The discount Decathlon doesn't want to be a Lululemon.

Decathlon has raised its prices.

This well-established French sports brand, which is nearly 50 years old, has always adhered to a strategy of affordable pricing. However, starting from last year, Decathlon's price hikes have been accelerating, with many items seeing increases of 50% to 100%. For example, the price of a white pure cotton short-sleeved T-shirt has doubled from 19.9 yuan to 39.9 yuan; a backpack that used to cost 49.9 yuan has surged to 89.9 yuan; and a previously 199 yuan windbreaker now sells for 249 yuan. In Decathlon stores, the presence of the blue-colored products that symbolize low prices has also weakened significantly.

Furthermore, Decathlon has also launched a new brand strategy called "Polar Star," along with a new logo and slogan: "Ready to play?" Typically, a brand will release a new strategy under what circumstances? The answer is primarily "transformation."

Decathlon's global chief customer officer, Celine Del Genes, cryptically stated, "Our strategy is to build a multi-domain professional sports brand." According to foreign media reports, Decathlon is reshaping its brand in hopes of increasing brand awareness by leveraging its official sponsorship of the 2024 Paris Olympics.

In addition to raising prices, Decathlon has also embraced a representative of the petite bourgeoisie—coffee.

On April 15th, Decathlon's first coffee corner, COFFEE HOUSE, opened in the form of a shop-in-shop at the Decathlon Wujiaochang store in Shanghai, China. In addition to the regular series of coffee and baking products found in coffee shops, Decathlon has also incorporated specialty drinks with sports attributes, such as the New Muscle Protein Shake and the energy bubble water containing 1500mg of Decathlon L-carnitine powder. This move clearly aims to capture the characteristic of brand users' love for sports and further tap into their demands in the "sports + diet" aspect.

Decathlon's price increase strategy will be effective? Or will it backfire? For a brand known for its fair prices, how difficult is it to truly move towards a high-end path? Today's push, let's calculate the future of Decathlon.

Fair prices are no longer comfortable.

Decathlon's business model is easy to associate with Costco, a kind of warehouse-style store strategy.

In Decathlon, the large store is the foundation, with thousands of square meters of large stores housing a large number of own brands, covering more than 80 types of sports you can think of. And in each product line, there are always several blue goods with the highest cost performance and the most popular, which are also known as "magic bags" and "magic shoes" by netizens.

Like Costco's free tasting, Decathlon also offers free trial play for customers. Decathlon specifically allocates a certain store area for consumers to play roller skating, table tennis, archery, or fitness, coupled with generous parking benefits, Decathlon has become a paradise for some people to take their children out. It can be said that Decathlon has long provided consumers with a one-stop experience of socializing, exercising, and shopping.

Fair prices, at the beginning of operation, are usually welcomed by both brands and consumers.

In Decathlon's profit system, doing full-category fair trade business and winning thin profits with cheap and large quantities is the most important strategy. However, over time, the drawbacks of fair prices will gradually emerge.

In order to make hard-earned money, Decathlon has never dared to raise prices at will, but has tried its best to reduce costs. However, the reduction of costs obviously has a limit, and the contribution of cost control to profits will also decrease marginally.

Decathlon has been the first team of global sports brands for many years. However, elephants also have their own troubles.

In the 2023 fiscal year, the company's sales growth rate was only 1.15%; the net profit increased by only 0.9%. This is the second year of significant slowdown in Decathlon's revenue growth rate after 2022. In 2022, Decathlon's sales growth rate sharply decreased from 21.3% in 2021 to 12%; the net profit margin in 2022 was 5.9%, which is less than half of Nike's (11.8%).

This means that low prices are no longer Decathlon's comfort zone.

In addition, Decathlon and Costco's business models are still highly similar, but the tracks they are on are different.

Costco's products cover most aspects of daily life, especially food and daily necessities, which are essential for everyone's life. It is not surprising that most members drive to Costco every week.

But Decathlon only covers the sports category, in other words, even people who love sports are not likely to visit a sports goods store every week. Therefore, the difference in purchasing frequency between Decathlon and Costco's customer base is evident.

Going against the current, if you don't advance, you retreat. Decathlon has felt the crisis, how to achieve profit growth within limited purchase times? The first response that this old French brand came up with is to raise prices.

In fact, the price increase of outdoor products has long been a common occurrence in recent years. According to Tmall sales data, for the category of just one type of outdoor clothing, including domestic and foreign brands such as The North Face, Columbia, and Decathlon, there has been an increase of 2.8% to 58.9%. In addition, Uniqlo has also shown a noticeable trend of price increases in recent years.

"Everyone else is raising prices, if I don't, wouldn't I be at a loss?" Decathlon's price increase strategy seems to be influenced by a herd mentality.

