OLIVER WYMAN IBERIA CASE COMPETITION DECATHLON'S NEW HORIZON - OCTOBER 2017 - DOYOUBUZZ

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OLIVER WYMAN IBERIA CASE COMPETITION DECATHLON'S NEW HORIZON - OCTOBER 2017 - DOYOUBUZZ
OLIVER WYMAN IBERIA CASE COMPETITION
  DECATHLON’S NEW HORIZON
  OCTOBER 2017

© Oliver Wyman X NueVista
OLIVER WYMAN IBERIA CASE COMPETITION DECATHLON'S NEW HORIZON - OCTOBER 2017 - DOYOUBUZZ
Executive Summary

To reach its 2020 targets, Decathlon Iberia should enter new business by promoting and organizing sports events

The polarized sports product market is growing steadily with disruptive players and fierce competition. Target consumers
value experience more and are willing to buy online
• Spanish sportswear market grows steadily at CAGR 2%, rising to 5.15 billion EUR in 2020, while discount textiles has grown
  rapidly by CAGR 17.9%
• The apparel market is polarized and experiencing fast changes with disruptive players. Spanish sportswear market is
  dispersed with fierce competition
• In Spain, more young people participate in sports and they prefer to spend money on experience over purchasing
• Nowadays, more apparel sales is generated online globally. In comparison to other major markets, Spain has a rather low
  online sales proportion and still has a great potential in online sales development
Based on the need of increasing profits quickly and current apparel market’s situation, Decathlon Iberia should start
promoting and organizing sports events
• Organizing three types of sports events can maximize personal experience of Decathlon’s major customers and have a rather
  low cost to boost Decathlon Iberia’s revenue with several new income sources including registration fee and sponsorship
• Online campaign on social medias following the sports events could increase Decathlon Iberia’s presence in target customers,
  which can boost event participation and sales
• By promoting and organizing sports events, Decathlon Iberia could also enhance customer loyalty, thereby increase its digital
  capabilities and drive its online sales

To successfully launch this new business, Decathlon Iberia has 3 stages of implementations: preparation (2017), testing
round (2018) and expansion (2019-2020)
• In stage 1 (2017), Decathlon will mainly focus on internal preparation, then in stage 2 (2018), Decathlon can launch in 4 major
  cities as a testing round, and if succeed, Decathlon can expand it to all 10 cities in stage 3 (2019-2020)

© Oliver Wyman X NueVista                                                                                                         1
OLIVER WYMAN IBERIA CASE COMPETITION DECATHLON'S NEW HORIZON - OCTOBER 2017 - DOYOUBUZZ
AGENDA

                       A    Understanding of the Project

                       B    Market Analysis

                       C    Strategy and Financial Analysis

                       D    Implementation Plan

© Oliver Wyman X NueVista
OLIVER WYMAN IBERIA CASE COMPETITION DECATHLON'S NEW HORIZON - OCTOBER 2017 - DOYOUBUZZ
Since 2010, Decathlon Iberia has suffered from profits stagnant growth,
and it is now facing the challenge of reaching its 2020 targets

 Decathlon Iberia has a 4.4% CAGR in revenue. However, its profits                       Decathlon Iberia will need an alternative
 only increase by 2.8% CAGR annually                                                     drive for profits by launching new sports-                A
                                                                                         related business. Alternative solutions
 Revenue for Decathlon Iberia                    EBIT for Decathlon Iberia
 (2010-2015, EUR million)                        (2010-2015, EUR million)                include:
                                                                                                                                                   B
                     +4.4%                                       +2.8%                   • Enter the business of promoting
                                   1,895                                                   and organizing events
                                                                             187
         1,662 1,608 1,662 1,742                         175   168    166
                                                                                   185                                                             C
1,530                                              161                                   -   Increase profits from events registration fees
                                                                                             and sales of event-related supplies
                                                                                         -   Increase social media presence to promote
                                                                                             online sales
                                                                                                                                                   D

