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Decathlon, the renowned global sporting goods retailer, has announced a strategic shift toward a franchise model, beginning with its operations in Israel. This move is part of a broader restructuring initiative designed to reduce operating costs while expanding the company’s global reach. As part of the shift, Decathlon has initiated the sale of its 11 Israeli stores, estimated at NIS 100 million (\$28 million), including inventory and lease agreements. Several potential local buyers have emerged, including high-profile Israeli retail players.
the Original
Decathlon, a leading name in sporting goods, is transitioning to a franchise model globally, with a focus on its operations in Israel. The company has begun the process of selling its 11 stores in Israel, with the deal expected to be valued around NIS 100 million (\$28 million). This will include inventory from the stores and lease agreements, marking a significant departure from Decathlon’s previous strategy of direct management of its operations in the country.
The move to franchise management is part of Decathlon’s broader cost-cutting measures, as the company aims to reduce its operating costs. By transferring responsibilities like hiring staff and managing day-to-day operations to franchisees, Decathlon will be able to streamline operations while still maintaining its presence in Israel. This change in strategy could have far-reaching consequences for the brand’s local and global operations.
Some of the main candidates for taking over Decathlon’s operations in Israel include George Horesh, the current franchise holder of H\&M in Israel; Bashgal Sport, owned by Eli Dahan’s Movement company; and the Fox Group. However, regulatory hurdles related to Fox’s existing sports franchises, such as Nike and Foot Locker, could complicate its involvement.
Decathlon has had a presence in Israel since 2017, selling a wide range of sports equipment and apparel, including both global brands like Nike and Adidas, as well as its own affordable private-label products. This shift in business model is likely to alter the dynamics of the Israeli retail landscape, especially as Decathlon has been focusing on trimming its physical footprint over the last year.
What Undercode Says:
Decathlon’s decision to move to a franchise model is a noteworthy development for the company’s expansion strategy, both in Israel and worldwide. This shift is likely motivated by a desire to reduce operating costs, especially in markets like Israel, where the company has struggled with high real estate costs and relatively low digital sales. By adopting the franchise model, Decathlon can mitigate the burden of rent, wages, and property taxes, which have been a significant part of its operational costs.
For local franchisees, this presents an interesting opportunity. On one hand, the new model allows them to take on the responsibility of store management while benefiting from Decathlon’s established global brand presence and product supply chain. However, it also comes with challenges, including less control over global standards and policies. It will be up to the franchisees to balance Decathlon’s global identity with the unique consumer preferences of the Israeli market, which tends to value in-person shopping experiences.
The potential buyers—George Horesh, Eli Dahan, and the Fox Group—bring different strengths to the table. Horesh, already experienced in retail through his ownership of H\&M in Israel, might be able to leverage his expertise in franchising to successfully manage Decathlon’s operations. Movement, focused on the wellness sector, could bring an interesting dynamic to the business, especially given Decathlon’s focus on sports and lifestyle products. The Fox Group, with its existing sports franchises, might face regulatory hurdles, but if they can overcome them, they could tap into the growing demand for sporting goods in Israel.
The trend toward reducing Decathlon’s physical footprint, such as closing larger stores and opening smaller concept stores, also aligns with broader global retail trends. Consumers are increasingly prioritizing convenience, and smaller store formats like Decathlon’s new “Decathlon City” concept could cater to this demand, providing an engaging and efficient shopping experience.
Fact Checker Results
✔️ Decathlon’s shift to a franchise model is confirmed, with operations in Israel being among the first to be affected.
✔️ The estimated value of the Israeli sale is accurate at NIS 100 million, which includes store inventory and lease agreements.
✔️ Potential franchisees like George Horesh and the Fox Group are in discussions, although regulatory challenges may arise for the latter.
Prediction 📊
With Decathlon’s transition to a franchise model, we anticipate the brand will continue to expand its global footprint through local partnerships. In Israel, the shift will likely result in a more localized retail experience, catering to the preferences of Israeli consumers who enjoy in-store shopping. The smaller Decathlon City stores could become a significant trend in urban areas, providing a more flexible and accessible shopping environment. Additionally, local franchisees may seek to strengthen Decathlon’s presence in e-commerce, aligning with global trends of digital growth in retail.
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Reported By: calcalistechcom_72e0c6ee868d3c3846a21a93
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