoother and easier so again

the product stands out because of the

technical Innovation which makes it way

better and way easier to use

the third category of products are

products that have extraordinary user

experience Innovation for example they

worked obsessively to reduce the weight

of trekking products by 15 to 20 now for

people like you and me 15 to 20 lighter

is not a significant Improvement right

but if you go and talk to a trekking

Enthusiast or a mountaineer they will

tell you that a 15 to 20 reduction in

weight is a blessing and sometimes it

could even be a life saver and decathlon

did not just make trekking instruments

lighter they even made trekking clothes

lighter Once Upon a Time their shots

weighed around 130 grams in size L but

they worked very hard on it and reduced

it to just 100 grams so if you carry 10

pieces of clothes that's 300 grams

reduced in just clothing

and their best record is making a

t-shirt that weighs a record of just 50

grams

and this brings us to the last category

of innovation which are breakthrough

Innovation and these Innovations are

literally ground breaking Innovations

for example 10 years back the time to

pitch a tent was around 20 to 30 minutes

but you know what the Catalan came up

with a keshua tent that could be put up

in just two seconds Yes you heard that

right two seconds

now this was groundbreaking because it

saved the hikers a lot of time a lot of

energy and gave them extraordinary ease

when they were in harsh climatic

conditions it also had a great feature

of having the tent entirely dark so that

the sunlight doesn't penetrate and

disturb the Trekker while she was

sleeping

so do you realize when you see products

that are so good you don't need a

celebrity or a fancy ad to convince you

to buy them this is how by choosing the

untapped Market of beginners and

hopefuls by building immersive and

amazing stores and most importantly by

being obsessed with product Innovation

for four decades decathlon became a

legend not just in India but all across

the world

and this brings us to the last part of

the episode which are the lessons that

we need to learn from the iconic rise of

decathlon lesson number one while most

entrepreneurs are trying to compete in

the organized Market of India the

unorganized Market of India is actually

a very huge Market which has a huge

scope of both profits and growth and

it's not just decathlon but even other

legendary companies like haldiram and

havells they've built a million dollar

business by capturing this unorganized

Market of India lesson number two with

the rise of the e-commerce wave in India

the touch and feel Factor has become one

of the most powerful and yet one of the

most underrated elements in business so

while you may start your business online

do not ever ignore the physical touch

and feel factor that offline stores can

offer to your products and lastly always

remember product Innovation will always

Trump marketing innovation in short if

you fundamentally make great products

marketing becomes a secondary instrument

of sale and that is a mark of an

extraordinary business that's all from

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much for watching I will see you in the

next one bye bye

[Music]