                                                                                         • Develop a network of sports
                                                                                           centers in Spain and Portugal
                                                                                         -   Increase profits from membership fees and
2010 2011 2012 2013 2014 2015                     2010 2011 2012 2013 2014 2015              sales of related sports equipment
                                                                                         -   Promote Decathlon’s community-based brand
 Decathlon Iberia has also increased its investment in logistics to                          image and engage with more customers
 enable its digital strategy
                                                                                         • Become a provider of sports travel
                                                                                         -   Increase profits of travel package and sales of
                                                                                             related sports equipment
                                           Decathlon is expected to strengthen its
                                                                                         -   Closely collect customer’s feedback for each
                                           operations in the online channel by
                                                                                             type of sports to improve product features
                                           increasing the size of its largest logistic
                                           center in Spain. The logistic center has
                                           increased its size to 48,000 sqm, aiming to   Meantime, in order to keep up with its
                                           increase Decathlon’s online sales capacity.   digital strategy, Decathlon Iberia will
                                                                                         also need to focus on online sales.

Source: Decathlon Internal Data, Euromonitor; NueVista Analysis
© Oliver Wyman X NueVista                                                                                                                      3
To boost its profits within a fair cost in next 3 years, Decathlon Iberia should
   enter the business of promoting and organizing events
              Enter the business of promoting               Develop a network of sports centers in                                          Become a provider of sports travel
              and organizing events                         Spain and Portugal
                                                                                                                                                                                               A
               •    Event planning and equipment supply     •                       Partnership with local sports centers                   •   Trip organizing
Predicted      •    Partnership with other companies                                (Sponsorship, business partner, etc.)                   •   Accommodations and transportations
Cost           •    Operation and marketing                 •                       Maintenance in centers’ facilities                      •   Operation and marketing
                                                                                                                                                                                               B
            Revenue in the “Sport Events” in Spain is       Fitness market in Iberia has a high penetration                                 Sports travel market is rapidly growing
Market      growing rapidly and is expected to show         rate with low membership growth, thus the new                                   with CARG 6% and average profit margin
                                                                                                                                            is considerably high
                                                                                                                                                                                               C
Potential   an annual CAGR 7.5 %, resulting in a            network of sports centers is unlikely to attract
&           market volume of 334 USD million by             new comers in fitness market.
                                                                                                                                            There are 3 major type of travel:
Feasibility 2020                                                                                                                            - Sports Event Tourism (Olympic, World Cup)        D

                                                                Membership growth
                                                                                    8
               "Sport Events" revenue in Spain                                      %                                                       - Nostalgia Sports Tourism (Camp Nou)
               (2015 – 2020e; USD million)                                                                            United Kingdom
                                                                                    6                                                       - Active Sports Tourism (Individual
                                                                                    %                France                                   participation as leisure activity)
                                    +7.5%                                                                     Germany    Average growth
                                                                                    4     Russia                        of top 10 markets
                                                    334
                                  276   296   316                                   %
                                                                                                                   Netherlands              However, in Iberia’s market:
                          254                                                              Turkey
                   233                                                              2                     Italy             Sweden          - Traveling budget is very limited
                                                                                    %                Poland       Spain                     - People tends to seek for professional
                                                                                    0
                                                                                    %
                                                                                                                                              guidance when participating in sports travel
                                                                                        2% 4% 6% 8% 10% 12% 14% 16% 18%
                                                                                                                                            - International sports tourism market is
                                                                                           Penetration rate (% of total population)           competitive
                   2015   2016   2017e 2018e 2019e 2020e

               Make profits by charging registration fees   Profits can not be estimated directly, but                                      The average profit margin of traveling
Profits        and boosting sales of related good           the increase of customer participation rate                                     industry is considerably high. For a travel
                                                            could be future revenue                                                         agency, the profit margin is ~10%

Payback        The event can bring instant profits in       Network establishment is very time-consuming,                                   Sports travel can have instant high profits,
Period         rather short payback period.                 and instant profits are hard to achieve.                                        and its payback period is generally short

Overall
Rating

   Source: Statista, NueVista Analysis
   © Oliver Wyman X NueVista                                                                                                                                                               4
Spanish sportswear market grows steadily at CAGR 2%, rising to 5.15 billion
EUR in 2020, while discount textiles has grown rapidly by CAGR 17.9%

