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Positive growth for Decathlon in Russia2016-10-13 source own
Decathlon, originally from France, has enjoyed good growth in recent years which has meant that they have been allowed to expand into more countries in Europe. One of the more successful expansions can be seen in Russia where their tally of 40 stores is about to increase once again; by 2025, the company plans to be a household name across the country. In addition to this, a one billion roubles investment will be made by the company for its ‘Plus Park Shushary’ in the well-known industrial park. Currently, the sporting goods industry is estimated to have a 250-280 roubles capacity which means that there is room for even more growth in the future.
According to the company, the center in Shushary is progressing well with the first phase expected to finish in February 2017. Overall, the site has a space of 100 square meters but this could expand to 300 square meters within the next seven years. Although we don’t know the full amount of investment, many industry experts believe that it falls within the 1-1.5 billion range. With this in mind, the first phase alone is said to have cost the company between 250-450 million roubles. Thanks to Decathlon’s plans to expand within the Northwestern federal district, this location of Shushary was chosen.
Currently, Decathlon has three retailers in Saint Petersburg with the first opening back in 2011. By 2025, this is set to expand to twelve after they announced plans to open nine new stores within the next nine years. With this being said, it’s clear to see that Decathlon is currently targeting Russia and sees ample opportunity for growth within the next decade.
According to Vadim Isakov, the sporting goods market has a bright future as he said the following “Last year, retail sales fell by 10-15% due to the devaluation moods, enhanced savings and reducing real incomes of Russians. Overall, the market is traditionally subject to a decrease in consumer demand in unstable periods as sporting goods do not belong to the ‘essential purchases’ section. This is partly due to the popularisation - especially among young people - the active lifestyle, sports, development of the market of fitness services in the regions, as well as the background of the grand sports event in the country, such as the Olympic Games in Sochi and the upcoming World Cup in 2018. However, the potential reach a new audience is very good, and, in our opinion, once stabilised the economic situation will improve and therefore increase consumer confidence. Then, the market can go up to the pre-crisis rate.”
In addition to this, it has been said that around 70% of the domestic market has been occupied by Chinese manufacturers when it comes to sporting goods. An expert in the industry has stated “The market is far from saturation, and in it there is room for organic growth of different players as the normalisation of the situation on the currency market continues and the resumption of growth of real incomes of the population occurs.”
Image provided by: © Evdoha | Dreamstime.com - Sport Shoes Photo