Decathlon sprints ahead with ‘clicks to bricks’ strategy in SEA

On paper, it ticked every box on the list of “why it should work”.

Decathlon Group, one of the world's largest sporting-goods retailers, was plotting its expansion into Southeast Asia back in late 2012.

The island nation of Singapore was the de facto hub of the region. It boasted good infrastructure, a large talent pool and a developed economy with a largely tech-savvy and mobile population.

The company also already had a physical footprint in the form of warehousing space before its retail intent was formed; Singapore served as one of three global shipping hubs supplying the Asia Pacific with goods.

Yet in an interview with Campaign Asia-Pacific, Clarence Chew, head of marketing for Decathlon SEA, highlighted just how much of a break from tradition the plan for Singapore was for the France-headquartered organisation.

Decathlon started with a store in Lille, France, in 1976 and has since grown into a global company boasting 64,000 staff in 22 countries. It has more than 930 stores around the world, with an additional 150 outlets confirmed but yet to launch.

In 2013, it recorded a total of €7.4 billion (US$8.36 billion) in global revenue, which rose to €8.2 billion (US$9.27 billion) in 2014—a 10.8 per cent jump.

The company’s typical path to new markets has been to acquire retail space, launch outlets and then pursue a marketing strategy to build awareness and garner new customers.

But this wasn’t the path intended for SEA. The need to adapt to a more digital environment meant adopting a new approach.

Chew, a native of Singapore and employee No. 2 for SEA, was hired to drive this new strategy—to launch Decathlon and its brands in the Lion City using mainly digital means.

“Singapore had all the correct elements for us to enter the market using a digital-first approach," he said. "It was ready for such a service and we wanted to do it the right way."

And so the first Decathlon store in Singapore was a virtual one, a new player in the SG$4.4 billion (US$3.14 billion) local e-commerce market.

Clarence Chew

A personalised introduction

The first challenge the team had to tackle was educating the market, for while Decathlon enjoyed high brand recognition in Europe, it was largely unknown in SEA.

“We had to decide whether to go with the brands first or the company, and ultimately we went with brands first then company," Chew said. "That became the greatest challenge, educating the market about our products, because we have a lot of them for almost every sport.”

As both retailer and maker of sporting goods, Decathlon owns 20 brands, each representing a different sport or group of sports, with a dedicated product development and design team.

The company also has research and development facilities all over France to develop the new designs, registering an average of 40 new patents every year.

Chew explains that the company’s core mission is making “the pleasure and benefits of sport accessible to all.”

“We’re not about the hardcore sports enthusiasts or professional athletes," he said. "We’re about the everyday person, the student, the construction worker, the domestic worker, the office administrator. We want to make it affordable for them to enjoy and practice sports."

The brand created a message platform and decided to start by targeting the European community living in Singapore, because it would already be familiar with the brand, as well as Singaporean customers.

“We wanted to communicate on price," Chew said. "Because Decathlon controls the entire process from design to store, we could offer customers great prices. And to also show to them that low prices doesn’t mean low quality either.”

Sharing a peek into the company’s extensive R&D operations to showcase the attention to quality the brand espouses, also fuelled the team’s introductions to Decathlon’s various in-house brands.

For example, the company’s hiking-sports brand, Quechua, has its international design centre at the foot of Mont Blanc, the highest mountain in the Alps.

“Acquisition of customers through quality and price, that’s our strategy and will continue to be our strategy for at least the next year,” Chew added.

The team chose to focus principally on digital marketing, via the usual channels such as search and social media.

But a fully digital approach was not possible, and Decathlon also had tie-ups with organisations such as the Singapore Sports Council, Singapore Health Promotion Board and SMRT for on-ground events that were relevant and offered high-traffic locations for exposure.

“For example, Health Promotion Board wanted to promote Office Sports, with the message that you didn’t have to go out of your office to do sports," Chew explained. "So we have a roll-up portable table tennis net that can convert any table surface into a playing field.”

Chew admitted that for many of these events, no payment was required on Decathlon’s part because their offer was “strong enough” to be included.

When it came to building its online presence however, some budget had to be set aside to achieve its goals.