While apparel and footwear market in Spain remain stagnant, the sales of sportswear increase steadily with 2.1%CAGR,
and is expected to increase at 2% CAGR until 2020                                                                                                         A
Sales of Apparel and Footwear in Spain               Sales of Sportswear in Spain
(2011-2016, EUR million)                             (2011-2020e, EUR million)                                                                            B
                                                                                                                            +1.9%
                                                                              +2.1%
 25,031 24,061                      24,863
               23,504 23,710 24,445                                                                      4,786    4,888     4,981   5,065     5,153
                                                                          4,386     4,497`   4,671                                                        C
                                                      4,311      4,289

                                                                                                                                                          D

 2011        2012     2013   2014   2015    2016       2011      2012     2013      2014     2015        2016     2017e     2018e   2019e   2020e
The most purchased sports products are textiles, and within the textile sector, the sales grow fast at discounter, with
CARG 17.9% in the past 5 years
Sports products purchased in Spain
(2014; %, by type)                                                       Sales growth in Spain within the textile sector
                                              4.0%                       (CAGR 2012-2016; 2012 sales=100)
                                       9.0%                                   17.9%
      Textiles                                4.0%
      Water sports items            14.0%
      Fitness equipments
      Hunting / Fishing                                  70.0%                                  5.0%                4.4%
                                    17.0%
      Skiing                                                                                                                        0.4%
      Golf
                                                                            Discounter          Luxury           Fast fashion   Medium mass
Source: Statista; Eurostat; El Oberbatorio Cetelem
© Oliver Wyman X NueVista                                                                                                                             5
The apparel market is polarized and experiencing fast changes with disruptive
  players. Spanish sportswear market is dispersed with fierce competition

  Apparel retail is a polarized market where only high-end                              Sportswear Market is dispersed, top 10 major
  premium and low cost products have bargaining power                                   players occupy less than 40% market share.                             A

  Apparel product portfolio positioning                                                 Company Shares of Sportswear in Spain
                                                                                        (2016, %)                                                              B
                                              High-end Premium
                                                                                            Sportswear                                             100%
                                                                                                                                                               C
                                                                                                 NIKE                                 15.1%
                                                                                                                                                               D
                                                                                                Adidas                    11.1%

                                                                                             Decathlon             2.6%
                                                                                                                                  Decathlon is the third
                                                                                                 Puma            2.2%
                                                                                                                                  player in this market, but
                                             Professional                                                                         its market share is way
                                Luxury                                                           Alfico      1.5%
                                                Sports                                                                            below NIKE and Adidas

Fashion                                      Affordable                        Sports
                              Fast Fashion                                                       Asics      1.4%
                                               Sports

                                                                                         VF Jeanswear      1.3%
                                                      Now players like
                                                      PRIMART is disrupting
                                                                                             Wolverine    0.7%
                                                      the market by entering
                                                      the sports business
                                                                                           Alnisa Sport   0.4%

                                                                                             Skechers 0.3%

                                                                                                Others      ~63%
                                             Low Cost

  Source: Statista; Eurostat; NueVista Analysis
  © Oliver Wyman X NueVista                                                                                                                            6
In Spain, more young people participate in sports and they prefer to spend
money on experience over purchasing

In general, more people in Spain do sports on a weekly                        Cycling, Swimming, Hiking, Running and Fitness are the
basis. Young group has the highest participation rate                         most popular sports in Spain. Decathlon has successfully                                                                  A
with a high growth                                                            covered 10 most practiced sports
Sports Practice on a Weekly Basis in Spain                                   Most practiced sports categories in Spain                                                                                  B
(2010 and 2015; % of surveyed population)                                    (2015; % of surveyed population)

      2015         2010                                                      38.7% 38.5%                                                                                                                C
                                                                                        31.9% 30.4%
                                                                                                                          29.0%
                                         46%
        TOTAL                                   +4.5%                                                                             22.4% 20.0%                                                           D
                                   37%                                                                                                      16.8% 14.2%
                                                                                                                                                                             11.7% 11.3%
Gender
                                          50%
             Men                                   +2.1%
                                       46%

                                                                                                                                                                    Tennis

                                                                                                                                                                               Basketball

                                                                                                                                                                                            Chess
                                                                                                                                    Football

