Decathlon - Oliver Wyman Iberia Case Competition

© Oliver Wyman
OCTOBER 2017
OLIVER WYMAN IBERIA CASE COMPETITION
DECATHLON’S NEW HORIZON
PREPARED BY THE IEers

1Team IEers, IE Business School© Oliver Wyman Team IEers, IE Business School
DECATHLON – STATUS QUO
problem summary and solution approach
Problem definition
Decathlon Iberia must tackle the insufficient growth it is facing in its core business. To attain its 2020 targets, the firm is
considering to enter other sports-related businesses in the region. With a €15million budget, the solution must be disruptive and
boost its profit (+2.8% CAGR since 2010) in order to follow its revenue growth (+4.4%).
Problem Solving Approach:Revenue and EBIT for Decathlon Iberia
in € million
Analysis of Decathlon customer
base: needs & preferences
Identification of business
opportunity
Market analysis
Implementation strategy
Executive Summary
Microsoft Word
Document

DECATHLON – STATUS QUO
company value proposition and customer analysis
t
*See appendix 1
Going from supporting the customer in his choice and
understanding of the product to actually experiencing
and understanding the sport
WordCloud Decathlon Customer Survey*
What do you think of Decathlon?
Solution must follow Decathlon’s value
proposition
 “Make sport available for all” by breaking down the
greatest barriers of sport: prices and practical use of
the equipment
o Support the customer in the understanding of the
product, allow him to test it in the stores
o Focus on low prices through cost minimization in
both production and distribution
 “Focus on innovation”: 10 new patents every year,
strong investment in R&D

IDENTIFICATION OF SOLUTION ALTERNATIVES
and application of selection criteria
Selection criteriaIdentified Solution Possibilities
 Promotion & organization of sport events
 Develop network of sports centres in Portugal & Spain
 Decathlon Sport Travel
 Cooperation with sport centres (sponsoring equipment / offering
workshops / integrate shop)
 Decathlon organizes (smaller) events / excursions / training
sessions as a Pipe
 Decathlon is platform enabling community to organize events /
excursions / training sessions
 Profitability:
o New revenue
stream
o Market size /
scalability
 Competitive
landscape
 Digitalization
 Customer preference:
experience
 Timeframe – business
impact by 2020
 ROI comparison
 Aligned with value
proposition
 Synergies
Promotion & organization
of sport events
Network of sport centres
Decathlon sports travel
Decathlon as a pipe
Decathlon as a platform
Fitness centre cooperation
1
5
5
3
5
3
2
1
4
4
4
3
1
1
3
2
3
2
1
1
2
3
4
1
4
2
5
4
4
2
1
1
4
4
3
2
1
1
4
3
3
2
1
1
3
4
5
1
1
3
2
4
1
3
54
65
136
126
140
82

DECATHLON AS A PLATFORM
as choice of top 3 comparison
DecathlON – Platform
Enable sport guides and users to
connect
Revenue stream:
 % of class price
 Rental service of equipment
Decathlon Sport Travel
Provide sport travel experiences
Revenue stream:
 Travel price
Decathlon – Pipe
Organize variety of experiences:
workshops, trainings, sport events
Revenue stream:
 Class price
Cons:
 Classes offered would not be as
diverse as Platform
 Less digital than Platform
 More costly than Platform
Cons:
 Clients would mainly participate in
only one / a few travels
 Budget restrictions
Pros:
 More control of activities
 Expand current workshop offer
Pros:
 More control of activities
 Very aligned to company values
Revenue; Experience; Digital;
Community; Innovation; Cost
Cons:
 Small influence on type of offered
services
 Professional trainers not guaranteed
Pros:
For sport guides:
 Advertising / customer base
 Brand image
 Rental service for clients
 Best trainers (ratings): career
possibility
For customers:
 Rental of equipment
 Community

