Decathlon: how the sports equipment giant is coping with the shortage of bicycles
Decathlon has a fairly good command of its production chain. Despite everything, we have seen tariff increases. What are they mainly due to?
I would like to tell you that we have not been impacted [by the Covid-19 pandemic and the shortage of components, Ed], unfortunately we have been impacted like all the other brands, even if we integrate a lot. The cost of raw materials such as aluminum has skyrocketed, tire rubber too, the various components supplied by Sram and Shimano too. And the cost of transport exploded in a hallucinating way: it was multiplied by 8, and by 13 for certain containers.
Unfortunately, I think that other price increases will happen.I read a lot of comments on social networks and I receive all the customer reviews from France: Decathlon's objective is not at all to get rich during the crisis. Our objective, really, is still to make sport accessible to as many people as possible, it has always been the basis of the company, that has not changed, we are not opportunists.
However, we are required to deliver results, so we had to increase the price of certain bikes. I unfortunately think that other price increases will happen.
As there is less stock, we also favor stock on the Internet.To limit these price increases, we take everything back and calculate the overall cost of the product with a margin commitment. If the expected margin decreases too much, or even disappears, we think about how to increase the bike while remaining on correct prices, also compared to the competition. We remain cheaper than the competition, even if the prices have increased.
As there is less stock, we also favor stock on the Internet. We work with the 100 biggest stores in France and in the majority countries, in which we have exhibition bikes that we will keep all season long, which are not salable, so that our customers can try them out. The customer then orders on the web with a reception in 48 to 72 hours in his store.
At Decathlon, since the creation of the company, you know that you enter the store and leave with the product you came to pick up. This is changing...At Decathlon, since the creation of the company, you know that you enter the store and leave with the product you came to pick up. This is changing, on the one hand because of the current shortage problems, and on the other hand because an electric bike costs 2000, 3000, 4000, 5000 €. We are working on more and more expensive bikes. For example, in XC mountain biking, this year we sold bikes at €3,300. With 1500 stores in the network, it's impossible to have a show bike in every store, especially with the different sizes available.
We are now working more on centralization, because the weight of the stock is expensive, the show bike in the store loses value... A person who puts 2000 to 3000 € in a bike is more likely to wait 2 or 3 days to have a bike that has never been used in the store and that has been prepared for her. Buying on the Internet is taking up more and more space, so we will continue to centralize the stock anyway.