In January 2024, Zhang Xiaoyan, the former head of the China region for lululemon, jumped ship to Decathlon and took on the role of CMO (Chief Marketing Officer) for the China region. Prior to joining Decathlon, Zhang Xiaoyan had worked for lululemon and the luxury sportswear brand Bogner, and high-priced marketing had become a personal label for Zhang Xiaoyan. It is precisely this point that has given Decathlon hope of breaking free from the norm.

After Zhang Xiaoyan joined, Decathlon's fans quickly realized that something was amiss. Are they trying to push Decathlon onto the path of lululemon? Sure enough, after the price increase, the next question is, how many consumers will be willing to foot the bill for it?

Lululemon's ambition

Although netizens believe that Decathlon wants to earn money from lululemon users, the fact is that, whether it's the selling price, style, target audience, or business model, the two brands are quite different in many aspects.

The popularity of lululemon was somewhat unexpected. At the 2022 Beijing Winter Olympics, the uniform red down jackets of the Canadian delegation amazed Chinese viewers in front of their TV sets, and from then on, this brand, which started with yoga wear, entered the view of Chinese consumers. In addition to the divine assistance of the Beijing Olympics, lululemon's success in breaking into the Chinese market was more about seizing the combination of "female consumerism + the rise of yoga and fitness."

Many female yoga practitioners often struggle to find the perfect pair of yoga pants, which need to be aesthetically pleasing, shaping, and avoid embarrassment, and although it doesn't require any particularly high-tech features, at the time when such goods were scarce, lululemon's timely appearance promptly filled the gap in the female consumer demand, becoming a must-have for middle-class women.

It can be said that Decathlon occupies the market with a full range of products, while lululemon breaks through with a single major product, yoga pants. Since 2019, China has led the global expansion of lululemon's stores, and even in 2021, over 60% of the new stores came from China. Nowadays, lululemon has long been "fed up" with the instability of relying solely on the single explosive SKU of yoga pants and wants to become a high-end sportswear brand with a full range of products.

For lululemon, the current task is more about expanding from female consumers to male consumers.

To achieve this, lululemon has stepped up its efforts in both marketing and product development. From a marketing perspective, lululemon has enlisted Zhou Guanyu, the first Chinese F1 driver, as its spokesperson. With his racing driver identity and handsome appearance, Zhou Guanyu can be said to be "appealing to both men and women."

From the product development perspective, in November 2023, lululemon established its first men's clothing pop-up space in Shanghai; at the end of January this year, the company opened its first independent men's clothing store in Beijing's Yintai Center, which is also its first independent men's clothing store in the Asia-Pacific region.

The business of men's sports products is not easy. Compared with the rise of female consumerism, male consumerism has long been established, and men's clothing is a recognized competitive field. With leading brands such as Nike, Adidas, and Decathlon dominating the market, the road for Lululemon's men's clothing is undoubtedly challenging.

Lululemon's transition is not easy, but for Decathlon, expanding its brand presents an even greater challenge. Interestingly, Lululemon does not want to be exclusive to "hot girls," and Decathlon does not want to be a "straight male paradise."

Ultimately, both sides do not want to be limited to a single customer group, but rather aim for a diversified product line. Expanding the consumer base is not easy in the current situation of insufficient overall consumption. Therefore, the way to expand the market is to radiate to new customer groups through a variety of product lines.

However, Lululemon is expanding horizontally, aiming for a balanced consumer group of both men and women, while Decathlon's goal is to expand vertically, transitioning from affordable to high and low price points.

Decathlon does not want to be like Lululemon, as Lululemon's customer base remains fixed in the middle class. Decathlon's ambition is to cater to both the middle class and the general public, becoming an evolved version of itself.

Fabien Brosse, Decathlon's global chief product brand officer, admitted in an interview that Decathlon does intend to develop a high-end brand, but this does not mean it will abandon its affordability. Decathlon's primary goal is to make sports accessible to everyone, which will not change. However, they also hope to gain a certain market share in the professional market.

In the high-end market, consumers have higher demands and lower tolerance. A high-end brand producing affordable products may lose its identity, but few consumers question its ability. However, when an affordable brand produces high-end products, consumers' considerations become more complex.

Raising prices to what extent? It is a risky move for Decathlon, as it heavily relies on loyal customers. To compensate for the potential loss of old customers, Decathlon must compete aggressively.

If two similar-priced yoga pants have good quality and aesthetics, most consumers would choose Lululemon over Decathlon. To compete, Decathlon must raise prices while maintaining a better cost-performance ratio than its competitors.

In conclusion, the road to brand elevation is not a short-term endeavor, and Decathlon's price increase may not be well-received initially. However, with a range of affordable products, it can gradually grow in a balanced and steady manner on the path to high-end development. Whether Decathlon can win in the high-end market remains to be seen, and it will take time and market feedback to determine the outcome.