Iberia
 Rural areas
 Cities
Age group
 Age: 0-24
 Age: 25-44
 Age: 45+
5C MARKET ANALYSIS - CUSTOMER
market segmentation and target group selection
Psychographic BehavioralGeo- &
Demo-
graphic
I’ve always watched golf on TV but its etiquette
indimidates me and the complex rules have kept me
from trying it. It would be cool to have a buddy who
could introduce me to the sport.
I love having a healthy nutrition and climbing
complements the physical well-being with mental focus. I
would love to share my interest for this activity by
discovering new locations with other people.“
”
“
”
Lifestyle
 Workaholic | family-centered* | sedentary |
sport-savvy | active | health aware
Interests
 Not interested in sports | interested in sedentary
activities | thrives in competitive environments |
enjoys social interaction | wants to keep in
shape whilst enjoying | fueled by experiences
Attitude towards sport
 Practices as a duty | practices moderately |
intimidated by sport environment | adverse to
sport | wants to try new sports
Consciousness
 Price conscious | quality conscious
User status of similar platforms
 Non | ex | potential | first time |
unsatisfied regular users |
satisfied regular users
Platform adoption readiness stage
 Unaware* | aware* | informed* |
interested | desire | intend
Loyalty potential
 Hard-core: stick to one brand |
split: comfortable with utilizing
several providers | Shifting: loyal
to one brand for a limited amount
of time | switchers: unlikely to be
loyal to a brand
José, 42, engineer, dad of 2 Maria, 29, consultant, environmentalist
= chosen target group

6Team IEers, IE Business School© Oliver Wyman© Oliver Wyman
5C MARKET ANALYSIS – COMPETITORS
analysis of differentiating factors
Gyms Personal Trainers Media solutions* Entrename Meeting platforms**
Price 35-50 Euro/month 20-40 Euro/h 0-15 Euro/plan 20-40 Euro/h 0-20 Euro/h
Offering
- Group Classes
- Machinery
- Weight area
- Equipment
- Trainers
- Personal classes
-Nutrition plans
- Group classes
- General media - Class trainings
- Personal trainings
- At home trainings
- Events
- Workshops
- Classes
Revenue Stream
- Subscription fee - Pay per class - Advertisements
- Subscription
- Advertisement
Target Clients
- Sport enthusiasts
- People seeking
physical shape
- Sport enthusiasts
- People seeking
physical shape
- Stay at home
- Introverts
- Sport enthusiasts
- People seeking
physical shape
- Collectivists
Collaborators
- Trainers
- Nutritionists
-Machinery providers
- Gyms - Platforms
-Sport brands
- Gyms
- Trainers
- Venues
Location
- Dedicated facilities - At home
- Sport center
- Online - Gyms
- At home
- Everywhere
Customer
Perception
- Professionalism
- Empowering
- Intimidating
- Professionalism
- Empowering
- Intimidating
- Premium
- Easy access
- Individual
- No obbligation
- Professionalism
- Empowering
- Intimidating
- Digital
- Easy access
- Community
- No obbligation
Intensity of
competition

5C MARKET ANALYSIS - COMPETITORS
added value analysis
*Youtube videos, Kayla Itsines, Nike training +
**Meet up, Time Out
Customizable
Professional
Digitalized
Affordable
Easy going
Ratings possible
Gyms Personal
trainers
Media
solutions*
EntrenaMe Meeting
platforms**
DecathlON
Community focused
Scalable
Accessible
Specialized
DecathlON follows the company’s value proposition and differentiates itself from it’s competition by being affordable and easy
going while simultaneously adding to the company’s digitalization strategy and creating a community for it’s customers. The
platform ensures quality through a rating system and high specialization in the sports field as well as customization through an
idea exchange forum.
Low Capabilities High Capabilities

5C MARKET ANALYSIS - COMPANY
identification of market niche
Strategic Groups - Polarization
+--
+ A
B
C
D
easygoing
specialized
 Identification of market gap between demand
and supply in segment of easy-going and
experience focused sport offerings
 The DecathlON platform connects amateur
sport guides who offer sport activities with
potential customers interested in new sport
experiences
 DecathlON combines specialization in sports
sector through existing brand image with easily
accessible platform in community focused
environment filling the identified market gap

Phase one of launch offers lower commission fee of (15%) to sport guides. Once platform is successfully
launched, tire structure will be introduced, offering guides who attract same customer for several sessions lower
commission fee for said customer
Based on their loyalty to the platform and number-of-lessons-to-ratings-ratio, sport guides could be
considered for positions as Product Developers or be chosen as Ambassador for the
Decathlon brand
Sport guides automatically adhere to Decathlon fidelity program and earn
points that entitle them to discounts in the Decathlon stores for any kind of
sports equipment
DecathlON allows sport guides to enlarge customer base
compared to solely offering classes and trainings held in
gyms or privately
Platform bridges existing gap between
demand and supply for easily
accessible and experience focused
sport offerings
5C MARKET ANALYSIS - COLLABORATORS
incentive scheme to attract sport coaches

