{"id":20217,"date":"2016-11-18T17:48:00","date_gmt":"2016-11-18T22:48:00","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/sport-retailer-knows-how-to-swing-the-racquet\/"},"modified":"2016-11-18T17:48:00","modified_gmt":"2016-11-18T22:48:00","slug":"sport-retailer-knows-how-to-swing-the-racquet","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/sport-retailer-knows-how-to-swing-the-racquet\/","title":{"rendered":"Sport retailer knows how to swing the racquet"},"content":{"rendered":"

Decathlon is a private French sport retailer turning around $10bn sales (65% international), employing 70,000 people in ~ 1,200 stores[1]<\/a>. The customer value proposition focused on all year long affordable quality multisport offering. Its second market is China. Quite impressive in the world first manufacturing market!<\/p>\n

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Decathlon achieved this through a fully vertically integrated business model<\/strong>. To guarantee affordability, it developed its own white label products creating one brand for each sport, sitting next to international brands. Internally-developed products are not cheap low quality knockoffs, there is genuine innovation: 620 R&D employees![2]<\/a> For instance, Decathlon pioneered the 2s tent or foldable ping pong tables. The result?<\/strong> Private label accounts for a staggering ~80% of sales<\/strong>.<\/p>\n

\"Universe<\/a>
Universe of white label Decathlon brands for all sports<\/figcaption><\/figure>\n

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But where does Digital play? <\/strong><\/p>\n

As for insourcing product development,<\/strong> Decathlon created an autonomous subsidiary<\/strong> focused on RFID solutions<\/strong>. Started in 2008, Embisphere<\/strong>: “Embedded Intelligence, Software, Portable, Hardware, Electronic, Recyclable and Environment” (What a program!) does not serve only Decathlon but offers design & consulting solutions to retailers[3]<\/a>. Decathlon owns its technology while remaining relevant. RFID dates back to the 90\u2019s[4]<\/a> but its usage generalized only recently.<\/div>\n
\"RFID<\/a>
RFID label simplified design<\/figcaption><\/figure>\n

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So, how does Decathlon\/Embisphere use technology to develop their business? <\/u><\/strong><\/p>\n

\"2-rackets\"<\/a>If you are walking in a Decathlon store, you would see employees strolling down the aisles with a small black racquet slightly larger than a table tennis one. It is not a new product. It is the fastest way to account for inventory<\/strong>. Given the large proportion of private label SKUs, Decathlon could take the dramatic step to<\/strong> equip all its products with RFID<\/strong>. The \u201csource tagging\u201d is done at the production site with 35 RFID manufacturing offices directly supplying ~1,000 manufacturing suppliers. Traditional retailers with wide sourcing could hardly force such a change. As a closed loop retailer, Decathlon could jump to Full RFID: a step change supply chain improvement. It launched global RFID roll-out in 4 months only.<\/p>\n

Does it make a difference? According to Decathlon, 2% of sales, i.e. $200m+[5]<\/a>. What a hit! <\/strong><\/p>\n

For full transparency, it seems that Decathlon may have copied the technology from an entrepreneur[6]<\/a> it was partnering with. This should serve as a cautionary tale for start-ups partnering with large companies\u2026 Retail is somehow always a balance of power!<\/p>\n

Nevertheless, the move to full RFID offers tremendous opportunities. What changed in practice?<\/p>\n