RFID tags to drive digital transformation in Decathlon

Digital transformation is a strategic change process, where a company uses new technologies to drive significant improvements in their business segments (Maheshwari, 2019, 3). The transformation is motivated by the changing customer needs, tightening competition environment, and changes in the overall business environment. However, the transformation is not only a technological project, but in addition it includes other perspectives: the strategic view, the customer view, and the employee view. In the following these four perspectives are exemplified with the case of Decathlon, the sporting goods giant.

Decathlon is an international sports company that was originated in France in 1976. They design, make, and sell their own clothes and sports equipment (“Decathlon” Our Story, 2023). The company has more than 900 stores in Europe, Africa, South America, and more than 100,000 employees. They sell more than 600 million products every year. (“Statista”, 2023; “Cisper Electronics BV”, 2023.)

Picture: Public domain picture from Pixabay

To decompose the digital transformation of the Decathlon, one can start by looking at the company history. According to the company website, the business developments in the 1900s have mainly concentrated, for example, on the products and the logistics. The first digital business development came in 2006 when an e-commerce site was launched. Since then, several digital improvements and innovations have taken place. (“Decathlon” Key dates, 2023.) Hence, one can interpret that from the 2000’s, the company strategy has shifted to the digitalization and to the customer value instead of the inner efficiency of the 1900’s.

RFID as a technological choice

The strategy is visible in Decathlon’s technological choices as well. The company has adopted radio frequency identification (RFID) and gained business benefits both on improving the customer experience, on facilitating the employees in their daily work, and on reorganizing the organization to better serve the business needs. In 2008 when the first trials were launched (Decathlon RFID, n.d.), the main goal of the RFID project was to increase the product availability in the brick-and-mortar stores: The need was to ensure that sales were not lost because customers could not find the needed products. (“Cisper Electronics BV”, 2023).

Currently worldwide, RFID is used in businesses for identification of various items, such as consumer goods, vehicles, animals, and much more. The biggest difference between RFID and barcodes is that unlike barcodes, the RFID does not need the line of sight to work. This means that an RFID tag can be, for example, hidden inside the product box.  Data is captured and transferred to the system database without a need of separate data entry. (Jagdev & Kaur, 2016.)

In the case of Decathlon, each product is tagged with an RFID, which enables every product to have a single identity and to be digitally recognized. Further, all warehouses had to have RFID detection technologies and all stores had to be equipped with checkout and rackets. They also set up centralized data centers to track the items in real time during the supply chain. (“Cisper Electronics BV”, 2023.)

Transforming the customer experience, internal processes, and organizational structures

For the customer experience these technological changes ment that the conventional checkouts were replaced by checkout that automatically detect all items placed in a special bin. This means faster checkout process by the cashier when up to 100 items per second can be detected at the same time. Hence, also waiting time is reduced. Product availability can be checked fast and easy when all items have their own ID. (“Decathlon” RFID, 2023.)

Since the start of the project, the inventory has been sped up to five times faster after introducing the RFID tags. This has also an implication to the customer service because the employees have more time to spend with customers instead of counting the items one by one in the inventory. Hence, the single technology was used both to improve the customer experience and to re-design the inventory process. (“Decathlon” RFID, 2023.)

The changing customer needs and improved internal processes require the organization to re-think also their internal organization. In many transformation projects it is a challenge when business units want to stick with their old mandates (Maheswari, 2019, 4.) To acknowledge the managers’ and employees’ needs, Decathlon has created the “RFID Solutions” division to coordinate the different production stages linked to the RFID. This division was seen as a necessity to organize the new flow of information in real time between employees and shops, to strengthen the information technology team to solve problems, and to continue to be dynamic and innovative in managing RFID. (“Decathlon” RFID, 2023.)

To conclude, in their digital transformation, Decathlon has transformed both their customer experience and internal processes using RFID technology. To succeed, they have re-organized their business functions to better support the new business demands. It has taken several years from the first pilots to the actual business benefits, but looking at their sales revenues racketing upwards, one can say that the transformation has paid off.

Marie Costenoble, Burgundy School of Business, France.

Marie Costenoble is a business student at the Burgundy School of Business in France. She is specialised in event communication. She is currently studying business management and sport business as an exchange student in the Jyväskylä University of Applied Sciences.

Riikka Ahlgren, PhD (Econ.), Jyväskylä University of Applied Sciences. riikka.ahlgren@jamk.fi

The second author of this article, Riikka Ahlgren is a PhD in information system sciences. She works in the Jyväskylä University of Applied Sciences as a Senior Lecturer, specialising in digital business. This article is a joint effort with her student in the course “Digital business models”.

References

Cisper Electronics BV: RFID Case Study: Decathlon uses Tageos RFID labels to identify millions of items worldwide.(12.4.2023) Retrieved from: https://www.cisper.nl/en/case-studies/rfid-case-study-decathlon-uses-tageos-rfid-labels-to-identify-millions-of-items-worldwide

Decathlon: Our story. (12.4.2023). Retrieved from: https://www.decathlon-united.media/en_GB/our-story

Decathlon: Our story – key dates. (12.4.2023). Retrieved from:

https://sustainability.decathlon.com/decathlons-story-our-key-dates

Decathlon: RFID – A universally beneficial technology. (12.4.2023) Retrieved from: https://www.decathlon-united.media/media/decathlon-united-rfid-en

Maheshwari, A. (2019). Digital transformation: Building intelligent enterprises. Wiley.

Jagdev, G. & Kaur, A. (2016). Exercising RFID in retail sector for economic growth and enhanced customer satisfaction. International Journal of Advanced Research in Computer Science, 7(6). (15.4.2023).  Retrieved from http://ezproxy.jamk.fi:2048/login?url=https://www.proquest.com/scholarly-journals/exercising-rfid-retail-sector-economic-growth/docview/1860624200/se-2

Statista: Revenues of the French company Decathlon 2010-2021. (12.4.2023). Retrieved from: https://www.statista.com/statistics/1167982/value-french-company-decathlon-sales/