                                                                                                                                                  Body

                                                                                                                                                           Paddle
                                                                                                                Running
                                                                                  Cycling

                                                                                                       Hiking

                                                                                                                                               -Building
                                                                                            Swimming

                                                                                                                           Gym
                                     42%
        Women                                  +7.9%
                              29%
Age
                                                           76%                                                       Decathlon Presence
   15-24 years                                                   +5.6%
                                               58%
                                                                              In addition, customers concern more on an experience than
                                                                              on simply buying something
                                            53%
   25-54 years                                         +5.8%
                                                                              •    78% millennials would choose to spend money on an experience or
                                    40%
                                                                                   event over buying something
                                                                              •    55% say they’re spending more on events and live experiences than
                             26%                                                   ever before
 over 55 years                      +3.2%
                            22%                                               •    72% say they would like to increase their spending on experiences
                                                                                   rather than physical things in the next year

Source: Ministry of Education, Culture and Sport of Spain; Euromonitor; NueVista Analysis
© Oliver Wyman X NueVista                                                                                                                                                                           7
More apparel sales is generated online globally. In comparison to other major
markets, Spain still has a great potential in online sales

Globally, E-Commerce platforms (Alibaba & Amazon) play                                In Spain and other major markets, online sales market
important roles in apparel retail market with high absolute                           share has increased rapidly. But compare to major         A
percentage value growth                                                               markets, Spain still has a high potential to grow
E-Commerce vs The World’s Most Dynamic Markets in Apparel and Footwear                Online sales market share                                 B
(Absolute Value Growth, USD Billion; CAGR 2011/2016)                                  (2014 - 2016; % over total apparel sales)

                                                    CARG (2011/2016)                                                                23.0%       C
100      93                                                                     80%
                                                    Absolute Value Growth
80                                                                                                                         21.0%
                                                                                60%
                  59                                                                                                                            D
60                                                                                                19.0%
                            43                                                  40%
40                                                                                                17.1%                    17.2%    17.3%
                                  24
20                                      14     13                               20%
                                                        9        7          6
  0                                                                             0%
      China Alibaba US           India AmazonRussia Mexico Turkey       UK
            Group
In Spain, Amazon makes most revenue online and is expected to
be the leader in apparel market in coming years
Top apparel retail online companies by revenues in Spain
(2016)
                                                                                                                                    4.0%
                                                                                                   2.5%                    3.0%

                                                                                                   1.2%                    1.2%     1.2%

                                                                                                   2014                    2015     2016

Source: Euromonitor
© Oliver Wyman X NueVista                                                                                                                   8
Based on the need of increasing profits quickly and current apparel market’s
situation, Decathlon Iberia should start promoting and organizing sports events
                                                                                                                           1
                                • Need to have alternative income, which could                                                 Increasing profits with clear
                                  generate high revenue with a rather low cost                                                   revenue model and high            A
                                                                                                                                      profit margin
                                • To cope with the fierce competition in apparel             Enter the business            2                                       B
Decathlon Iberia
                                  markets, Decathlon needs to expand its                                                       Emphasizing on experience
needs to boost                                                                               of promoting and
                                  market share rapidly                                                                           instead of direct sales
profits by 2020                                                                              organizing events
                                                                                                                                                                   C
                                                                                                                           3
                                • More millennials participate in sports and they                                                Associating with online
                                  value experience over purchasing                                                               campaign to increase
                                                                                                                                 Decathlon’s presence              D

In Spain people age from 15 to 54 are more active to participate in sports events, and those who don’t are due to lack of
money and sports options. Decathlon can offer them big marathon and frequent community-based sports events
Share of people who attend sports events               Main motivations for not attending in person to sports events
in person in Spain                                     in Spain
(2015; %)                                              (2015; %)
                                                                                            Lack of interest
                                                                                                                               Comparable
54.7% 55.0%                                                     1.8%                       Lack of time                        low entrance       • Big Marathon
              47.8%                                         4.9% 1.2%                      It is expensive                     fee and higher     • Frequent
                  43.7%                                                                                                        frequency
                            41.2%                        7.5% 2.0%            31.3%        Preference for watching TV
                                                                                                                                                    community-
                                                                2.0%                                                                                based sports
                                                                                           or online                           Community-
                                    29.1%                                                                                                           events
                                                       8.8%                                Lack of what is on offer in         based sports
                                                                                                                                                  • Online
                                        22.4%                                              the area where they live            events are
                                                                                                                               easy to get          registration
                                                                                           Difficulties in getting out of home access             • Aim people age
                                                9.1%                                       Don’t have anybody to go with                            from 15 to 54
                                                         18.7%                                                                 Web registration
                                                                         21.8%             There is a few information          and searches