52%
13%
Market growth key drivers
5C MARKET ANALYSIS - CONTEXT
market size, professional sport training platform market used as proxy
145
168
191
214
2017 2018 2019 2020
1) Spain Ministry of Education, Culture and Sport Survey 2015
2) IHRSA, Sport Statistics 2016
3) Reebok, Training Market Data 2016
4) Salaryexpert.com Data, 2017
5) Oliver Wyman, Case Competition pack
Key facts & assumptions
 5% Ratio between trainers and consumers3)
 Annual revenue for training led market: 3’054 m€
o 40€/hour charge per class4)
o 170’000 trainers in Iberia region
 Of above annual revenue, 4.8% of classes are
organized online5)
 0.8% Online market share growth rate5)
The market is greatly fragmented providing low entry barriers and a possible competitive advantage based on
differentiation. This is an opportunity to fill a gap in the market, by responding to unmet needs.
Active sportsmen are having at least one personal
training class per week2)
Iberian citizens are active and looking to increase both
intensity and frequency for training1)
Iberia’s market size for DecathlON platform
in € million

11Team IEers, IE Business School© Oliver Wyman
The value proposition
 DecathlON aims to make sport reachable
for all, following its firm’s “Sports for all”
value proposition
 DecathlON follows its parent firm
attractive price-quality policy, justified by
the amateurial status of sport guides
 The platform is user-friendly, sport-
focused and allows for cashless classes
 Trainers have access to a new customer
base and additional source of income
 The contract-less relationship with
trainers allows for flexible schedules
Channel
 Online platform website created through
internal development
The offering: DecathlON
 The idea is to provide a meeting platform, as
point of contact & organizational tool between
“sport guides” and users
 DecathlON enables sport enthusiasts to
subscribe as “sport guides” and offer on the
platform group or private classes and
excursions to our clients
 Provide users with variety of sports guides
with whom to carry out trainings
Client perception
 An easy-going, not
intimidating, sport
platform offering
enjoyable experiences
led by sport guides
 The guide is a friendly
figure rather than a
teacher, supporting
the user in the
understanding of the
sport
Features
 Listing of activities offered by sport guides, sorted by areas of interest corresponding to Decathlon’s current sports portfolio
 User ratings and feedback system to ensure quality of activities
 Forum for voting and suggestions of most-wanted activities
 Rental of sport equipment necessary for activities
 Online customer support
BUSINESS CASE
business model and business idea
From supporting the customer in his choice and understanding of the product to understanding and experiencing the sport

12Team IEers, IE Business School© Oliver Wyman
BUSINESS CASE
step by step process of decathlON platform
DecathlON
landing page
User
Sports Guide
User creates
personal profile incl:
 Interests
 Personal picture
and description
 Gender, age
 Contact details
Sports Guide
creates personal
profile incl:
 Classes offered
and specifics
 Personal picture
and description
 Gender, age
 Contacts
User goes to platform
calendar and:
 Filters activities
based on interest
 Registers
 Redirected to
purchase page +
rent/buy material
from Decathlon
Sports Guide:
Creates activity
on calendar with
details
Answers
questions on his
‘wall’
User is sent:
 Automatic
reminder of class
 Motivational
message from
trainer
 Cancellation
policy: 24h prior
to class
Sports Guide
 sends
motivational and
introductory
message to client
 Reminding about
the venue, time
and required
materials
User writes
feedback and rates
the Sports Guide
Sports Guide
 receives feedback
and rating
 Necessary to
attract further
clients and earn
DecathlON fidelity
points
 Receives payment
Engagement Post RegistrationSign-up Phase Pre-class days Meet-up Day Post Meet-up

2017 2018 2019 2020
Customer # 8,864 20,528 34,990 52,252
Profit and Loss (in Million €)
Revenue 3.1 9.0 18.4 27.5
Platform usage 1.6 5.5 12.6 18.8
Rental 1.4 3.2 5.4 8.1
Incremental
sales
0.1 0.2 0.4 0.6
Cost (2.0) (2.6) (4.1) (5.8)
Profit 1.1 6.4 14.3 21.8
Profit margin 36% 71% 78% 79%
Target Customers Fact & Estimations
 55% of Iberia population is aged 25-441)
 Estimated 23% of platform’s customers will rent
equipment2)
• 12% of Decathlon’s platform user would increase their
Decathlon spending by 100€ per year3)
Estimated market share
 10% in 2018 growing at 36% CAGR until 20214)
Revenue breakdown
 Initially charge 10% commission to sport guides for
platform usage, increasing by 5% each year until cap of
20% (in 2019)
 Rental service offered at 20€/hour and estimated 100€
expenditure/equipment purchase3)
Cost breakdown
 Platform development costs
 Marketing budget maximized initially for adoption rate
 Inventory costs to ensure rental service
 Overhead costs
Key assumptions
DecathlON Platform’s selected KPIs
1) CIA, Factbook 2017 2) Spain Ministry of Education Survey, 201 3)Based on our 4) Customer survey 5) Based on Business Plan and Marketing Expenditure
Overhead needs
 Phase 0 requires a dedicated platform launch team,
composed of 7 FTE (Manager, 3 staffs and 3 developers)
 In Phase 1-2, the platform’s team will be comprised of 5 FTE
(Manager, 1 developer, 3 Marketers & Salesmen)
FINANCIAL PROJECTIONS
revenues, costs and key assumptions

