Sports market is a global market which has been growing at an annual average rate of about 2 to 3% for over a decade (Ohl & Tribou, 2004). Due to strong competition, brands are very dynamic (Chantelat, 2008). They constantly seek better positioning and new ways of gaining market shares (Bouchet & Hillairet, 2008). In order to do this, these brands put more and more emphasis on innovation (Hillairet, 2005). Following decades of domination by the major international brands and a permanent status quo between manufacturers on one side (i.e. Nike, Adidas,...) and specialized retailers on the other (i.e. in France, Decathlon, Intersport, GO Sport, Sport 2000...), since the late 1990s, the industry has undergone a significant change. Its structure has been transformed; new balances and new actors’ statuses have appeared. Sports goods manufacturers become retailers by developing their own stores networks (i.e. Quiksilver, Lacoste ...), and retailers become sports goods manufacturers through the creation of sub-brands under their control. Especially dynamic, these retailers create brand models that compete with the manufacturers, and through innovation they are able to provide consumers with technical and high-performance goods at affordable prices. But how do these companies, whose basic trade is distribution, manage to generate innovations considered as difficult and expensive? How did their R&D departments become so competitive? Is their innovation and ideas management system the key of their success? In this paper we are going to examine the case of Europe’s leading company in this sector, the Decathlon Group[2] [2] Since 2007, the Decathlon Group changed name. It became...
suite, which has a constellation of own brands named “passion-brands”.
2 We will show how, starting from a vertical growth strategy, the Decathlon Group developed by creating new specialized brands and by launching a ‘federator’ innovation process as well as an R&D activity divided by sectors, not as a retailer owner of sub-brands, but as a manufacturer owner of ambitious and powerful autonomous brands. This strategy led to a dual system of innovation management, and finally, to a form of “variable geometry” management. This original organization finds its explanation in the fact that, beside its principal activity of retailer of sports articles, from now on, Decathlon Group has chosen to embark on a manufacturer’s strategy with the announced ambition to make its very innovating passion-brands count in the eyes of the consumers.
The vertical growth strategy of the decathlon group : building a portfolio of powerful and innovative own brands
3 In contrast to an external growth scheme based on the creation of a portfolio of strong brands by purchase / acquisition as most companies usually do on many markets (Ries & Ries, 2000; Aaker & Joachimsthaler, 2001; Lewi, 2005; Kapferer, 1997, 2006…), the Decathlon Group has invented a model of business growth based primarily on the development of a portfolio made up of new own brands[3] [3] Even if, recently, the company also took the way of the...
suite. At the same time, the group has developed, its own R&D department, an original management system of knowledge and innovations. In this way, the Decathlon Group is different from its main competitors such as Intersport and Go Sport which have not chosen to design and manufacture their own innovative and strong sub-brands. The latter has many own brands, but they are not built on characteristics related to technical performance or innovation (Lebrun, 2006). Today, the Decathlon Group has embarked on an upstream[4] [4] The term “integration” does not seem, in the species,...
suite vertical expansion without seeking to enhance the attractiveness of its sales outlets. By creating specialized brands that directly compete with international sports brands, the group seeks to control the market from the top (making faster, better control of prices…), while maintaining its position as a leading French specialized retailer. As is usually the case with all big international companies, this strategy asserts its wish to “control” the whole upstream-downstream value chain to ensure better profitability (Aaker, 1996). However, when one retailer “controls” the whole channel, we notice an impoverishment of its offer along with a decrease in the number of referrals due to better coverage of its profitable brands. In its stores that focus on “in-house” goods produced by “passion-brands”, the Decathlon Group retains much better margins. And, in order to make their conquest of the market successful, each new passion brand is given an autonomy variable from one brand to another in terms of R&D, budgets, and human resources.