15-19 20-24 25-34 34-44 45-54 55-64 65-74 75+                                              Difficulties to get tickets
                                    (By age group)                                         Hard to understand
Source: Ministry of Education, Culture and Sport of Spain; NueVista Analysis
© Oliver Wyman X NueVista                                                                                                                                      9
1   Organizing three types of sports events can maximize personal experience of
2   our major customers, which could lead to a higher spending…

      Event Types                                                                         Event Details
                                                                                                                                                                   A
                                •   Marathon
                                        • Organizing cheap(Less than other major marathon events), easy-to-join marathons for running-lovers once a year
                                        • Target people from all ages who could run and is willing to participate in marathons                                     B
                                        • Experience focusing: sense of achievements & participations
     Big Major Events:
        Marathon &              •   Triathlon (Swimming, Running, Cycling)                                                                                         C
         Triathlon                       • Combing 3 top favorited sports in Spain
                                         • Organizing medium-sized, less professional triathlon once a year, so that any amateur triathlete could participate in
                                         • Target people who are not professional triathletes                                                                      D
                                         • Experience focusing: sense of achievements & participations

                                •   Community treasure hunting
                                       • Organized on a monthly basis (start from once a month)
                                       • Participants sign up and compete as teams, through entertaining activities the winning team will discover treasure
                                         offered by Decathlon
         Community-                    • Mainly target ages from 12 to 35 years old
           based                       • Experience focusing: participations, community bonds
       high frequency
        sports events           •   Family community sports activities
                                        • Organized on a monthly basis (start from once a month)
                                        • Designing events like mini-Olympics for families, attracting more busy dad and mom to participate in sports
                                        • Mainly target parents from 25 to 50 years old with their kids
                                        • Experience focusing: Children development, family bonds

                                •   One day hiking group
       Group Sport                      • Organized on a bi-monthly basis (start from twice a month and gradually increase the frequency based on needs)
         Events:                        • Calling for participation to a day trip on hiking or mountain sports, designing the routes for participants
         Hiking &                       • Target people over 15 years old, photographers and adventurers
      Mountain Sports                   • Experience focusing: sense of achievements, nature experience

    Source: NueVista Analysis
    © Oliver Wyman X NueVista                                                                                                                                 10
1   … and can also have a rather low cost to boost Decathlon Iberia’s revenue
2   with several new income sources
    Major Revenues and Costs for organizing three types of events in Iberia                                     Monthly Revenue & Cost Evolution of
                                                                                                                Decathlon after entering new business        A
    Major profits*                                                Major costs*                                  (2018-2020e; EUR Million)
    •   Marathon                                            •    Marathon
                                                                                                                      Monthly Revenue         Monthly COGS   B
             • Registration fee (60€, as the                         • Operations (HR and marketing)
                cheapest official marathon offered                   • Food and beverages for participants            Monthly Cost            Monthly OPEX
                in Spain)                                            • Marathon facilities
                                                                                                                1.8                                          C
                      Zurich Barcelona Marathon
                      has over 20,000 participants
                      with a 70€ registration fee
    •   Triathlon (Swimming, Running, Cycling)              •    Triathlon (Swimming, Running, Cycling)         1.5
                                                                                                                                                             D
             • Registration fee (Early bird 200€,                     • Operations (HR and marketing)
                Regular price 250€)                                   • Food and beverages for participants
                      Ironman has 1600                                • Triathlon facilities
                      participants with ~250€ fee                     • Insurance fee                           1.2

