Apparel Online India Magazine May 1-15, 2019 | Page 46

DOMESTIC UPDATE
Decathlon succeeds Adidas, Nike and Puma to
become No. 1 in sports gear category
French sportswear and sporting
goods retailer Decathlon has
demoted older rival brands in the
segment like Adidas, Nike and
Puma by registering higher revenue
in FY 2018. With revenue of Rs.
1,278 crore for the year to March
2018, Decathlon has also become
India’s second-largest single-brand
retailer after Xiaomi. The brand
also made a profit of Rs. 33.8 lakh,
the first in India for the retailer that
began operations in the country
about a decade ago. In FY ’16-17,
the brand had a net loss of Rs.
53.1 crore on revenue of Rs. 925
crore, reflecting a 38% jump in FY
’18 sales, regulatory documents
sourced from research platform
Veratech showed. Earlier in the
month of February this year, Puma
was declared as the sportswear
market leader in India. Within two
months of that announcement, now
Decathlon has overtaken Puma in
sales revenues.
“Decathlon has lower-end
price positioning and targets
consumers who see value-
for-money as more important
than brand image. In doing
so, it appeals to a wide range
of age groups, and more
to participants in sporting
and outdoor activities,
as opposed to consumers
buying sportswear as
fashion statement.”
– Alexander Göransson,
Consultant, Euromonitor International
Decathlon prides in selling through
its 70 large, warehouse-like stores
at prices about 30-40% lower than
the competing products. The brand
sells everything from running shoes
to mountaineering equipment
under its own brands. This also
helps the retailer earn higher
operating margins.
Decathlon uses a combination
of in-house manufacturing and
outsourcing to stock its shelves
and by selling only private labels,
it controls almost every bit of
operations, from pricing and design
to distribution and keeps its costs
and selling prices low. This operating
model has worked both globally and
in India. Here, the company sells
more than 500 products catering to
70 sporting disciplines. Decathlon
opened its first cash-and-carry
format and wholesale store in 2009.
However, it got approval for single-
brand retailing in 2013 and changed
its business model from wholesale
to retail.
After 28% growth in 2018-19, Khadi targets
Rs. 5,000 crore sales for FY '20
Khadi has been a new rage in India
for some time now and it is not
showing any sign of slowing down
in the near future. With sales rising
28 % to Rs. 3,215 crore in 2018-19,
Khadi has registered its one of the
most rapid successes in recent
years. “There has been a very good
response across segments be it
fabric, readymade garments and
even solar vastra. During the last
five years, we have seen a quantum
jump every year,” said V K Saxena,
Chairman, Khadi and Village
Industries Commission (KVIC).
While KVIC has been complaining
of production growth not keeping
pace with demand, it reported
a 17% jump in production to
Rs. 1,900 crore in 2018-19,
compared to 7% a year ago. KVIC’s
revenue comes from sale of khadi
but the majority of it is from village
industry products such as food
products and cosmetics, which are
many times bigger in share than
garments.
The steady growth in khadi sales
has helped KVIC bridge the gap
46 Apparel Online India |
MAY 1-15, 2019 | www.apparelresources.com
with some of the leading garment
majors, which are seeing a slower
pace of growth. In 2017-18, Aditya
Birla Fashion and Retail, which
boasts of leading garment brands
in its portfolio, reported sales of
Rs. 7,181 crore, while Raymond
had consolidated revenue of over
Rs. 6,000 crore, but both companies
saw a growth of below 10%.
Fabindia, which is seen to be a rival
to Khadi, had sales of over Rs. 1,000
crore but the growth was almost
flat. Saxena has set a sales target of
over Rs. 5,000 crore for the current
financial year, buoyed by the recent
spurt in demand. However, the
target is highly ambitious given
that it will require a growth of 55%
which is unprecedented at least
since 2004-05.