Singapore
Singapore
The sporting goods retailer also says it wants to launch rental services and more than double the number of stores it has in Singapore.
Decathlon Singapore Lab flagship store at Kallang. (Photo: CNA/Tang See Kit)
SINGAPORE: Enter any Decathlon store and you’ll find low-priced items across a wide range of sports – from a S$4 hiking backpack to a S$10 badminton racket.
And the French sporting goods retailer hopes to keep it that way, even as it comes under pressure from rising costs on multiple fronts.
“We are not immune to cost increases,” said Decathlon Singapore’s managing director Stephan Veyret, adding that these challenges are “multiple” and “completely uncertain”.
For one, stress on global supply chains is likely to persist due to uncertainties over how the war in Ukraine will pan out, as well as bubbling tensions between the United States and China, he said. COVID-19 outbreaks are another risk, with lockdowns in countries like Vietnam and China previously disrupting supplies of products from hiking shoes to tennis rackets.
Surging energy prices add to transport and manufacturing costs. Currency fluctuations are putting the squeeze on the bottomline and the 1 percentage point increase in Singapore’s Goods and Services Tax at the start of next year will further crimp margins.
With these uncertainties, Mr Veyret said he cannot provide a definitive answer on whether Decathlon will have to adjust its retail prices in Singapore.
“I don’t know what will be the impact (of) energy costs, raw material costs and transport costs,” he told CNA in an interview last week. But if the company were to raise prices, it would be because it had no choice, he added.
But Decathlon will remain focused on being the more affordable option for customers, Mr Veyret said.
The retailer’s ability to offer competitive prices since its establishment in 1976 stems from its integrated business model, in which it designs and manufactures almost all its products. Decathlon also has its own logistics arm and eliminates non-essential packaging. All these enable the company to optimise resources and reduce cost at every stage of the process, it says.
Additional cost-cutting steps it takes for its Singapore operations include sourcing from as many different countries as possible but keeping it within the region to minimise logistics costs.
“Our aim is to give access to sports by providing affordable products … and it is in our culture to adapt to rising costs,” said Mr Veyret, who has worked at Decathlon for the last 24 years and took on the top job in Singapore last July.
“We will continue to do as best as we can to make sure that we keep prices as low as possible and continue to (offer) the best quality-price ratio in the market. Because that’s the reason why people come to us.”
Headquartered in Lille, France, Decathlon first entered Singapore in 2012 as an online store before opening its first “experience store” in 2016 in Bedok. It has since opened five more of these mega stores, which carry its full range of 5,000 products and allow customers to try them out.
It also has nine other smaller “click-and-collect” outlets, taking its total number of stores to 15 across Singapore.
While the COVID-19 pandemic spurred some to embrace an active lifestyle or try out other sports, the effect on Decathlon has been mixed as the growth in some sports compensated for the drop in others.
“During the pandemic, home fitness and cycling boomed,” said Mr Veyret. “But at the same time, swimming pools and football pitches were closed so our sales in swimming and football tumbled very heavily. Singaporeans who like to travel could not do so, so hiking, skiing and so on also suffered.”
Now that travel and most domestic restrictive measures have been lifted, the reverse has happened, with sales of hiking gear picking up again while pandemic top-sellers such as dumbbells and yoga mats are falling.
Likewise, as customers return to shopping in its stores, its online website has seen a drop in orders versus a year ago.
“So I wouldn’t say that we have benefited from the pandemic because while the figures exploded on one side, we suffered on the other side,” Mr Veyret said.
But overall, Decathlon is “still growing” and running a profitable business in Singapore, said Mr Veyret. And so the firm intends to grow its presence here to eventually reach 37 stores – an “almost golden number”.
These will mostly be click-and-collect outlets to ensure good coverage across Singapore and that customers have a Decathlon store within 10 minutes from where they live, he said.
It is also planning to open one more experience store in the northern part of Singapore. Such mega stores, said Mr Veyret, serve a different purpose.