    •   Community treasure hunting               •               Community treasure hunting
           • Registration fee (Individual: 25€,                     • Operations (HR and marketing)
             Group: 22€)                                            • Prizes and gifts for final competition    0.9
           • Related apparel & equipment’s sales                      winners
    •   Family community sports activities           •           Family community sports activities
            • Registration fee (50€/kid, parents are                 • Venue fee
               free to join)                                         • Operations (HR and marketing)            0.6
            • Related equipment’s sales                              • Related facilities
            • Partner advertisement fee (200€ for                    • Prizes and gifts for final competition
               each booth)                                              winners
                                                                                                                0.3
    •   One day hiking group trip                           •    One day hiking group trip
            • Registration fee / Group trip fee                      • Operations (Guide & transportation)
              (45€ per person)                                       • Food and beverages for participants
            • Related equipment's sales                              • Insurance                                0.0
                                                                                                                       Year 1        Year 2    Year 3
    * More information can be found in the Excel file attached
    Source: Desktop Research; NueVista Analysis
    © Oliver Wyman X NueVista                                                                                                                           11
Financial projections for all sports events

Given all three types of event, Decathlon Iberia is expecting to have over 49 million EUR revenue in the next 3 years,
with a net profit of 16.6 million EUR*
                                   Account(€)               Y1 - 2018         Y2 - 2019       Y3 - 2020          Total                                   A
                                         Revenue from event 1                 4,237,500            5,085,000        6,102,000          15,424,500
         REVENUE                         Revenue from event 2                 3,048,000            3,048,000        3,048,000          9,144,000
                                         Revenue from event 3                 6,480,000            8,100,000       10,125,000          24,705,000
                                                                                                                                                         B
       Total revenue                                                         13,765,500           16,233,000       19,275,000          49,273,500
                                          Total cost for event 1               684,000              787,400          911,480           2,382,880
           COGS                           Total cost for event 2              1,032,000            1,032,000        1,032,000          3,096,000
                                                                                                                                                         C
                                          Total cost for event 3              2,764,800            3,456,000        4,320,000          10,540,800
        Gross profit                                                          9,284,700           10,957,600       13,011,520          33,253,820
                                                   Staff                       975,000              975,000          975,000           2,925,000
                                                                                                                                                         D
OPERATING EXPENSES                           Facilities&office                 400,000              393,000          393,000           1,186,000
                                                General                       1,780,000            1,780,000        1,780,000          5,340,000
        EBITDA                                                                6,129,700            7,809,600        9,863,520          23,802,820
    DEPRECIATION &
                                       Depreciation&amortization                 0                    0                0                   0
     AMORTIZATION
         EBIT                                                                6,129,700            7,809,600        9,863,520           23,802,820
                                            Interest expenses                    0                    0                0                    0
       Interest &Tax
                                                   Tax                       1,838,910            2,342,880        2,959,056            7,140,846
          Net profit                                                         4,290,790            5,466,720        6,904,464           16,661,974

In terms of margin and ROI analysis, business of organizing sports events will have better performance than in 2015
             Analysis                          Definition          Y1 - 2018         Y2 - 2019         Y3 - 2020           Decathlon 2015
          Gross margin                   Gross profit/Revenue       67.45%               67.50%           67.50%                35.80%
          EBIT margin                       EBIT/Revenue            44.53%               48.11%           51.17%                 9.70%
         Net profit margin                Net profit/Revenue        31.17%               33.68%           35.82%                 7.00%