4 With a 2007 sales turnover of 4,476 Mde, including 56.60% realized outside of France, with more than 400 stores and more than 40,000 employees on the payroll, the Decathlon Group is a company which is involved in a true strategy of “expansion intrapreneuriale” whose mainstay is the constitution of a portfolio of new brands, not only able to launch new lines of products on the market but also able to durably transform a whole market segment. In 2008, these new sport brands were: Quechua, Kipsta, Domyos, Geologic, Aptonia, Inesis, Wedze, Tribord, Kalenji, b’Twin, Géonaute, Fouganza, Artengo and Oxelo. Each one of them is positioned on a precise sporting branch of industry: b’Twin, for example, is specialized in mountain bikes and road bikes; Wedze in boardsport on snow, and Kalenji in walking, running and cross-country running. Together, these “passion-brands” make the Decathlon group one of the first ten world’s manufacturers of the sector behind Quiksilver, Nike, Adidas, Timberland, Columbia, Salomon, The North Face and Patagonia.
5 By giving an autonomous operation and R&D (variable depending on the case) to each “passion-brand”, the group’s ambition is to acquire specialized brands capable of lasting shine on the international scene. Each one focuses its resources on a number of priorities and rationalizes the human and material resources needed to launch innovative goods. As a result, in 2008, no fewer than 12 new goods were rewarded with several design prizes (IF Design Award; Reddot Design Award & Design Observer). If the whole competitive advantage of Decathlon was based, until now, on the attractive prices of its sub-brands (but to the detriment of the performance of the products), the group’s new objective is a rapid rise in technical performance through its innovative “passion-brands” with the aim to match exactly the expectations of sports enthusiasts. Even premium products are being studied, whereas they were previously reserved for specialized and old brands like Eagle, Lafuma (outdoor) or Helly Hansen (sailing & boating). “The Decathlon example is interesting to follow for it shows that companies can pass from one policy to another. For twenty years, the company has been following a single brand policy which, given the success of the scheme, has created an unexpected effect: the brand is almost ‘soviet’. Everyone wears Decathlon goods and the brand has become a sign of standardization. With the strong reactivity that characterizes it, the company decided to change policy overnight and, from now on, to grow under specialized own brands anywhere in the world” (Kapferer, 2006, p. 185). Finally, the Decathlon Group follows the strategy of a big company willing to increase its market share by seeking to enter high margin segments (Michel & Salha, 2005), although it was rather forced to do so. Indeed, the solution of sports specialized superstores – invented by Decathlon and successful either in France or in Europe - is a failure in countries where consumer patterns are different. Not to mention that, on some markets, particularly in the United States, there are situations of quasi-monopoly on behalf of local retailers (barrier at the entry) which cancel any thought of expansion of a newcomer, even a big one. Therefore, to become a producer instead of being only a retailer, has not only been an economic necessity but also a quasi-obligation in order to develop.
6 On a market where the technicality of the products and the technological progress are powerful consumption levers, the competitive success of specialized brands will inevitably require the development of an innovation and creativity management system particularly productive and efficient. To take up this challenge, the Decathlon Group has implemented pioneering strategies that are likely to outdo the strategies of leading brands with much higher marketing, communication and sponsorship budgets. For example, if the “passion-brand” Tribord or Quechua develops today a policy of new products similar to that of international sport brands, it also chooses a widening spectrum of customers with sectional positionings, ranging from the first price ranges (the X-basic swimming goggles of Tribord are sold 3 e) to virtually premium ranges. This rise reflects a new step in the development of the group brands. At the same time, it is a challenge to offer consumer goods that are, on one hand, at the best quality-price ratio, and on the other hand, the result of advanced studies in the field of ergonomics, design, bio-mechanics, physiology or choice of materials. In order to obtain, for each of its “passion-brands”, products as technically advanced as those of the best sports brands, the Decathlon Group must seek for the excellence in its R&D activities, particularly in the innovation process.
A federative innovation process and a R&D activity divided into sectors
7 Within the framework of many and various approaches, much authors have been interested in innovation processes : from the viewpoints of economic changes and progress (Schumpeter, 1939; Freeman, 1990; Kline & Rosenberg, 1986; Dosi, 1982; Amendola & Gaffard, 1988, etc.), of social and organizational changes (Rothwell, 1994; Chandler 1990; Callon, 1994, etc.), or from the sociological and managerial viewpoint (Crozier & Friedberg, 1977; Mintzberg, 1982; Akrich, Callon & Latour, 1988; Alter 2000, etc.). But whatever currents and theoretical origins, the innovation process shows nevertheless a dual permanent feature. First, it is an integral part of the goods launched on the market, and thus, implicitly, of their success (or unsuccess) with users. Then, chronologically, the process is always the same: gestation, development and diffusion.
