The global CEO of Decathlon, the world’s biggest sporting goods retailer, said the company is in discussions with the Indian government for allowing it to sell products from rival local and global brands in its stores, in effect operating as a multi-brand retailer.
Globally, rival brands account for a fifth of Decathlon’s revenue but in India, everything from running shoes to mountaineering equipment is sold under its own labels, in line with the rules.
“We are a single-brand retailer – so we are asking (the government) for the possibility of selling different brands in our shops,” CEO Barbara Martin Coppola told ET in her first interview after joining the French company last year. “Right now, we only sell Decathlon products and what we would want is to have the licence or opening up to other brands.”
India permits 100% foreign direct investment (FDI) in single-brand retail – different products can be sold under one brand, the route taken by companies such as Ikea, Nike and Adidas.
FDI in multi-brand retail – the sale of many brands under one roof directly to consumers – is not allowed.
The BJP government fears that allowing this freely will undermine the businesses of small and medium retailers that dot the country.
“We believe in offering our customers the widest choice across sporting products and categories, including seeking a provision for sports industry in India where single-brand retailers can also offer up to 20% of their inventory from other local and global brands across their sales channels,” said Coppola, 46.
The United Progressive Alliance (UPA) government had in 2012 allowed 51% investment in multi-brand retail with several riders – at least $100 million investment, prior approval from the relevant state government and prohibitions on stores outside the big cities with less than 1 million residents. The policy was a nonstarter with no global player entering the market and has since been kept in abeyance.
“We are asking for a simplification and easiness for sure, so that is part of the dialogue,” the CEO said. “We have people that are in constant dialogue with the government on very good terms. India has been a good country to do business in and that’s why we want to accelerate.” India is the first market she’s visiting with Decathlon’s entire leadership team after she joined the company in March 2022.
To be sure, by sticking to private labels in India, Decathlon controls every part of the operation, from pricing and design to distribution, and keeps costs and selling prices low. It uses a combination of in-house manufacturing and outsourcing to stock its shelves.
With more than 100 large, warehouse-like stores and 110 factories in India, Decathlon’s pricing is about 30-40% lower than competing products. It sources nearly 8% of its global requirement from India across sporting goods. Almost all of its cricket merchandise sold globally is designed and made in India. The company plans to increase sourcing from India further in the next few years.
“Today 60% of the products sold are made in India and by 2026 it will be 85%. So we are increasing production capabilities in India. We will also increase the capability of producing for the world,” Coppola said. “India is among the top six countries for us but it can go to be in the top three markets. So we are accelerating the investment here.”
With a population of 1.4 billion, India is one of the fastest-growing and largest international markets for sporting companies. Brands such as Reebok, Adidas, Nike and Puma have been around for more than two decades in India and have grown by virtue of pushing their wares partnering cricket and other sporting activities.
Focus on Non-Cricket Sports
Decathlon India’s sales rose 41% in the year ended March to Rs 2,936 crore. The company sells products catering to 85 sporting disciplines. By contrast, most other retailers sell merchandise restricted to popular sports such as cricket and soccer. Over the past few years, India has demonstrated an increasing appetite for non-cricket sports such as soccer, volleyball, hockey, badminton and kabaddi. India now has professional leagues in most of these sporting disciplines, drawing participants from across the globe.
The company said demand for fitness wear and sports equipment for disciplines other than cricket also grew as people prioritised health amid the Covid-19 pandemic.
“Accessibility to playing fields is very important. Also, educating people that sport is about health. So there is a very important mission here that the government can have to get more people to understand that sport is preventing illnesses and that will help more people actually feel good. In many government schools today, some don’t have physical education classes,” said Coppola.
The Indian government introduced the Khelo India programme in 2018 to energise the country’s sports culture at the grassroots level. It aims to build a framework for all games played in the country and establish India as a strong sporting nation.