30 March 2016
by Simon Evans

Is Decathlon the Aldi of Australia's $3.5b sporting goods market?

French sporting goods group Decathlon has been labelled a category killer

The Rebel sports retailing chain will open more stores where sport collides with theatre and technology as the $3.5 billion sporting goods sector in Australia faces the biggest shake-up in decades.

Rebel and its stablemate sporting goods chain Amart are facing one of the biggest competitive threats for years, with the imminent arrival of French category killer Decathlon.

Decathlon, the world's largest sporting goods retailer, runs 1031 stores in Europe and Asia and in the next few days will go live with an online store targeted at Australian customers, before rolling out up to 35 warehouse-style superstore outlets over the next decade.

Decathlon Australia chief financial officer Sylvain Baudens said earlier this month the company had already identified six locations for physical stores in Sydney and Melbourne.

Decathlon will steer clear of smaller format stores in shopping centres and will position itself in big sites more like a Bunnings or Ikea of sporting goods.

There is the potential for a major effect on existing players, similar to the arrival of Aldi, which ate into the profits of Woolworths and Coles.

Technology changes
As well as greater competition, the sporting goods retailing sector is facing disruption from fast changes in technology. Rebel is meeting that challenge with the rollout of its new "accelerate" format stores.

The second of those new format Rebel stores opened at Chatswood on Sydney's north shore last week and a third is planned later this year at Miranda in Sydney's south.

Rebel Sport and stablemate Amart could face a tough road ahead. Sales are rising strongly but a big disrupter similar to Aldi in the supermarket sector is about to tackle the $3.5 billion sporting goods market.

The first opened at Bondi late last year and is built around a concept of replicating the experience of being at a sports stadium and being part of the game, complete with cyclone fencing, bench seating, line markings, LED screens and lifelike sounds.

The sporting goods division at Super Retail is run by Erica Berchtold, who has been at the helm for the past 4½ years. She was an executive at ASX-listed Specialty Fashion Group for almost four years until late 2011, looking after the Autograph and Crossroads brands. She says Rebel's Bondi store has been a huge success and more of the new format stores are planned, but declined to go into specifics about the future strategy.

The sporting goods division at Super Retail is run by Erica Berchtold.

Rebel and Amart are strong performers for ASX-listed parent Super Retail Group, with the 160 outlets across the two brands producing like-for-like sales growth of 6.1 per cent in the first half of 2015-16, and delivering average transaction value growth of 3.4 per cent.

The two sporting goods retail chains, bought for $610 million in late 2011 by Super Retail from private equity firm Archer Capital, produced $452 million in sales for Super Retail in the first half of 2015-16 and are poised to overtake its automotive retailing business of Supercheap Auto, which generated sales of $458 million for the first half.

Decathlon's Sylvain Baudens already has his eyes on half a dozen sites in Melbourne and Sydney.

One of the biggest growth areas in sports retailing is in women's active wear, a segment where Lorna Jane, which is part-owned by private equity firm CHAMP Ventures, has made strong headway.

A research report this month by the Australian Sporting Goods Association, the overarching body for sporting goods retailers, found that sales of women's active wear had increased by 50 per cent between 2012 to 2014, and executive director of the ASGA, Shannon Walker, says it is continuing to accelerate.

"It's moved off the running track and into our cafes and shopping malls and the trend shows no signs of slowing down," Mr Walker says in an update to the association's members in his March newsletter. A new research project is underway on projections for that sub-segment's growth over the next five to 10 years.

Meanwhile, the Decathlon Australia online site on Monday was still asking customers to be patient.

"Our exclusive products will be available online in March, 2016," the website stated as it trumpeted the Decathlon range of covering "75 Sports Under the Same Roof".