8 If, in the sports industry, the issue of the diffusion of innovation has been approached under the technological angle, in particular through the diffusion of new materials (Desbordes, 1998), on the other hand, the issue of the production of ideas, of creativity and procedures, more generally the upstream part of the innovation process, has never been studied with specific depth (Hillairet, 2006). Thus, our study will focus on the R&D of the Decathlon Group, especially on how innovative ideas are created and managed. According to us, the analysis of the innovation management in this company is part of the prospects of Akrich, Callon & Latour (1988) to make progress in the art of managing innovations: understanding the mechanisms by which innovations succeed or fail to develop principles that serve as guide to action. To a great extent, the success of the Decathlon Group innovations and “passion-brands” depends, first of all, on an excellent understanding and coordination between the various components of the company involved, but also on an atypical innovative projects management system.
9 With regard to the emergence and implementation of innovative ideas, whether at the individual or the organization level, the genesis of new solutions has always to go through a succession of identifiable informal and cognitive steps (Deschamps & Ranganath Nayak, 1997) that widely participate in the mechanisms of creativity (Moles & Caude, 1970; Prost, 1995). This progression in the upstream part of the innovation process is indeed the core of the discovery step (Ait El-Hadj, 1989) and of the R&D in medium to large organizations, but also the core of the business project in smaller structures (Burgelman & Sayles, 1986). If this progression depends on the know-how, the perception, the value systems of the company and on the quality of its innovative behaviour, it also depends greatly on the ability to innovate of the people involved in new goods development projects (Robinson & Stern, 2000). Indeed, the steps of creativity that structure the start of any innovative project are largely determined by the creative skills and behaviours of consumers (Kao, 1989; Amabile, 1988). On the other hand, if it is no longer necessary to prove the role and the importance of the creativity management in the success of innovations (Heunks, 1998; Fitzgerald, 2000; Brabandère, 1998), does this creativity management constitute a competence factor in the success of a company? In the case of the Decathlon Group, some indicators appear to be moving in that direction.
10 In companies, innovation is driven by a proactive management of ideas that would include three distinct steps: first of all, a step of fertilization, then a step of sowing of the new ideas, an lastly, a step of incubation (Deschamps & Ranganath Nayak, 1997). The innovation process implemented within the Decathlon Group follows this modelling. It also divides into three great steps: the upstream step (a), the project step (b) and the marketing and communication step (c).
On the methodological level, this study about the innovation management within the Decathlon Group is initially based on studies about the sports industry innovations (Desbordes, 1998, 2001, 2002; Chantelat, 1992; Hillairet 1999, 2005, 2006), about the sports markets and industry (Wolsey & Abrams, 2001; Ohl & Tribou, 2004; Mullin & al, 2000; Scully 1995; Stotlar, 2000) and about the sports brands (Bouchet & Hillairet, 2008). Then, it is based on the expertise on the new products marketed by the Decathlon Group “passion-brands” since 2004. A thorough analysis of articles taken from professional reviews (particularly directed towards the industrial design and the sports articles market) usefully supplemented the knowledge of the company’s innovation management. Lastly, this study is based on a research carried out by Richard & Abdourazakou (2008) who interviewed the Director of the innovation of the Decathlon Group “passion-brands”, Irwin Wouts. On this last aspect, the interview as collection method of primary data was chosen because of its absence of formalism. According to the authors, this method, not very directive, seemed more adapted to an executive officer unfamiliar with more sophisticated techniques. By letting the interviewee structure his answer, it is relatively easy to understand its logic before rationalization a posteriori. Moreover, the choice of the interview procedure makes it possible to establish a trust relationship with the interviewee so that he can speak more easily about the innovations developed by its company.
