Decathlon: sustainable approaches powering regional growth

Decathlon: sustainable approaches powering regional growth

Supporting goods company Decathlon has in recent years found new avenues for expansion in South East Asia (SEA). Identifying its potential, the company’s first store in the region was opened in Thailand in 2015. Since then, openings in SEA include a further nine stores in Thailand, six in Singapore, two in Vietnam, four in Malaysia, three in Indonesia, three in the Philippines and one in Cambodia. Nuno Tinoco is Head of Footwear for Decathlon Vietnam, and explains the company’s vision in this area. “Decathlon has changed a lot, both externally and internally over the past 10 years. We’ve expanded to more countries in the past decade than in the previous 33 years. This challenged us to re-think our product offering and our organisation. The main idea is to go faster by giving our teams power to decide locally, in each country, in each city, where the consequences have the most impact. We’ve gone for smaller teams, passionate about sport, who can better connect with their users and design more relevant products.”

The fulfilment of Decathlon’s plans is being aided by the procurement function, as Thao Nguyen, Head Of Supply & Logistics for Decathlon Vietnam, explains. “Procurement is an important part of making sport accessible to the many. Local teams based in manufacturing countries are responsible for sourcing and managing the suppliers that produce Decathlon products. Once they are manufactured, Decathlon products are shipped by transport providers right into warehouses, then allocated to stores or directly supplied to customers and users after an online order.” This vertical structure is vital for the business as it expands its operations. “Our fully integrated chain which stretches from retail to production allows us to better master our costs, the quality of our products and our supply chain,” says Tinoco.

Decathlon is clear that the character of its expansion is always conscientious. “‘People, Planet, Profit’ are our watchwords,'' says Tinoco. “For Decathlon, profit is a consequence of having the right people at the right place in a long term sustainable environment. We must preserve our planet and its people to protect our purpose. Profit will be a consequence of that, but that is not our first goal.” More than just words, the ‘three Ps’ guide and inform the company’s operations, for instance ensuring it goes above and beyond in its interactions with suppliers. “For many years now, we have had our own requirements to assess the level of our suppliers,” says Tinoco. “These requirements are more demanding than local laws and aligned with best international standards. These assessments are done regularly through official audits but critical points are checked daily by our compliance team with suppliers in the field. We are able to do this by having offices inside our factories with a daily Decathlon presence and by building close relationships with our suppliers’ teams.”

This inclusive, personal, sustainable approach extends throughout the company, and even into the creation of products themselves. “We started creating teams organised by sport three years ago, whether that’s volleyball, trail, boxing or more,” says Tinoco. “These sports teams work closely with retail, production and more importantly with our sport users. For example, we have one team-mate currently based in Vietnam who is a high level road runner and also part of the road running team at Decathlon. He develops the products of the sport he practices every day, collecting feedback from the community of runners he is part of.

By being user-centric, we can involve our sport users in the creation of the products of tomorrow to better fit better their expectations.” As well as ensuring its own operations have this culture, Decathlon extends its reach to influence those around it. “We have established numerous examples of good industry partnerships with suppliers all over the world,” says Tinoco. “Each of them is skilled in some of the specific key strategies and challenges of tomorrow such as automation, continuous improvement, big data management, innovation and digitalisation of the supply chain. Once per year we organise a forum during which each supplier can present to others.” Such a consideration dovetails with Decathlon’s extensive sustainability goals targeting risks across human rights, health and safety and the environment, which are backed by concrete targets. For instance, Decathlon is aiming for 100% renewably-sourced electricity for all of its distribution and logistics activities by 2026, and as of now, 82% of its suppliers are receiving A, B or C rating for working conditions, up 28% from 2017. By 2021, the company is targeting a 20% decrease in CO2 emissions thanks to energy consumption and renewables investment.

One specific example of Decathlon’s behaviour inspiring transformative change in others comes from its work with manufacturing partner Dovitec. “Dovitec was inspired by our sustainable development strategy,” says Nguyen. “One of their Decathlon exclusive sites has instituted an energy saving project which has resulted in a number of improvements. Solar panels now provide 56.9% of the office’s energy consumption, they’re using daylighting and walls are being made from non-baked bricks to reduce heat gain and save the CO2 emissions produced by the baking process. Thanks to these and other solutions they’re reduced their energy costs by 50%. They’ve also put in place wastewater treatment and rainwater harvesting systems. Free sport facilities are provided for workers, and facilities for disabled people have also been set up.”

Another comprehensive collaboration comes in the form of Decathlon’s work with DHL. “DHL International Supply Chain (DHL ISC) runs a dedicated DHL control tower which provides a single point of contact in Vietnam and Taiwan for Decathlon's operations,” says Nguyen. “The control tower oversees Decathlon's air, sea and road shipments from factories in Vietnam and Taiwan to the world. DHL's ISC services offer comprehensive solution design and project management backed by a global governance structure that guarantees consistency across operations. The collaboration we set up involved a high level of coordination, understanding and continuous improvement mindset for the mutual benefit of both companies. The results were very satisfying. We achieved 91% container optimisation, 100% data on-time and 100% document on-time. We believe this partnership can go even further, and we are working on implementing cloud-based transportation management systems with AI optimisation tools, as well as a green project to reduce CO2 emissions.”

Decathlon is not planning to rest on its laurels as it follows its plans for growth. “Over the next 10 years, we will regularly re-write our vision,” says Tinoco. “Doing that helps us to identify the main challenges of tomorrow, whether that’s the environment, data management, digitalisation, industry 4.0 and beyond. We want to connect with our sport users and make sure our products are accessible as fast as possible through physical stores or online.” Ultimately, Decathlon is confident in the resilience of its strategy going forwards, with rewards on offer not just for itself but for customers and the world at large. “More than 96,000 people in Decathlon are working every day to realise our purpose: sustainably make the pleasure and benefits of sport accessible to the many,” says Nguyen. “Going into the future, our strategy of empowering people, decentralisation, user centricity and digitalisation will help Decathlon become more agile and better able to adapt to fluctuating environments and answer to the increasingly complex requirements of our customers. 

Nuno Tincoc