             Analysis                          Definition          Y1 - 2018         Y2 - 2019         Y3 - 2020     Decathlon 2010 – 2015
                                        Gain from investment/
      Return on investment                                          28.61%               36.44%           46.03%                ~40%
                                          total investment
 * More information can be found in the Excel file attached
 Source: NueVista Analysis
 © Oliver Wyman X NueVista                                                                                                                          12
3   Online campaign for the sports events can reinforce Decathlon Iberia’s
    presence in target customers, and boost event participation and product sales
    The major audience of social medias age from 18 to 45, and they tend to                                   Follow-up social media campaigns and
    share information and participate in virtual campaigns                                                    other usages could be created to help                          A
    In general, there are 54% Spanish                Social network users in Spain                            promoting and organizing sports events
                                                     (2015 2020e; Million)                       22.29
    participate in social networks. In addition,                                21.32   21.79
                                                                                                              Sports events sharing
                                                                        20.84                                                                                                B
    users are increase steadily. Most active            19.88
                                                                20.36
                                                                                                              -     Content: Participants can upload their photos or
    social media users age from 18 to 45,
                                                                                                                    videos on social media to share their experience
    covered our preliminary target audience
                                                                                                              -     Satisfying the passion for social sharing
                                                        2015    2016    2017e   2018e   2019e   2020e
                                                                                                              -     Encouraging more potential clients to participate in
                                                                                                                                                                             C
    Frequently carried out activities on social networks by users in Spain                                          Decathlon’s sports events
    (2016; %)                                                                                                 -     Drive online sales by increasing online shop visitors
       79%                                   Chat/send messages                                                                                                              D
                 57%                         Watch videos/listen to music
                    48%                      See that contacts are doing                                      Online sports tracking platform
                         36%                 Publish content
                         36%                                                                                  -     Content: Participants are able to track their progress
                                             Follow influences
                           31%               Professional purposed/study                                            and compete with their friends to people nearby
                            29%              Commenting current affairs                                             through Decathlon App or official website
    Needs
                             26%             Online games                                                     -     Satisfy their need of participating in virtual
        Sharing information 23%              Follow brand                                                           campaigns
                              23%            Get to know people                                               -     Encouraging more potential clients to participate in
        Participating in      23%            Take part in competition                                               Decathlon’s sports events and online competitions
        virtual campaign       19%           Take about products                                              -     Increase online customer stickiness by expanding
                                16%          Buy/sell to contacts                                                   Decathlon’s online services
         Both                    14%         Interact with others nearby
                                 14%         Contact brand customer service
    With higher presence in social medias, Decathlon can develop more campaigns for more exposure, such as:
    #myDecathlonSports                 #ExerciseWithDecathlon                                                          #DecathlonFitnessChallenge
    - Encourage clients to upload      Invite fitness related Key Opinion Leader to post fitness tutorial, invite      - Develop online campaigns for followers to invite
    sports videos, then repost by      subscribers to follow the instruction and express their opinions                their friends and to complete a short term fitness
    Decathlon official account         Connecting social network to Decathlon website. Build sports blog,              contest together.
                                       fitness experience sharing to transfer Decathlon from online shopping           - Users gain more motivation and feel more
                                       website to integrated lifestyle sharing portal                                  connected to their friends
    Source: IAB Spain; Statista; NueVista Analysis
    © Oliver Wyman X NueVista                                                                                                                                        13
Case study: Decathlon UK successfully launched its sports series and
attracted more local people to participate in sports events to drive sales
Decathlon UK started its sports series project from 2011, started with family                          Decathlon UK has a higher CAGR in
fun day, then gradually changed to sports series events including running,                             sales compared to industry average                    A
hiking and fitness, they are also working on horse riding and cycling.                                 Decathlon UK Sportswear Sales
                                                                                                       (2011 - 2016; GBP Million)
                                                                                                                                                             B
                                                                                                                          +13.8%                60.6
                                                                                                                                        55.1
                                                                                                                                50.6                         C
                                                                                                                        44.3
                                                                                                                 37.3
                                                                                                         31.8                                                D

  - As part of a UK wide initiative, the Decathlon Sports Series will be staging a host of 5k and
  10k running events, aiming to increase participation in running, whilst creating a sporting
  occasion to add to the calendar by bringing together the local community
                                                                                                         2011   2012    2013    2014    2015    2016
  - All Decathlon Sports Series events are free and exclusive for Decathlon Card holders, where
  each participant will receive a Sports Series Goody Bag and Medal at the end of the race. In          Sportswear Sales in UK
  order to register for Decathlon Card, one need to submit related data and sports interests online,    (2011 - 2016; GBP Million)
  so Decathlon UK could also gather users’ information to improve their sales strategy
                                                                                                                           +7.6%                6,828
                                                                                                                                        6,279
As the sports series involve more and more participants, some bloggers                                                          5,692
                                                                                                                        5,293
voluntarily joined the campaign of “Decathlon Bloggers Community” to                                    4,727
                                                                                                                4,989
share their experience on “Sports for All”