11 (a) The upstream step called internal step of vision, aims to identify opportunities for new targets (customers and market segments), new sales approaches (i.e. the launch of a national campaign of advertising spots for the Wed’ze skis and snowboards, the Quechua Forclaz Light polar, the Kalenji Deefuz T-shirt or the b’Twin bicycles) and new marketing approaches (i.e. the launch of websites such as www.prêt-partez.decathlon.com where consumers have the opportunity to try more than 200 sports outfits for girls and boys on virtual models). In the company, this upstream step finds its concretization in 2-days creativity workshops gathering designers, R&D engineers and people in charge of marketing. Each workshop gives birth to 200 to 300 ideas of products or improvements (a few of which only will be taken into account). According to Irwin Wouts, director of innovation of the Decathlon Group “passion-brands”, this step allows to “set relevant targets and high potential for innovation”. In this process, the definition of the need according to a specific and latent use is essential to start the development of a new good. The listening of the customers, the feedbacks coming from the shops and the observation of sportsmen in the field, are the missions assigned to the product manager who will have to draw up the specifications. Then, in collaboration with advanced research and designers, the process engineers and the components engineers of Decathlon take over to establish the technical specifications (functional definition, materials, assembly processes, etc.).
12 (b) The project step is characterized, first, by a strong creative spirit in order to find innovative ideas that are achievable within a reasonable price. This second step incorporates all Decathlon R&D activity such as scientific research programs and design and ergonomics studies. If these studies are conclusive, the head of the prototyping industry will make a first prototype that is subjected to “torture tests” in a laboratory then to the “testers club”, a panel of customers, high-level athletes and people from the company staff (the “decathletes”). Chosen for their skills, their level of expertise and their critical mind, they have to monitor the quality and safety of the future product. The final prototype will be made after intensive use tests and the final technical specifications will be established. Then, the various offices of production, in France and abroad, will take over. The mass production of the products will be carried out by a Decathlon subcontractor who will be responsible for the supply of components, the quality of the series produced, the delivery in due time to the different logistic platforms of the group, and so on.
13 (c) The marketing and communication step is the third step of the Decathlon innovation process. It encompasses both the implantation of the goods in stores (merchandising) and the definition of a media plan to be implemented.
14 Depending on the nature of the projects, the importance of these three stages may be variable. While some projects will be inspired by the creativity of specialists and goods experts of the Decathlon Group, others, on the other hand, will be triggered by opportunities given by the observation of the markets and changing practices. According to P. Freychat, the Decathlon R&D Director, if we look at the very successful innovations of these last ten years (Flex concept, backpack Symbium, bra Topping Bra, Self Heat gloves, Supportive tights…), inspiration comes mainly from the observation of the use and simplification of the use like the b’Twin bicycle or the 2 seconds tent. Besides, the categorization of innovations invented by Decathlon is based, along with the goal of technical improvement, on this desire to simplify the use (figure 1). Eventually, the process varies according to the nature of the project and its actual intentionalities. But in any case, the project managers of the Decathlon Group try to “feed” the process both in quantitative (more plans for new goods are put in parallel to create a positive collective emulation) and qualitative modes (generation of many ideas with high growth potential[5] [5] Beyond the R&D units, in order to encourage the emergence...
suite). Many ideas come from the field of action. Staying in touch with places of practice, listening permanently to the sportsmen, setting a particularly dense network of technological and scientific observers and partners eventually determine a rather high threshold of creativity. Among the competitors, this creativity can be stimulated in different ways. At Nike for example, ideas and opportunities to develop new goods germinate in the “Innovation Kitchen”. It is in this unique place, located on the Nike campus, that were born most of the ideas underlying the biggest commercial successes such as Michael Johnson’s golden spikes, Cathy Freeman’s wetsuit, or all Air Jordan models produced since 2001. The concentration of the whole of Nike’s creativity in an only place is the natural outcome of the increasing business of the U.S. sports giant (basketball, football, athletics, horseback, etc.), the direct effect of which is to reduce the resources allocated to design new goods. If tens of millions dollars have been spent for the “Innovation Kitchen” since the beginning, approximately 90% of ideas that are experimented are never taking shape. At Nike, one prefers having a great deal of ideas in order to retain only the best ones. The resources invested in innovation and R&D by the American firm have no equivalent in the world.