Decathlon Singapore now has more than 32,000 fans on Facebook, and for its content-marketing strategy, chose to emphasise personalising the message and ensuring a well-executed user experience.

“A lot of marketers are doing ‘in-your-face’ campaigns these days, with ad retargeting and full pages in newspapers," Chew said. "I believe that’s something we should move away from. Consumers now have the power to choose, so we aim to create something that allows them to choose us instead.”

This proposition of choice is reflected in how the company phrases its pitches to customers, he added. For example, instead of stating “buy a scooter from us” it's, “How are you getting to work today?" And "What if your 15 minute walk could be cut?”

All marketing efforts are conducted in-house. While Chew said the company has been in talks with some creative agencies, he believes in-house efforts will continue to dominate Decathalon SEA’s strategy, aided by resources from the company’s global headquarters.

In November 2014, the brand expanded its presence with the launch of a 'click-and-mortar' experiential space on Kim Yam Road—which also doubles as its office—and the next phase of its omni-channel business plan.

The 7,000 sq ft space offers customers a chance to try out products before deciding whether to purchase, with several desktop computers available to access the Decathlon online site.

“A lot of consumers just want to get hands-on feel of a product before they make the final decision to buy," Chew reported. "Since we launched this experiential space, we’ve had a 30 per cent increase in turnover.”

Another feature of the space: Brand managers are seated right in the middle of it all, within view of their respective portfolios, so that they can observe customer reactions and handle any feedback on products.

In addition, the customer support team (dubbed the Customer Happiness Centre) was absorbed into the marketing team six months ago. Chew said the move was essential to master the entire user experience and help marketing achieve a higher sales rate.

A data-driven business

Decathlon website

The biggest benefit of launching in a market with an ecommerce store first is not the savings on retail rental; it is the steady stream of data the company has gathered about its customers, which allowed it to refine everything from customer acquisition to inventory management.

Chew said that transaction data dispelled a lot of initial assumptions about what would work in the Singapore market.

“At first we forecasted our hiking brand would be number one, as it is in so many markets around the world," he said. "But it’s not, mainly because there’s nowhere to hike in Singapore, so many hiking enthusiasts travel out of the country.”

Instead, the top-performing product for the past two years in Singapore has been the company’s range of scooters.

Chew also shared some insights from neighbouring markets served by the company’s ecommerce store. The company currently facilitates sales to Malaysia, Thailand, Australia, Indonesia and the Philippines online.

“Malaysia is a key market," Chew said. "Outdoor sports are popular and our running brands are doing very well. We’ve hired a local business manager and are looking into a retail presence, with the location guided by insights from the last one and a half years.”

The brand plans to launch stores in Thailand by the end of the year, in partnership with Lotus Tesco, while in Australia, the brand is finding its place amidst the plethora of local brands – many of which emphasise fashion.

“The demand online has been strong, but one challenge is shipping," Chew said. "We already have a team on ground in Australia exploring warehousing options.”

Data also influenced the location of its first flagship retail outlet in Singapore: a 35,000 sq ft presence at Technopark@Chai Chee (TPCC) in Bedok, slated to open in December.

“We’ve identified four other areas in Singapore to launch retail outlets in, informed by the data we’ve gathered on where our customers are buying online from,” he added.

In addition, the company now sees locals making up 80 per cent of its 60,000-person customer base in Singapore.

Chew reports that in 2014, Decathlon SEA recorded a total of SG$4 million (US$2.84 million) in sales turnover. Singapore alone accounted for SG$2.8 million (US$1.99 million).

The company is currently focused on growth moreso than profit. Chew said the marketing budget was 20 per cent of turnover in 2014, dropping to 10 per cent—a natural move as the company continues to grow.

“For example, in China, where we have about 100 retail stores, the marketing budget is 0.3 per cent of sales turnover,” he added.

Decathlon's digital-first strategy is certainly paying off. After two years online, the brand now has plans to open five more retail outlets in the next four years and recruit 400 more staff in Singapore over the next three years.

“The next two years is about building on the traction we’ve gained," Chew said. "We hope to have a very strong presence in SEA and Australia within the next five years, and so far we’re on track to achieve that goal."