Decathlon: renting equipment rather than selling it?  - Companies

Decathlon: renting equipment rather than selling it? – Companies

Advertisements

Advertisements

After two years of testing, Decathlon Belgium is embarking on the rental of equipment. The reason? Improve its environmental impact and facilitate access to sport. But the brand will also be able to assess the effect of such a service on the business. Will this be more profitable? Will it allow access to new strategic data?

Offering the rental of sports equipment when you are one of the biggest sellers in the sector and you have different brands can seem totally counter-intuitive. However, this is indeed the strategic movement made by Decathlon in Belgium. From now on, and after carrying out two years of tests, the brand is launching a large-scale equipment rental service. It will start with bicycles, water sports, fitness, camping, hiking and winter sports items. A total of 3,000 products in some 150 categories are offered. The offer will be expanded later.

Offering the rental of sports equipment when you are one of the biggest sellers in the sector and you have different brands can seem totally counter-intuitive. However, this is indeed the strategic movement made by Decathlon in Belgium. From now on, and after carrying out two years of tests, the brand is launching a large-scale equipment rental service. It will start with bicycles, water sports, fitness, camping, hiking and winter sports items. A total of 3,000 products in some 150 categories are offered. The offer will be expanded later. From now on, Decathlon customers will be able to rent equipment for a few days, a few weeks or a few months. For the brand, very concerned about its ecological footprint, this is a way of providing a sustainable alternative to the sale (and therefore the manufacture) of equipment whose use is not regular. In summer, ski or snowboard equipment rarely has the opportunity to come out of the closets, while in winter, surfboards and fins most often stay in the garage. According to a study conducted by Decathlon, one out of four Belgian households owns items that are only used a few times a year. And this figure is even higher (37%) in the most athletic category. On average, between 155 and 210 euros of unused or little used sports equipment would thus be dormant in each family. And if this reality is mainly explained by the seasonality of certain sports practices, other factors influence it. “Some people want to try a new sport, buy the right equipment and then realize that it’s not their thing”, analyzes Quentin Goffart, rental manager at Decathlon Belgium. This is why, within the brand, this idea has matured. The consumer rents DIY tools; why not sports equipment? “The starting point for this service is also linked to the analysis of the impact of our products, explains Quentin Goffart, After real awareness raising internally, we found that 80% of Decathlon’s environmental impact was linked to our products (the production chain, the life cycle, etc.).” The response to this reality has been multiple, and five main lines have been identified to change the situation and reduce this CO2 impact: teach customers how to better maintain their products to offer them a longer lifespan, open repair services, betting on the second hand to give a second life to unused products, finding ways to reuse/recycle end-of-life products… and of course, setting up rental systems to avoid the manufacture of unused equipment. On paper, the concept of equipment rental should indeed support the circular approach of the Decathlon group, which already offers second-hand items and repair workshops. It can ultimately significantly reduce the group’s CO2 footprint. “By multiplying the use of a single product, we limit the impact on raw materials which tend to reach certain limits”, pleads the service manager at Decathlon Belgium. With 150 days of use/rental, the CO2 impact reduction would reach approximately 50%, according to the brand’s calculations. But this new service also corresponds to a new business model. Which is nothing out of the ordinary. “In a context of seemingly pressured purchasing power and with the continuous increase in leisure, Decathlon’s approach makes sense, observes Pierre-Alexandre Billiet, CEO of the Gondola group, which specializes in retail. Knowing that today , we are increasing the number of hobby activities, equipment rental at Decathon will further facilitate access to new sports. And the brand can then position itself as a platform.” After the very fashionable concept of mobility as a service, Decathlon therefore seems to be inaugurating sport as a service. Which, strategically, also gives it a position as an access point to sport. “By allowing rental, Decathlon gives the public the opportunity to test themselves but also to do so through its own brands, continues the boss of Gondola. It is very interesting for the brand because it offers it a new access to a target that is not yet highly specialized, the one that is precisely part of its core target.” In concrete terms, the rental price will vary between 2 and 10% of the purchase price of the rented equipment, with a decreasing price depending on the duration of the service. A 600 euro bicycle could thus be amortized over approximately six months if it is rented for one month by six different people. And since it’s likely that the craft can be rented for longer than six months, that means renting is potentially profitable. On paper anyway. However, the calculation is obviously not so simple. Because to manage to ensure the rental of equipment, Decathlon must have specific logistics and dedicated teams: four people for the moment but probably five times more by the summer. The service is currently centralized from the warehouse where the repackaging and check-out of returned products are carried out. With new gestures to learn: taking back the product, analysis, putting the product back in place. And then, nothing indicates that each equipment rented will actually be rented. And some products might only be rented once and never again. In addition, a big question mark remains: will the material hold up? “Quality is a determining factor, maintains Pierre-Alexandre Billiet. It is a central question in the model. But obviously, the leaders of Decathlon seem to have real confidence in their equipment.” On the side of the sign, we admit that the question arises. But in other words: “Where we take the risk above all is on the use of the products by the customer: when we see the numerous deteriorations of free-sharing scooters, this raises questions, recognizes Quentin Goffart. . But we think that everything goes through the empowerment of the user.” However, the condition of the rented objects will not only be scrutinized to check whether the user has respected the product. This inspection should also allow Decathlon to collect information on the weaknesses of its products in order to possibly improve their quality. “Basically, our products are made for personal use, slips Quentin Goffart. Having the right data can allow us to improve them, make them stronger and better repairable. Our brands are fond of this data. For now , we only have customer feedback, but not traceability on repairs. Besides, the better we can do it, the more profitable the process will be.” Eventually, this collection of information will also make it possible to imagine the appropriate manufacture of products, exclusively for rental. Which is already done from time to time. Furthermore, it may well be that the capture of information is not limited to the sole state of the equipment when it returns from rental. Customer habits are also a wealth of information. “When you know that your customer has rented a bicycle during the two previous Easter holidays, you can assume that he will be interested in a bicycle again the following year, observes Pierre-Alexandre Billiet. And this allows you to develop great offerings, depending on the company’s strategy at that time”. Already informed of the purchasing habits of its customers, Decathlon misses out on a good deal of other behavioral information in the world of sport. However, in the age of artificial intelligence algorithms and data interpretation, those collected by this rental service could make it possible to improve customer understanding, refine the brand’s marketing and, why not, to adapt or launch certain new services… This strategic shift of Decathlon, even if it remains anecdotal today, constitutes an interesting laboratory for the firm, as much on the circular aspect as on the business axis. But also for all the other companies that will be able to learn from such an evolution. Whether she succeeds or not.

.

Leave a Comment

Your email address will not be published.