Decathlon is a private French sport retailer turning around $10bn sales (65% international), employing 70,000 people in ~ 1,200 stores. 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!
Decathlon achieved this through a fully vertically integrated business model. 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! For instance, Decathlon pioneered the 2s tent or foldable ping pong tables. The result? Private label accounts for a staggering ~80% of sales.
But where does Digital play?
So, how does Decathlon/Embisphere use technology to develop their business?
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. Given the large proportion of private label SKUs, Decathlon could take the dramatic step to equip all its products with RFID. The “source tagging” 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.
Does it make a difference? According to Decathlon, 2% of sales, i.e. $200m+. What a hit!
For full transparency, it seems that Decathlon may have copied the technology from an entrepreneur it was partnering with. This should serve as a cautionary tale for start-ups partnering with large companies… Retail is somehow always a balance of power!
Nevertheless, the move to full RFID offers tremendous opportunities. What changed in practice?
- Ultra-fast stock count throughout point of sales, warehouses and logistic
- Seamless register check-out given all products are instantly recognized without scanning
Daily inventory management becomes simpler: improved traceability, no need to open cartons, theft reduction, improve inventory location throughout stores allowing more reliable store pickups, faster POS data increase marketing flexibility, quicker audit… The benefits are so wide that it is hard to measure benefit. As for all new technology the S curve adoption drives price erosion. A label now costs $5cts against a $3cts for widely used EAS technology.
RFID implementation yields three direct benefits:
- Sales increase from better availability of products because more frequent inventory update
- Margin optimization from lower markdowns by operating an absolutely exhaustive workflow control
- More efficient operations in shops and logistic, from faster, safer and more reliable checkouts
In 2016, Decathlon received the Best RFID implementation Award.
Beside logistics, what are the next steps?
First, digital technology creates social transformation in the shop. With the employees’ time spent at the cash register or counting stocks removed, released labor capacity can be reallocated to other tasks. For instance, employees spend more time talking about their own sport practice improving service and driving sales. So employees and customers’ satisfaction are both increasing in a virtuous circle!
Second, the customer experience can be dramatically improved from precise localization and more articles’ details. Marketing teams’ creativity can be reinvigorated as new possibilities are offered: playing a music or a video in fitting rooms linked to the articles tried, removing the need to keep purchase receipts as unique labels could trace back purchases, washing machines recognizing the care notice and adjusting programs…
Third, technology improvements will increase efficiency. Scanning will improve through video. Labels themselves will get lighter, more flexible coupled with more memory and potentially sensors.
 Decathlon Corporate Innovation http://corporate.decathlon.com/nos-innovations/recherche-et-developpement/
 RFID labels, Modern Materials Handling, Nov 30, 1999, Vol.54(12), p.134 [Peer Reviewed Journal]
 Tech Partnership Looks Beyond the Bar Code With Digital Watermarks, WSJ By LORETTA CHAO Jan. 12, 2016
 Camera-assisted localization of passive RFID labels, Indoor Positioning and Indoor Navigation (IPIN), 2012 International Conference on, Issue Date: 13-15 Nov. 2012, Written by: Nick, T.; Cordes, S.; Gotze, J.; John, W.
 Lowry, Intermec by Honeywell – White Paper – Are you realizing the Full Benefits of RFID, December 2013