PENETRATION STRATEGY
marketing mix
Product
DecathlON, a web-based
platform connecting
amateur sport guides
offering sport activities
with potential customers
interested in (new) sport
experiences
Price
 Sport guide chose price
according to demand
and adjusting to market
offering
 Set price range 10 – 25€
to follow company value
proposition
Place
 Web-based platform
 Payment conducted via
platform
 Link to existing e-
commerce business
and extension through
rentals
Promotion
 Seo strategy based on
content development
and link building from
decathlon’s websites
 AdWords strategy
 Offline marketing*
 Promotion codes
CRM Strategy
 Measuring impact and analyzing metrics after
during launch phases 1 & 2
 Tracking and evaluation of:
o Sign-up number of sports guides and users
o Frequency of users participating in activities
o Returning users to specific guides and / or
activities
o Referring page and publisher
o Promotion code usage
* also see slide 15, phase 1 & 2

PENETRATION STRATEGY
phases and timeline of internal development project
Nov ‘17 – Mar ‘18 Mar ‘18 – Sep ‘19 jan‘19 – jan‘21
Phase 0 + Phase 1
Development and initial launch
 Platform development
 Plan & build up rental inventory
 From Jan: Start Advertising to sports guides
 launch beta version
 Mid Feb: Start Advertising to customers
Initial Launch
 Target collaborators: sports guides according to target customers
 Target customers: 20-50y amateur sportives
 Focus sports: yoga, fitness, hiking, running, biking, golf, ball- &
racquet sports
 Heavy advertisement
o Flyers & physical advertisement in decathlon stores
o AdWords strategy (search engines, social media, decathlon online
store)
o Discounts for new customers (10% on training / workshop / etc.)
o Recommend platform to a friend discount
Phase 2
Extending Launch
 Target collaborators: sports guides
according to target customers + sports
centres offering discounted venues
 Target customers: 20-50y amateur
sportives + niche customers (kids &
seniors)
 Additional focus sports: camping, beach
sports, mountain sports, horse riding,
fishing, arch, swimming
 Same advertisement efforts as phase 1,
focusing mainly on additional target
groups & sports
 Advertisement partnerships with sports
centres

17
APPENDIX 1
Quantitative research – Survey (100 respondents)

18
APPENDIX 2

19
APPENDIX 3

20
APPENDIX 4

21
APPENDIX 5
Quantitative research – In-depth interviews

23
Personal Trainers Panel:
Personal trainers from Holiday Gym, Madrid
Pablo, 26 years old
Lucia, 23 years old
Guidelines:
• Discussion group conducted in Madrid
• Duration: 1h
Main insights and conclusions:
• Offering additional customer base is extremely attractive to Trainers
• Trainers would not accept having taken an excessive percentage by DecathlON from their revenue as their working life span
is quite short and they get 100% of gains if work with gyms => stick to 20% commission once cap reached on DecathlON
• The fact that trainers are offered advantages without having to fight for them is very convenient
• During the warm months having a physical space to train is not important as open air is fine However, when the temperature
shifts to cold weather it is important to have a training facility => partner with sport centers in order to have discounted
venues for sport guides on DecathlON
• DecathlON is especially interesting for trainers who are close to retirement. These would be the ones most interested in the
platform. After 35 years old, gyms don’t want them to train anymore and they have to change careers => job offer for
trainers with best ratings on DecathlON
• Trainers are bounded by a contract with gyms, their classes cost 40€/hour on average, gyms provide equipment, customer
base and venue and they only have a minimum of 10hours of classes/week they need to provide on top of group classes =>
contract-less relationship on DecathlON
APPENDIX 7
Alfonso 22 years old
José, 32 years old

24
APPENDIX 8
Market Sizing Calculations

25
APPENDIX 8
Financial Projections

26
APPENDIX 10
Financial Projections

Decathlon - Oliver Wyman Iberia Case Competition

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Decathlon - Oliver Wyman Iberia Case Competition