Decathlon to team up with Vanke on China expansion

Decathlon, the French sports goods chain, signed a strategic alliance with real estate giant China Vanke Co Ltd on Thursday in a bid to further penetrate the country's lower-tier markets.

Under the contract, Decathlon will rent or buy properties in Vanke's commercial projects in second- and third-tier Chinese cities such as Foshan and Dongguan to open its new stores.

"It's a win-win situation for both parties. Decathlon can lower their costs on finding good store locations, and Vanke has a famous brand to lease their property," said Wang Hongtao, a press officer and industry expert from the China Chain Store and Franchise Association.

Wang said cooperation between retailers and real estate giants is very popular, a recent example being between French retail giant Carrefour SA and property developer Dalian Wanda Group Co Ltd.

Decathlon said that it plans to triple its number of Chinese stores and make the country its third-largest global market.

Bertrand Tison, vice-president of Decathlon China, said the firm is targeting 150 stores in around 100 Chinese cities by 2015, with most being planned in second- and third-tier cities.

"Around a third of our China sales come from first-tier city stores, but smaller cities will be the drivers of our growth," Tison said.

He added that Decathlon will follow Vanke's steps to further enter cities in western China.

Founded in 1976 in France, Decathlon opened its first store on the Chinese mainland in 2003 and now has 57 outlets.

Tison said China is now its fourth-largest market after France, Spain and Italy, but it plans to move that to its third in the next five years.

Guo Hongchi, chief executive of xijie.com, a leading e-commerce portal for sports goods, said: "Many Decathlon items are between a third and a quarter the price of international counterparts, but with almost the same quality. That makes it very competitive in smaller cities."

Decathlon stores generally cover large areas of around 4,000 square meters. They have shop-front basketball courts or swimming pools, and other in-store sections include areas for badminton and fishing, where customers can play for free.

Its two largest Chinese stores are in Beijing and Wuhan, covering an area of more than 6,000 square meters. The Wuhan outlet has shop-front basketball and tennis courts, and in-store playgrounds including a 60-square-meter golf range.

"We hope customers can enjoy sports while shopping, and then revisit our stores either for goods or for fun," said Qin Shuang, the manager of the Wuhan Decathlon store.

Guo Zengli, president of the China Shopping Center Development Association, said the company has a good future in China because of its careful market research.

"There's still a lot of room in lower-tier Chinese cities, which international sports brands still have to penetrate," Guo said.