French sports chain Decathlon to open 20 stores in Argentina

[Lanick]

True, once someone broke down taxes for one product, and with retail price abroad did not come close to half the price here. Also Mercosur and pure Argentinian products are also way too expensive. It's greed mostly. Because they can. And zara is just riding the wave, because why not? Decathlon has different policy though, so stuff might be cheaper there than what we are used to.

An Argentine brand of bottle of water is a lot more expensive here than a UK brand of a water in the UK. All the supermarkets offering discounts everyday to a different bank card each day. A supermarket can not offer 20% discount as their margins are too little. But they do it here. Restaurants offer even 40% sin tope. A kilo of cherries us$ 9. These are all produced here. They’re just riding the wave as Argentine people don’t say anything.prices are artificially inflated. But a serious competition will wake people up I hope.

 

[antipodean]

An Argentine brand of bottle of water is a lot more expensive here than a UK brand of a water in the UK. All the supermarkets offering discounts everyday to a different bank card each day. A supermarket can not offer 20% discount as their margins are too little. But they do it here. Restaurants offer even 40% sin tope. A kilo of cherries us$ 9. These are all produced here. They’re just riding the wave as Argentine people don’t say anything.prices are artificially inflated. But a serious competition will wake people up I hope.

The reality is that high margins reflect high external risk faced by businesses in Argentina and low confidence thanks to a century of undisciplined politics that change the whole playingfield on a whim. One should always remember that when one sells something they produce today, one needs to account for the future cost of the next sale, next week, next month, next season, next year or whenever... which in Argentina could be anything for any whim or reason affecting any part of the price they can offer (imports, labour, logistics, raw materials, unions, energy, capex, inflation and the list goes on). If a business isn't "safe" today and ends up "sorry" tomorrow, then no one - especially their customers - is going to help them out.

We can only hope that stability and confidence improve over the coming years that businesses can pass on this confidence to their customers at the check-out, and of-course increasing competition may help to speed this up, but saying that I don't expect Argentina to be an inherently "cheap" market anytime soon until a century of political-economic trauma can be overcome in the minds of its people and businesses.

 

[Rich One]

I believe this brand will open one store to test the waters. Then offer promos for cards etc. and eventually place themselves to be competitive with major imported foreign brands.
Why leave money on the table ?

 

[Ries]

All their competitors that sell legitimately in Argentina double or triple the prices here.
For example, a Columbia Sportwear puffer jacket that costs $120 in the usa is 335,000 pesos on mercado libre.
obviously, vamos a ver, but I continue to think that until import duties and the frictional costs of importing are removed, nobody will suddenly start selling things at half the price of everybody else.

 

[Ries]

I would add that Columbia has had an Argentine based subsidiary for some years now, and is not, like, say, iphones on mercado libre, bringing things in one at a time or illegally. Its doing everything legitimately just like Decathlon would, and its products are manufactured in Bangladesh and Vietnam, which, I would guess, is similar to many Decathlon items.
And yet, they are selling for double or more what the parent company in Portland Oregon sells for elsewhere.
This is not another wacky Argentine mindset- its how multinationals do business in Argentina, and I cannot imagine that the Decathlon accountants are going to magically see a different set of market conditions than one of their competitors like Columbia. Columbia already has 20 or 30 stores here, with amortized build out costs, all paid for at a much lower peso cost- how can a brand new store, which has to pay current construction, rent, and expensas, miraculously undercut a company that already has its infrastructure in place?
Its magical thinking.

 

[carride]

I would add that Columbia has had an Argentine based subsidiary for some years now, and is not, like, say, iphones on mercado libre, bringing things in one at a time or illegally. Its doing everything legitimately just like Decathlon would, and its products are manufactured in Bangladesh and Vietnam, which, I would guess, is similar to many Decathlon items.
And yet, they are selling for double or more what the parent company in Portland Oregon sells for elsewhere.
This is not another wacky Argentine mindset- its how multinationals do business in Argentina, and I cannot imagine that the Decathlon accountants are going to magically see a different set of market conditions than one of their competitors like Columbia. Columbia already has 20 or 30 stores here, with amortized build out costs, all paid for at a much lower peso cost- how can a brand new store, which has to pay current construction, rent, and expensas, miraculously undercut a company that already has its infrastructure in place?
Its magical thinking.

This is spot on. There is zero chance that Decathlon enters Argentina with plans to disrupt the market with prices lower than the competition.

 

[Lanick]

This is spot on. There is zero chance that Decathlon enters Argentina with plans to disrupt the market with prices lower than the competition.

Zero chance!? This is the business model of Decathlon! Not saying they aim to put other businesses out of business but they come with all different sports goods from karate to kayak, tennis to hiking under one roof and they create massive competition with their own brands at very competitive prices.

 

[cortazar]

I'm happy for competition, but I'm surprised to find that people actually like Decathlon.

The quality of the goods is very poor. Maybe the shoes work for a Sunday stroll, but they'll wear out after a month of exercise. You'll find used Quechua stuff in good condition, but that's because its the brand of choice for people who go hiking once every 5 years.

Genuinely did not know that people go there on purpose. I always assumed it was a place people go when they have no choice or no clue.

 

[mikic007]

I'm happy for competition, but I'm surprised to find that people actually like Decathlon.

The quality of the goods is very poor. Maybe the shoes work for a Sunday stroll, but they'll wear out after a month of exercise. You'll find used Quechua stuff in good condition, but that's because its the brand of choice for people who go hiking once every 5 years.

Genuinely did not know that people go there on purpose. I always assumed it was a place people go when they have no choice or no clue.

While it might be true for a lot of stuff they sell, they have plenty of solid quality all over the departments. Their model is pretty simple, to offer entry and medium level quality for beginners and amateur sport enthusiasts. Whoever wants professional grade will go elsewhere of course.

Personally I have some quechua clothes for 15 years already, all the time in use. And some stuff I bought for one time event, to try a sport I wasn't usually doing. It's great for kids as well. For winter climbing I'll buy la sportiva shoes and specialised technical equipment of course. Clothes will still be from decathlon, since up to 6k metres they work as good as any.

I know plenty of people despise such stores, because they have enough money to buy north face or Columbia, but reality is, for amateur sport decathlon is good enough. You have everything, and different price range in each sport.

There is also no comparison between Columbia and decathlon, one is outdoors fashion for people with money, the other is sport shop for amateurs, that don't want to spend much. Two very different models.

 

[Ries]

In the US, Columbia is considered to be cheap, outdoor-like clothing for urbanites. And North Face pretty much lost all credibility with real climbers when it was purchased by Vanity Fair, the ladies lingerie company, in the year 2000.