                                     The group is formed of some of the UK’s most influential
                                     Fitness and Sports Bloggers brought together to form the
                                     awesome #DecathlonBloggersCommunity by Decathlon UK

                                                                                                         2011   2012    2013    2014    2015    2016
Source: Decathlon UK website; Euromonitor; NueVista Analysis
© Oliver Wyman X NueVista                                                                                                                               14
By promoting and organizing sports events, Decathlon Iberia could also
increase its digital capabilities and drive its online sales
Currently, Decathlon Iberia, as a top-ranked e-commerce website, doesn’t work efficiently. With 4.8 million site visitors
every month, only few users were successfully converted to Decathlon’s customers                                                                                       A
                                         Registered                 Engaged                                        •   Low registration rate: only 8% of
 Visitors                                                                                        Buyers                website visitors would registered online
                                                                                                                                                                       B
 4.8 million                                 8%                                                    1.2%
                                                                      6%                                           •   Low engagement rate: only 6% of
                                                                                                                       registered user would select items online
                                                                                                                                                                       C
                      Anonymous                   Unengaged                   Abandoned                            •   Low payment rate: only 1.2% active
                            -92%                       -94%                      -98.8%                                users would make the payment
                                                                                                                                                                       D
Updated Online Customer Journey (Website based e-commerce)

         Visitors                                       Users                         Active User                       Buyers                    Promoters

                                   Registered                           Engaged                           Paid                        Engaged

  •   Sports events                •   Making sports events             •   By recommending events        •   With specific needs
                                                                                                                                     •   With online sports
      could attract new                registration online could            to related apparel and            – to participate in
                                                                                                                                         tracking platform, user
      website visitors                 significantly increase the           equipment, registered             certain event –
                                                                                                                                         experience could be
  •   With higher                      registration rate                    users could engage with           users are more
                                                                                                                                         tracked and analyzed
      exposure on social           •   User data can be collected           more product selections           likely to purchase
                                                                                                                                         to increase their
      media, more new                  during the registration          •   User preference could be          from Decathlon
                                                                                                                                         satisfaction rate
      visitors could also              process to improve                   recorded and be applied
      be introduced to                 Decathlon’s portfolio                to improve customer
      official website                                                      purchasing experience

Source: Guesswork; Statista; NueVista Analysis
© Oliver Wyman X NueVista                                                                                                                                         15
To launch this new business, Decathlon Iberia has 3 stages of implementations
from 2017 to 2020

                            Stage 1 - Now~ 2017                   Stage 2 - 2018                     Stage 3 - 2019~2020                   A
                                   Preparation                    Testing round                             Expansion
           Goal                Internally prepared for     Launch in 4 major cities – Madrid,   Gradually launch in all 10 selected        B
                            launching this new business    Barcelona, Valencia and Lisbon       cities based on performance
                                                                                                                                           C
                             • Market research             • Recruiting & training              • Performance evaluation
                             • Organizational structure    • Content design                     • Recruiting & training
                               adjustment (Internal and    • Event planning (Including venue    • Content design                           D
        Main                   external recruiting)          selection, budgeting etc.)         • Event planning (Including venue
      Operations             • Content design              • Partnership development              selection, budgeting etc.)
                             • Event planning              • Marketing promotion (Online and    • Partnership development
                             • Partnership development       offline)                           • Marketing promotion (Online and
                                                                                                  offline)

                                                           • Triathlon in June                  • Triathlon in June
                                                           • Marathon in October                • Marathon in October
        Events                        N/A
                                                           • Other events will be held on       • Other events will be held on a
     Information
                                                             a regular basis                      regular basis and increase
                                                                                                  frequency based on performance

                             • Prepared for related        • Establish connection between       • Continue to connect events and
                               online sales support,         events and online sales by           online sales
         Others                including website design,     providing selected items for       • Collect data from participants to
                               social media campaign         participants, related social media   improve product design and future
                                                             campaigns                            event implementation

Source: NueVista Analysis
© Oliver Wyman X NueVista                                                                                                             16
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