But how could a small team of thirty people sign such a partnership with the NBA, the powerful North American basketball league? From its office in Tourcoing (Nord), housed in the Kipstadium, Decathlon’s team sports product creation centre, the Tarmak band (the brand’s basketball brand) has offered itself the holy grail: the design and worldwide distribution (outside the United States and Canada) of branded items bearing the colors of famous American franchises.
And this, according to our information, for a period of at least four years. Which will take the contract beyond the Paris 2024 Olympic Games… Or how to surf on the presence of “Team USA” and its “megastars” without having to ruin oneself, in order to appear as an official partner of the next Olympics. Quite a sesame for Decathlon, which only launched this umpteenth house brand in 2016. “We had the idea for this partnership two years ago and it was rather on our initiative”, confides Adrien Lebbe, the artistic director of Tarmak, quite proud of his achievement.
France, “first market for NBA derivatives”
It must be said that the physical presence of the NBA in France is still recent and limited. In January 2020, the American league organizes a regular season game in Paris. A first in its history. She then established contacts with the French ecosystem where her fan base is significant, as illustrated by the incredible demand for tickets (more than 150,000 for 15,000 places at Bercy). Before the meeting, the European boss of the NBA, Ralph Riviera, is invited to lunch with an audience of business leaders and senior sports executives. “He recalled that the league had around 60 Europeans out of 400 players and that France had the largest contingent. He also told us that we were the first market for NBA merchandise and therefore a territory with great potential”, remembers Magali Tézenas du Montcel, general delegate of the interprofessional organization Sporsora, present during this famous lunch. In this context, it is not surprising that the Americans have decided to accelerate by looking for a tricolor distributor.
This is what the NBA representatives told the Decathlon teams at the start of the negotiations. Even if it means causing a misunderstanding since, in their minds, the Frenchman is just a simple sporting goods retailer. “They had somewhat forgotten that we certainly have a powerful network, but that our strength is design,” recalls a group executive. After this misunderstanding, the NBA and Tarmak multiplied the exchanges to create the collection. “The guideline was precisely to make a very technical range, especially not sportswear, with special shoes and textiles that dry quickly,” explains Adrien Lebbe. Once the products have been launched in production, the announcement of the partnership is made official at the end of January 2021 by means of a press release.
In the pure northern and American tradition, the amount of the contract is kept secret. It would include, according to a source familiar with the French group, an annual guaranteed minimum and a percentage on each product sold for the league. In exchange, Tarmak will be able to market them throughout Europe, Asia, Africa and South America, i.e. in more than 1,200 Decathlon stores around the world. For reasons of exclusivity with Nike, the main partner of the NBA, the North American market will remain closed to Tarmak. But the French brand already has plenty to take care of, as its international presence is impressive.
More than 12 billion euros in turnover
Because the company founded in 1976 by Michel Leclercq – a cousin of the founder of Auchan Gérard Mulliez – has become one of the world leaders in the sector. With more than 12 billion euros in turnover, the northern group is now one of the top 5 sports equipment manufacturers behind Nike (30 billion euros, according to Capitalmind) and Adidas (22 billion), but far ahead references such as Puma (5 billion) or New Balance (4 billion). It is above all the world’s largest distributor of sporting goods, neck and neck with the Swiss Intersport. Decathlon (93,000 employees) is thus present in 59 countries and 78% of its stores are international. Behind France (324 stores), China has also taken on the appearance of a powerful locomotive (293)!
Despite the pandemic, Decathlon (not listed on the stock market and still owned by the family galaxy) should continue its race forward since, at the global level, the sports equipment market has limited damage. “It’s contrasting, between strong increases in fitness or cycling, for example, and big setbacks in team sports. But overall, the trend for everyone is not so bad”, explains David Richard, director of the sports market at the NPD firm. The sector would thus have seen its revenues melt by 10% in 2020, against an annual growth of 5% before the crisis. A lesser evil compared to the collapse of other parts of the economy. According to our information, Decathlon should thus publish stable results for 2020, with France accounting for only a third of turnover compared to 50% ten years ago.
change of foot
In this context, what can the famous NBA contract bring in? “Is it going to explode the sales of the brand? I’m not sure,” blows a specialist in the sector who, like many others, was surprised by the announcement. “This will allow both parties to penetrate more markets to which they do not have access”, still thinks Alexandre Ebin, partner at Capitalmind and specialist in sports trading.
For this former director of acquisitions at Decathlon, who knows the blue house well, it is also a way to make up for past mistakes such as the delisting of major brands. Indeed, in 2018, Decathlon completely overhauled its sales area, releasing many famous labels to replace them with its own products, available under around twenty brands already accounting for more than 70% of sales. “This decision has lowered turnover and created a lot of tension. This NBA partnership is proof of openness,” said Alexandre Ebin. “We did not know how to explain things at that time”, recognizes Xavier Rivoire, director of communication for Decathlon United, the international subsidiary, who sees a very French debate in it, “because everywhere abroad, our customers come mainly for our innovations”.
In fact, it is only in the United States that Decathlon still rows. In the early 2000s, the group tried the adventure by buying a chain of specialty stores in Boston. Six years later, he was already packing up. “We wanted to impose our brands on Americans who didn’t care at all”, explains, laconic, a former member of the house. It is therefore with more humility that the group reopened a point of sale in San Francisco in 2017. Since then, two other stores have opened in the California bay. And if it is still fragile, the transplant seems to take, especially thanks to online sales which have experienced double-digit growth in 2020. Last summer, Decathlon was even approached by the giant Walmart which wanted to sell its famous Quechua “2 seconds” tents. “They told us that their customers were asking for this product a lot. So we decided to install a corner and it was a hit,” says Xavier Rivoire. Another open sign that illustrates a change of foot. And draws a new commercial strategy, both opportunistic and ambitious.