“In France, for example, we have lifelong customers because the first time they rode a bike was in our stores. So the emotion and the relationship you have (with) the brand is very different. That’s the aim of the experience stores.”
Decathlon is, however, “not in a rush” to open these new stores. “Time is not the issue,” said Mr Veyret, stressing that the retailer is more focused on quality such as finding “the right location at the right rent”.
Beyond physical stores, the retailer, like many others, is also ramping up its online presence.
This is why it launched an online marketplace in May, allowing customers to shop not just Decathlon’s in-house brands from its website and app but also products from other brands. This aims to fulfil the “varied sporting needs and budgets” of its customers, the retailer said in a press release.
Doing so does not cannibalise its own business, said Mr Veyret, noting that the new marketplace only lists external brands that complement its offerings, such as foldable bicycles from European brand Shulz which are of a higher price point.
Decathlon also opened a data lab opposite its experience store in Kallang last month. The 700 sq m space serves as the workspace for its growing digital teams and also incubator for new digital services.
Data is the “goldmine” for retailers in an evolving environment, Mr Veyret explained.
“The customer now shops wherever and whenever he wants, so we have to adapt. One of the keys to that is to know our customers better and serve them better, and in order to do that, we need to gather data to know our customers and to (come up with) solutions.”
Decathlon also intends to partner with external agencies, technology start-ups and students in some of these data projects and solutions. For one, it will be sharing its data with government agency Sport Singapore.
“We will put our data together to understand the needs of our customers and more importantly, the sports people in Singapore, how they behave, what to anticipate in terms of sporting trends here,” said Mr Veyret.
“What we sell today is the practice of tomorrow. So there is a lot of synergy in doing that.”
But as it grows, Decathlon said it wants to do so sustainably and has taken steps to embrace the circular economy model – where items are recycled and reused to cut back on waste and pollution.
One such move is to roll out its own maintenance and repair workshops. These are currently available at all experience stores in Singapore and offer a range of servicing and repair options for bicycles.
Last year, Decathlon followed up with the introduction of a Second life scheme here – where items that have been returned but are still in good condition are repaired and resold at lower prices. These can include bicycles, treadmills and weights like barbells.
A leasing and rental service on a pay-per-use or subscription model is also in the works. This was made available at some Decathlon stores in UK earlier this year, allowing customers to rent products such as e-bikes, kayaks and surfboards.
The retailer is also mulling a buy-back option further down the road.
“You bought a bike for yourself and after two years, you want to change. You can bring it back, we will purchase it and give you a voucher to buy a new product. The one you returned will be rented, leased or sold second-hand,” Mr Veyret explained.
“We will do as much as we can to not waste anything and to extend the lifespan of our products.
“Instead of selling 10 times more products to 10 times more customers in 10 years, what we want to do is to generate 10 times more value from each product that we sell today.”
And when it comes to producing new items, Mr Veyret said Decathlon aims to be “100 per cent eco-conceived by 2026”, up from 30 per cent currently. This includes the use of more recycled materials and coming up with workarounds to minimise the impact on the environment.
For example, it did away with the dyeing process for its newest tents given how the process usually requires high temperature and uses large amounts of water.
“We are not dyeing our tents. Our new tent is white and not colourful, so as to minimise impact on the planet.”
Among other climate commitments, Decathlon is also targeting to source all its electricity from renewable sources by 2026.
It has also committed to reducing 90 per cent of its total scope 1 and 2 greenhouse gas emissions by then, according to a transition plan updated by the company in January on its strategies for sustainable development between 2020 to 2026. Scope 1 emissions are from direct, controlled sources, while scope 2 emissions are from purchased energy consumption.
This service is not intended for persons residing in the E.U. By clicking subscribe, I agree to receive news updates and promotional material from Mediacorp and Mediacorp's partners.
Copyright© Mediacorp 2022. Mediacorp Pte Ltd. All rights reserved.
We know it’s a hassle to switch browsers but we want your experience with CNA to be fast, secure and the best it can possibly be.
To continue, upgrade to a supported browser or, for the finest experience, download the mobile app.
Upgraded but still having issues? Contact us